- We propose updating the
threshold_deposit_ratein the Overseer Contract to account for the change in average block time since the launch of Anchor Protocol and to enable the protocol to maintain a tighter peg around 20%.
Anchor money market’s interest calculations are based on blocks. Prior to Anchor launch, it was assumed that the block time would stay consistent, but that has not been the case. The Anchor money market expected 6.4274 seconds per block on the Terra network; in reality, recent block time (120hr) has been 6.772016867318786 seconds on average due to:
- An increase in the validator set & number of validators.
- Increased network congestion.
The Terra network has recently increased its max validator set from 100 to 130. Additionally, since the launch of Anchor, the number of validators has increased from 81 to 108. Due to the increase in the validator set and number of validators, block time has increased, as validator’s signatures are required during block creation. Also, the total transaction amount on the Terra network has increased, affecting block time.
As our current
target_deposit_rate calculations are based on past block time assumptions, we propose adjusting the
target_deposit_rate in consideration of recent block times.
We propose using 6.772016867318786 seconds for block time, so the block per year calculation would be 4,656,810 blocks.
Furthermore, we also suggest adjusting the annual_threshold_deposit_rate and annual_target_deposit_rate to 19.5% & 20.5%, respectively, to maintain a tighter peg around 20%. Due to the interest subsidy calculation, our current interest rate shows a slightly lower interest compared to our current annual_threshold_deposit_rate, which is 18%. Adjusting annual_threshold_deposit_rate and annual_target_deposit_rate to 19.5% & 20.5% would enable us to maintain a peg closer to 20%.
So the updated
target_deposit_rate would be:
blocks_per_year = 4,656,810
annual_threshold_deposit_rate = 19.5%
annual_target_deposit_rate = 20.5%
threshold_deposit_rate = 0.000000036686454933
threshold_deposit_rate = annual_threshold_deposit_rate / blocks_per_year = 0.000000041874158490
target_deposit_rate = 0.000000040762727703
target_deposit_rate = annual_target_deposit_rate / blocks_per_year = 0.000000044021551233
The on-chain proposal will follow.
As this proposal only provides a temporary solution, we plan to change the time-related calculation base from blocks to seconds in the longer term.