Background
December saw a borrow growth of 124% as deposits Anchor protocol increased as a result of a massive inflow of UST (likely contributed by new leveraged strategies such as abracadabra aUST degenbox), whilst borrows only grew at 34.66%. This disparity between deposits to borrows is growing wider, and without enough borrower demand in the short-term, it is possible that the Anchor protocol could continue to deplete its yield reserve.
Utilization ratios on the platform also fell as a result of this disparity, however this was offset by an increase in the interest generated by bLUNA deposited as collateral.
Proposal
Anchor should adjust the target rate by -1% down to 18.5% to ensure that the protocol can continue to maintain its health and deliver returns to Anchor Lenders.
1 Like
Not a fan of this at all.
It sends out a clear message that yields are taking the big ugly stick before any other options have been considered.
Even though itâs only 1% (nobody will notice right). It is a path towards 17.5% the month later or perhaps 16.5% if we can get away with it. This approach is last resort type of stuff when the yield reserve is burned out.
This doesnât even need a proposal. We will be forced down this path if no alternative action is taken to resolve the imbalance.
Letâs wait and see what the Anchor team come back with in their proposals.
Iâve already pulled all my collateral off anchor and am on solana until I see improvements.
Earn rates are unsustainable and either borrowers, or depositors are going to get screwed when all of this unravels and Iâm not leaving my luna and eth here where people are constantly crying âall we have to do is raise borrowingââŚ
Iâve already proposed multiple solutions to incentivise borrowing, Itâs been 2 months and the only thing iâve seen from the community was their inability to compensate other borrowers (I was not affected) on their price oracle failiure. 2 people command 47% of the entire governance voting power.
Make bANC a collateral, raise liquidation LTV to 0.75, increase the ANC rewards for borrowing like was done in the past. Maybe then I can CONSIDER coming back to Anchor but its a brutally competative market for lenders right now and Anchor is sitting on itâs ass with MIMtoy.
Iâve even proposed helping Nexus with charging up our borrow utilization however no feedback was even given on that. Yet everyone is so quick to defend danny boyâs MIMtoy as the holy grail Anchor needed. Nexus would solve the borrow side equation with a little simple borrowing incentives especially now that they are moving to protocol owned liquidity.
bANC nLUNA nETH bPSIdp are all great collateral options if you want to balance the borrow side of the equation. This combined with tools we alerady have, like ANC rewards rate for borrowers, liquidation LTV, and ability to compensate injured borrowers to show good will to future borrowers is what Anchor needs to run 20% APY sustainably. Not a bunch of voters who are whining we need more borrowing. Otherwise your APY on cash will drop fast as the rest of us borrowers leave for better pastures. It really isnt that hard to liquidate your loan and move elsewhere when you can only use 30% of itâs value safely.
Otherwise, just suck it up buttercup your Earn APY is going DOWN.
Hubble Protocol - Exploring the DeFi Universe on Solana
An example of one of many âAnchorâsâ I think its time to stop thinking that the protocol is unique and just has a couple minor problems when this, AAVE, Abracadabra, Alchemix, etc all offer the exact same thing and do it better. No point in saying âwell you can just leave if you donât like it hereâ because there wonât be anything left here without continuous improvement to the protocol to remain competent and competitive.
3 Likes
Getting consensus isnât fast or easy, just because folks havenât engaged your ideas doesnât mean they arenât interested in solutions. Bashing the community is going to get you nowhere fast. If you canât be patient and persevere with a commitment to your ideas in the public domain, Iâm afraid youâre just going to be angry and disappointed.
