[Proposal] Terralytics - Increase Borrow Demand via ANC Value Capture from Deposit Growth

As a borrower myself, borrowing is a hard sell. I lose my staking rewards and other opportunities. I also have to pay an apr on top of this. The worse thing about it is, I have to almost double collateralize my loan. Even at 80% liquidation, I cant go close to that number because of volatility. So again, its like double collateralized. This is crap for the borrower. The borrower should be able to borrow up to 100% of their collateral. Obviously this will never happen as volatility makes this impossible. But I should be able to move the amount I borrow closer to 100%. Right now I am around 65% percent of collateral. It liquidates at 80%. Ok so I am supporting UST borrowing by almost double collateralizing my loan. Great for UST earners, bad for borrowers.

Then we have not even talked about the apr, which will be put in place. Honestly what makes the most sense? UST borrow or staking. Borrow is the feature you want to avoid because of what I have stated above. As long as this is the feature to avoid, anchor will have problems attracting borrowing, which is the foundation of the system. Do’s cash is not.

Move the liquidation up to 100% of collateral, so at least we can utilize 80% of the collateral safely. Dont rely on borrowers double collateralizing UST earners. Mathmatically, as it stands, borrow is the feature you want to avoid.

Why does everyone think they need to fix Anchor??? The leaders arent as worried as everyone else. Let anchor grow and add other Bassets. We have to add as many Bassetss as possible. End or Story.

How is this going to work for major expansion with Fintech/Neobanks?? When the masses connect via Alice/Kado/Outlet,etc. how are they going to recieve/stake/sell ANC tokens??? This is short sided and not big picture.

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My humble opinion: Its quite the opposite of what you say. Just adding bAssets and see what will hapen is short sided.

Take a look at the amount of additional bAssets that will be needed to fix the gap. Borrowing is important, but not a reliable parameter since only a “few” degens do it. Shall these few provide the billions of needed collateral to balance the deposits the NoCoiners will add soon through Alice etc.?
Morover, there is a lot of competition for borrowing, e.g. with Mars upcoming.
These thoughts are all written down here in the Proposal.

Nobody wants to fix Anchor, but to improve it to be sustainable for the future. Thats the bigger picture. The Leaders are relaxed, because they rely on the community to come up with a solution, not the other way around.

Refilling the yield reserve over and over does also a big damage to the reputation of Anchor. If you ever want a serious business engaged, we need to get rid of the “Ponzi” screamers first.

There can be plenty of solutions for Alice & Co. to deal with this. The simplest one would be, to keep 5 percent, buy ANC from it and provide only 14.5 percent to the User.
But thats really just the simplest solution.

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It seems better to use the Reply function. :sweat_smile:

And I agree.

1.bAsset borrowers decide to borrow based on interest rates.

  1. bAsset is currently heavily dependent on $ANC compensation.

  2. If the price of $ANC goes down, the interest rate will go down, so simply adding bAsset doesn’t seem to have much effect.

This is spot on
We can add more collateral options all day, but the amount of ANC distributed to borrowers has a cap and we have already hit said cap.
If the amount borrowed doubles (which still wouldn’t be enough at current rates to balance out) then anc distribution would half assuming ANC price remains the same.
Also I think people don’t quite understand the amount of growth earn will see once Kash and others release to the masses with debit cards.
No amount of additional collateral could make up for that, even if they were willing to pay 10% in interest as ANC distribution tends to zero.

Again great talking through it all, we all want the same thing

Hi bitn8 …

I agree that Poll 18 came out a bit too fast. In addition, regarding the larger picture, we fully believe this proposal as it stands fits into the overall strategy of driving sustainability and market share leadership for the Anchor Protocol and has parts that are just as good, if not better, as other proposals that have been passed historically. In terms of timing, we agree that dynamic anchor rate is a critical component and should be presented first (hopefully passed and implemented). It would be foolish for us to not recognize the wisdom of going ahead with something simpler, less risky, and that also move the ecosystem forward on the sustainability curve.

Even though our proposal’s secondary objective is to maintain the 19.5% earn rate for a much longer time, a lot of this is still theoretical in nature (though we are actively consolidating our data and will be adding that to the overall proposal) and thus of higher risk.

In terms of overall maturity, due to implementation complexity … our proposal is still young and needs more time for everyone (central team + community + developers) to establish the appropriate framework. We strongly believe that our proposal will be a huge step forward in driving additional borrow demand.

Regarding veTokenomics for ANC borrow, we would welcome the opportunity to discuss more in-depth with the main team on how ours can combine in and if it could fit. My first instinct is that we are coming at addressing the Borrow Demand issue from 2 different hypothetical directions. It could be possible that both of these proposals might not be able to exist in tandem.

Let us know if you or other parts of the team will be available. @kash_ron is always available to discuss, while I work full time so am much more constrained.

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BigAwnz … what you described is exactly the issue we are trying to address with our proposal. We want to make the ANC token the main reason why a borrower, someone like you, would use the Anchor protocol. The team is working to consolidate our data and research into a meaningful story to share with everyone in a week or 2. Unfortunately, most of us have other Full Time jobs or Students, so please forgive us for not sharing everything…

We fully believe once the community sees our analyses and the data from the Anchor as we see it, everyone will be just as excited if not more. As always, we will share it both in the forums and on video.

Regardless, please read my response to bitn8 about timing and where this proposal could stand with all of the others.

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Thanks for taking a deeper look. Again, I wish I could pin this message because i have typed it so many times now lol - Patience here, please. Ve-tokenmics will be up for vote in the coming the weeks, the dynamic anchor is up for vote now and needs some time in the wild. The team is also hard at work on cross-chain efforts. I think aligning with the priorities of all, this can be the next thing on the table in a few months.

