@ZenDog Appreciate your comments & agree that encouraging more borrow volume is a very important goal for the protocol. What I do not agree with, is that lowering max premium is the best way to solve for this. We essentially introduce a much larger risk (of arbitrageurs not entering the market and risking the solvency of Anchor) in order to maybe boost borrow volume/reduce congestion.
I think the other proposal of trying to back-stop the yield reserves could be a less intrusive way of keeping the protocol well-functioning until bidding liquidations are in place.That being said, it’s a non-trivial matter using community funds for this and more discussion needs to take place on that topic.
I’m also slightly optimistic that we have the time to build out the bidding logic due to multiple changes in the environment since the selloff in May.
- Launch of Harpoon (allowing retail to fill the shoes of bots if the bots can’t/won’t liquidate)
- AnchorHODL script (biggest bLuna providers now have a way to avoid liquidation)
- Reduction in risk-taking sentiment (I’m guessing people are generally more conservative with their borrow LTV)
- Lack of a significant bLuna-Luna spike when Luna most recently dipped below $5, suggesting that the above 3 changes may already be having an impact
As such, I don’t think we’re in a dire enough state to warrant introducing such a “drastic” (and unproven) measure to try to improve Anchor. Dismantling this may be more difficult in the future as a rise in max_premium is always going to be viewed negatively.