This is my take on the Anchor v3 proposal and how we can improve borrower yield (thus driving borrower demand) and reducing emissions. I will post other forum links relating to this later.
Borrower incentives are often dumped right away to counterbalance the interest earned, this is how the realized 0% borrowing rate is created. However this creates persistent sell pressure on the token requiring frequent buybacks to maintain price stability.
My proposal both enables enhanced positive interest rates for borrowers to have self repaying loans and reduces the sell - side pressure.
implement 5x rewards for 90 day staking and 10x rewards for 180 day staking.
Reduce Borrower emissions for not staking down to 1/5th their current variable level.
For the staking mechanism, users will put up the UST portion of ANC-UST LP on astroport. Anchor would then 5/10x the borrowers current rewards, take the borrowers UST, and deposit both sides into an ANC~UST loan and lock it up for the designated number of days. Upon release the borrower will own the entire LP and be able to sell it, including the 5/10x anchor portion that was provided on staking.
A lending protocol projectlarix.com has implemented this strategy for 3 months now and has seen tvl in the Larix-stable lps increase over 20% respectively.
With clear communication and an opt out mechanism this has been favoured relatively well on their platform as it’s also a simple defi yield strategy that can be done by borrowers.
This would probably change the present net borrowing rates rates accordingly. (Assume our present baseline is 0%
No staking: -9.15%
5x staking: 0%
10x staking: +11.44%
That’s right, we can offer the most competitive borrow rate in defi, this is exactly what larix is doing to drive borrowing demand and it’s been working (~5-10% increase over 3 months).
I will see if I can pull on chain data somehow to show evidence. Probably will consult with flip side on this but from what I’ve written down and crunched it’s probably one of the most effective and simple strategies for drawing borrowers as it offers an easy and direct way of earning defi yields. (What the majority of the borrower base is seeking).
Imagine if your a borrower and someone is PAYING YOU 11% for your collateral, now that’s a no brainer.
This also extends emissions runway, increase pool depth, and reduces sell pressure all at the same time.
At the end of the staking period if the protocol is doing well people are naturally incentivized to staking into governance for further yield.
I believe we can view the pseudo code for the system larix uses and implement one. We can approve a separate community spend to onboard some more developers to build this out and assist with the current workflow the team has on their plate. Maybe even consider students / apprenticeship if the market supply of labor is too low as it is at the moment. In fairness I don’t think it would be THAT complicated to implement however and we have a proof of concept to work off of.
Got the data to back it up now here:
here is raw data:
the massive spike just recently was invictus bonds launch (kinda like ohm pro bonds).