Terra and Anchor already has higher fees than banking (where fees are generally zero). The nickel and dimming should stop. We shouldn’t be adding to it.
Adding a _% Withdrawal fee would be a massive mistake. Most uses of Anchor would no longer work. Not for savings. Not if someone makes regular withdrawals. And most of the apps built on top would be outright broken, as those depend on frequent deposits and withdrawals. Most importantly, it wouldn’t achieve the objective to stop the parasitic abuse or Anchor - one could still do that unimpeded (already now the abracadabra scam fees amount to around a months worth).
The right way to do this is the saUST proposal. Not fees. Simply change aUST to saUST for higher (I suggest 3X of aUST) earn, and saUST cannot be sent outside of one’s wallet. That would be simple long term savings (saUST) vs everyday spend and misc (aUST) separation, which would work much better without penalizing legitimate uses, while discouraging abusive practices.
Retard here @paletas How much confusion will it lead to the average joe ?
When you are lunaticos well informed , np
But when you are like me , i dont even know how to use all the dapp and figured what is what .
Would mind please think of about your grandma using his bloataware with assistance ?
We are not all google scientist computer nerd addict , can you guys pleas understand that ?
Thank you , that was my retard rant.
Going to pivot here for now on the withdrawal tax. Leaning more towards some kind of Staked aUST mechanism as well. I think there are some great points laid out here. Seems like we are getting support for this idea.
I have been doing more research, talking to major stakeholders such as Jump capital who also seem to be in favor of something like this.
Ideally, we should have a summary and proposal for something that incorporates these ideas in the simplest way possible in the coming weeks.
I would really go towards setting a withdrawal tax without a timelock required.
As long as it doesn’t eat into the depositors funds and only affects the earned amount. I dont know if protocols like abracadabra could still exploit this though…
Time locks are a grea, simple and bulletproof solution withouth a doubt. But they will lead to iliquidity of depositors which can potentially turn into a loss when trading this time locked tokens in secondary markets… Unless of course the timelocked tokens are non transferable and thus force depositors to wait without exception (which could be potentially considered as it brings some advantages)
I point this out because more these timelocks will more than probably have to be set for more than 90 days so iliquidity will be inevitable…
Timelocks will simply be gamed by other protocols, could be the turning point on making Anchor more focused on protocol-to-protocol rather than protocol-to-user, but if the locks annoy people to much and if the rate is still pretty good, someone will make locked deposits liquid and profit on a premium charged. Something like treasury bonds right? You can lock your money for X years, but also sell your bond maybe at a small loss, but we’ll be getting there. Something that could make it even more like that is if locked aUST are NFTs, percentage may change over time but once you have your NFT bond, it’s set in stone for the period, so you actually have the potential of profiting on that if you get some really nice rate that goes away. Would also give the protocol the ability to invest that money, knowing it won’t be needed for the lock duration.
Also the problem with the tax you’re suggesting (and I know we’ve discussed before) is it’s not feasible with the current fungible tech, and giving that up would be worse imo.
This is certainly possible and I would guess over time this would happen, however, the success of that is questionable. Locking funds creates a time-vaule money risk/reward that protocols that build this would have to factor in. Moreover, it creates more steps for users/protocols to buy staked aUST bonds from another protocol. That’s not taking into account there could be huge slippage and other issues on the bonds since it’s been proven that so far these are not popular in defi.
With that in mind,Locking/staking aUST still stops the majority of short-term looping issues that are drawing down the YR, such as yield farms backing tokens in aUST and other MIM strategies that need the short-term revenue from the looping stream.
I agree, was not trying to suggest it’s not a valid solution for the issue at hand, I even believe it will provide opportunities to innovate in the space, which was what I was trying to briefly describe in the bonds comparison. I’ve been in Anchor since inception mostly because I truly believe in time Anchor will function mainly as a “bank of banks”, if that makes sense…
Any sort of timelock is fundamentally incompatible with Anchor. For a timelock you expect - and the depositor deserves - a guaranteed rate for the time period. That is technically unfeasible in Anchor (as all aUST and potential new saUST appreciate at the same rate) for one; you cannot do a guaranteed individual locked rate (i.e., set at the time of lock, which may be different from the rate if locked in at the current time) in Anchor given how it works. Second, Anchor is not a financial institution and it cannot guarantee the rate for any prolonged period of time, as it depends on the whims of LFG (will LFG replenish the YR or no). No one is going to timelock for a “don’t know what rate you’re going to get - good luck!”
So, both for fundamental technical reasons (any time lock would require a major rewrite of the core of Anchor “earn” mechanism), as well as reputational and practical reasons (time lock has to have a guaranteed rate), it’s not feasible.
There’s a third consideration also. Right now Anchor is an unregistered security. You sell UST and buy aUST. Anchor already has the best code-free time lock imaginable - a depositor pays long-term capital gains for all aUST they hold for over a year, which is a very strong incentive to hold one’s aUST undisturbed for at least 365 days. Any change to add timelock, guaranteed rates, etc., would need to mint and post new tokens, vs. appreciate the UST value of the aUST (and/or saUST). That would destroy the current #1 feature of Anchor: it’s a tax-efficient savings-slash-investment vehicle and any deposits held for >1 year are subject to long-term capital gains, vs. interest (regular tax rate), as is the case for any other DeFi (or CeFi) stablecoin savings product.
