Now that it looks like the dynamic Earn rate is going live it’s time we look at improving capital efficiency. This one looks like a no-brainer bETH has gained a lot of liquidity on Terra as of late. I know @mariano247 is going to want some data to back this up again so if I can post the proposal but don’t know anything about paying for the flipside bounty so if someone can help me there (maybe @fig that would be appreciated).
Otherwise if we can get people on this poll here I will post the proposal on governance in advance with enough support (say more than 50 votes with a greater than 60% approval rate).
I will be present on this Topic to answer any questions.
@atebites thanks for posting this here - and giving the community a platform to convey their vote.
Bounties are paid for as part of Flipside’s Terra delegation. We can make these questions part of Friday’s upcoming drop our do a flash bounty if there is a more immediate need.
As proposed above by @atebites and by many people in the community lately, raising the max bETH LTV will increase collateral capital efficiency. This was decided against during the bLUNA vote because the data wasn’t compelling data to override the possible risks. However, bLUNA has sustainably grown over 3x since that time and continues to be a larger part of the collateral base.
The major risk is the depth of the bids in the liquidation queue, meaning the more bids, the shallower the premium and less risk of insolvency. The substantial growth of the bETH supply has helped build liquidation depth to the queue. If we look at the liquidation queue premiums since Oct of last year, which includes the Dec & Feb deep pullbacks - we can see the bETH supply actually grew and liquidation premiums tightened substantially limiting risk.
Therefore moving forward with the recommendations of many community members to increase bETH is highly recommended to further increase its capital efficiency and revenue to the protocol.
75% LTV seems like the reasonable level to set it at without taking on too much risk.
yep, and frankly a lot of borrowers have loads of excess capital they would love to get more ust for. This is just another tool to get us to xAnchor and veANC. I have all the confidence we’ll see a sustained high APY for depositors in time as we increase their ability to utilize their capital assets.
Totally agree with @bitn8. The recent increase and continuous inflow of bETH shows evidence that we can support a higher LTV. This will bring even more capital since most Money Markets are in the range of 70-80% LTV for ETH and we would be competitive. We will probably see a nice increase on the borrow side of things too, actively increasing overall health of Anchor.
I was always on the fence to deposit more ETH due to the competition of incentivized Money markets with higher LTV ratios. I don’t see any disadvantages with a potential veANC model, higher LTV and the terra ecosystem in general
Yes. Regardless of dynamic earn rate. Unless a collaterall is deeply suspect they should all have 75% plus. 100% even. If the collaterall is provided in a smart contract it is there and it is good to be borrowed against and liquidated if need be.
When proposal dynamic earn rate passed, the income of anchor protocol is much critical. This proposal could raise the revenue of anchor protocol indeed. It should pass ASAP
This is great. Would love to see a higher bETH LTV cap. That being said, xAnchor is adding bETH right? Are you assuming it’s fine to just watch sAVAX and other things being added as a metric to tell if that’ll break the current bETH system when it goes crosschain?
From my understanding savax is under xanchor, ui still reports legacy im sure the team is crazy busy with cross chain and what not. 80% will remain for Beth the liquidity is present. I believe both bluna and Beth are being reworked for xanchor anyways so there won’t be too much to change / worry about once xanchor is live.
We’re nearing 50 polls guys keep it up let’s get this live!