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I 100% agree with this proposal. Great job! I will stand by giving value to $ANC with some of the 19.5% earned rewards to drive up borrowing demand. We may need to consider prioritizing this first.

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I’m frankly worried about Proposal 20 passing on Wednesday, and would like to send this idea to Proposal ASAP myself (EDIT: Given that sub-Quorum Props don’t get their ANC back, I’m actually not sure I can afford to do so, which just makes me even more frustrated) It doesn’t make sense to me why we would reduce and destabilize the yield without improving Borrow first.

Not only would I like to see this idea implemented, but perhaps users will see that Prop 20 is not needed and change their vote there to No

@Gnawkz @KashHurley

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You can’t change your vote once you already voted.

Noticed this last night. Definitely disappointing, but I also just noticed your message in this thread from 8 days ago, which gives me some hope that both sides of Anchor are being looked. I presume you also don’t want the Earn % to fall significantly before proposals like this + veAnc can be implemented and the effects born out. Gnawkz agreeing as well is comforting

Honestly, I think the borrowers should still get the most APR in ANC rewards. Since they are taking the most risk and they’re the customers of Achor Protocol. The depositors can just help protect the price with auto buybacks keeping the ANC value attractive for more borrowers.

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I can answer that. If we can just compare the borrowers to miners. Look at the POW coins hash rate for example. The miners BUY more equipment and electricity(despite how much it cost them) just to mint more coins due to the growth in coin value.

I believe we can create the same dynamic with borrowers using auto buybacks from depositors to protect and increase the value of ANC.

Also if borrowing loops back into EARN, even they would have to keep a portion of ANC to get the 19.5% APY $UST. With this proposal the more that is in EARN the higher ANC price is protected. This could continue to create a higher floor in ANC price over time despite short-term volatility. Keep in mind that Anchor will continue to use staking rewards from other protocols like SOL, ETH, etc to achieve this.

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I like the direction this is going. Adding some degen complexity ok to me. Most public applications for users will handle such in the background for their users (Alice, kash, outlook, etc) and able to attain a high tier. As is for degens, complexity been run of the mill, though simplicity always appreciated.
Speaking of, borrowing will be enabled on some public facing apps, Outlook’s twitter says as much. Many regulat folks love to borrow just a couple hundred ust to pay a bill, rent, car repair, whatever and get an apr return!? Even if 0.5% RETURN, off a LOAN!? What? Nothing in my country does that, it’s all 10 to 50% pay more APR

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@haboussef, dynamic earn rate makes sense. We are in the process of putting together our data and analytics to help express the ideas more quantitatively. There is a off-shoot, VERY LOW probability scenario where borrow demand out-strips deposit. If that event does occur, a dynamic earn rate would increase it beyond 19.5% to drive additional deposits.

Therefore, it made sense to have things move in parallel. The veToken mechanic, that is something I am very on the fence … and leaning a more towards no right now. We still need to do additional analyses on borrowing behavior during liquidation events to understand if it would really help.

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Excellent points — I think ShareWizard is right to look at Anchor as a (an “Anchor”) component of a larger ecosystem (as it is now on the earn side) - both on the earn and borrow side — opening up more opportunities to do both (earn and borrow) via additional protocols/apps

I agree with this proposal very much. I think mature tokenomics should be able to grow with the TVL of the protocol. Looking forward to seeing this proposal officially voted on in Anchor.

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hey @Gnawkz

Can you guys at Terralytics check out my proposal over here: [Proposal] Borrower Rewards Staking for +10% borrowing APR

I think this can go well in conjunction with your proposal in terms of enabling higher yields for borrowers and boostraping both borrower and LP demand. Simple economics and a sound system with 3 months of test data backing it from
https://projectlarix.com

It’s one of my favourite lending protocols and honestly one of the most competetive offerings out there from a borrower’s perspective so I definitely think it’s worth taking a look into for modeling this proposal with.

One note of concern is aust fungibility and the risk framework of the deposit is completely redone. I think some veAnc proposals have had it where you vest your anchor for a payout of the remaining deposit yield to reach 20% apy. Not sure which is harder, redoing all of aust or integrating a yield payout for vested anchor but I don’t think dev is looking for messing around with aust more than adjusting parameters but they are focused on veanc from what I can tell.

When deposits, who receive the 19.5%, get a percentage in ANC, then and only then, the sell pressure of ANC token Will decrease and the Buy/demand pressure Will increase.

There has to be a correlation between the more than $12 Billions of UST and the ANC token price. Right now is inverse: as depósitos increase, ANC token price decrease. And that doesnt look good for the project essentially because if a project is good, the price of the token increases.

The price/value of a token is determinated by the futures incomes and benefits that will enter to the project.

Right now, seems like the project is only losing money.And it is. Reserves get lower and lower and more money goes out.

This scenario is not attractive for anyone. Even if it pays 19.5%. Even if asking for loan gives you 8% of ANC. Investors will think twice in putting their money if they see ANC token going to a downtrend.

Another thing: WE SHOULD CONSIDER TO LOWER ANC APR DISTRIBUTION FOR BORROWERS. A gradual reduction. Maybe 0.5% per month. Maybe less. But we must do it. As quick as they get ANC rewards, they just sell them.This strategy is used when you are the new kid on the block and nobody knows you. It’s ment to enter in a market and by offering better everything, even if it costs a lot of money, end with the competition. It’s called DUMPING and has existed for hundreds of years.

Ring Ring!! Anchor is already the biggest, better and the leader. We can and should stop it now.

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