As for a withdrawal tax, that may help stop looping abuse, but DeFi already has so many fees and taxes - many fold more than normal banking. That just would rub a lot of users the wrong way. It could work, but it would mean that you can’t actually get your full saved amount, that there is a hidden tax you have to pay to get to your money. Doable, but highly inadvisable as the harm it’d do to Anchor’s reputation is more than any gains from it.
A whole lot of assumptions for something that’s not even done, I agree that locking is a substantial change but doesn’t need to come at a reputational risk.
“saUST” doesn’t need to have the same rate, in fact it shouldn’t exist at all, you can have people deposit the aUST into a vault, or as I’d prefer it, locking would provide you with an NFT that would prove your ownership of the capital and yield, at a fixed rate set when it was minted.
aUST could have the true rate, or slightly below if that is high enough so we can fill the yield reserve, and locking could only be allowed if there was enough money already in the yield reserve: want to lock 10000 UST at a 20% APY for one year? The yield reserve needs to have 2000 UST available, and once you lock those 2000 UST are marked for you and no longer available. These lock rates could be adjusted every day, or every block, based on the protocols need for cash (to let other’s borrow) and the health of the yield reserve.
These NFT could be traded at any NFT market, or even one provided by Anchor, Anchor could buy any of the NFT for the deposit value maybe even minus a modest percentage (the user would forfeit the yield) or if it’s close enough to the due date maybe charge a premium on the yield only (what @mariano247 was suggesting before). If the user wouldn’t want to sell to Anchor, other users could be willing to buy it, say you have an NFT for those 10000 UST at 20% APY for 1 year, 6 months have passed you need the cash, maybe you’d sell that to me for 10500 and I would carry it for the rest of the period, netting me 1500 UST in profit in 6 months, which would be around 30% APY, if I’m not mistaken.
These lock would also allow Anchor to know how much UST cashflow it needs and when, allowing Anchor to use the UST effectively to generate more yield. The more I think about it, the more I am in favour of something like this, it’s optional and there’s a way for the user to get the cash back should an emergency arise.
Makes sense in many ways. But, then Anchor will need to be properly formed (as a legal entity with fiduciary duty to all depositors) and hire a full time product manager at least, to develop and continually manage the various yield lock products and permutations (different rates for different terms, amounts, etc.). In short, not sure if it’s worth the complexity.
Simple staked and locked in place saUST, with no time constraints or time based locks, just that cannot be moved out of the user’s wallet, makes more sense. Especially considering that then it’s still manageable for the apps built on top of Anchor to adapt to that. With time locks, complexity is much higher for users, and it’s a much less conducive environment for developers building on top of Anchor. And tradable NFT time locks give a way for abusers to go around it in a secondary market, and will be a magnet for scammers (you can be sure that many users who are too trusting will be easily scammed out of an extra zero when selling it in the wild secondhand market). Staked non-movable saUST does not have any of these problems and is much more straightforward. In other words, KIS (keep it simple).
Please consider having an NFT that gets issued that represents the locked position. This NFT will allow the locked position to be traded, giving the user some liquidity while still preventing the capital flight from a macro perspective. This is analagous to bond trading. Thank you!
Your right we (depending on your country) would end up paying income tax on the yield from the time locked revenue. Depending where you are this could be advantageous but it adds a lot of complexity.
Time locks are not really needed but it DOES kill aust abuse as like you said no protocol in defi is gonna bother with the complexity.
With that being said people are familiar with how bonds work and I don’t think it will be that difficult for people to quickly figure out how to use staked aust and actively use it even with the time lock mechanism. Ohm bonds were popular for this reason (and still are).
Also remember aust would still exist and be the fine product it’s always been so really we’re just picking at a feature not a compromise.
Right now if you think about it this just kills (9,9) that’s happening in defi with the YR.
Yearn finance invests in the best rates automatically, the developer just needs to integrate them and by people using the protocol it auto-adjusts, Anchor could have the same process, I don’t want someone controlling the assets but rather automated processes for investment, if possible.
Having a token saUST that can’t be transfered it’s the same as having nothing at all, there doesn’t need to be a token for what you want, the NFT would allow you to trade ownership over the locked position. And we can have both timed locks and non-timed locks, they don’t have to be mutually exclusive, but the protocol would benefit from the time lock aspect.
Also using an NFT doesn’t mean the user needs to know it’s an NFT, the UI can simplify the complexity underneath.
Personally I think that 15% on saUST, 5% on aUST (1/3) may work for the long, or at least medium, term and be sustainable with just the right mix of positive incentive. At 20%/15% I think we are kidding ourselves and it is still far too attractive to the abusive loopers.
Far too messy with NFT. Say you deposit $100 each day and stake it. You’d soon end up with 100s of different NFTs. Also, that would be a total rewrite of how Anchor works.
saUST keeps the same core logic. saUST starts at 1:1 to UST and its value in UST increases every few seconds. Exact same as for aUST. The difference is that saUST increases at one rate, while aUST increases at a different lower rate (I suggest 1/3 of the base saUST rate).
There is also a major problem with an NFT: you could transfer it. That defeats the whole purpose! The whole point is that the saUST is locked in your wallet and cannot be transferred. You want to transfer it? Unstake it and turn it back into UST or aUST. Of course, the staking/unstaking has to be in real time with no delays (like there is for LUNA, for example).