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

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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Just to be sure,

In order to rebalance and make buying/demand pressure for $ANC tokens, there Will be 2 ways:

  1. UST Depositors who don’t have already 5% of the value in $ANC tokens to lock and start earning will receive the 19.5% APR divided in 75% USTs and 25% $ANCs until the 5% is reached. Then, the system will just keep adding the rest of APR in only USTs until the 19.5% completes.

Worst case scenario is: the price of $ANC will fall or keep flat since the beginning and the Depositor won’t care, since he is receiving 75% in USTs and free $ANCs and in the worst case scenario will receive 14.5% in USTs (that no one gives) and a bunch of $ANCs to sale as soon as he withdraws.

The problem: “Free $ANCs to be Sold ASAP and the price goes down again”

The best case scenario: Depositor will get impatient and will buy ASAP the required $ANCs in order to receive the full 19.5% APR.

WE HAVE TO THINK THAT THE WORST CASE SCENARIO WILL MOSTLY HAPPEN. AND FREE $ANCs FOR DEPOSITORS TOO (already free ANCs for borrowers, stakers, etc) NOT SUCH A GREAT IDEA.

  1. The second way, more secure and obligating the Depositor to buy that 5% in $ANCs in order to receive the 19.5% or don’t buy $ANCs but only receive the 14.5% is, for me, much more reliable and most likely will make the buying/demand pressure is needed.

I think the main issue with anchor Earn is there are lot of mercenary capital (aUst) that is just sitting in the wallet and getting 20% yield which does not provide any benefits to the terra ecosystem.

One simple way to fix this is to reduce the base rate to 15% or whatever number. and separately incentivize (5%) the Protocols/Platforms(smart contract ) which are built on top of aUst( Mirror, Alice etc).

Like how Mars provide a credit line to other smart contract like Mars Field , Protocol like Mirror , or Neo bank like Alice can request for this extra 5% incentive to Anchor earn, and if the use case is contributing to the growth of Terra ecosystem Anchor Earn smart contract can pay that extra 5% to those platform. In that way the basic composability of aUst remains intact and at the same time encourages more utility to be built on top of aUst.

this is a great objective, BUT not so sure about the way (implementation) to do it:

  • The propose implementation is basically giving 25% ANC to depositors.
    My concern with this:
  • This feel forced in a way like a token airdrop. What percentage does people really keep their airdrop token?
  • If fundamentally people does not want ANC token (because they don’t see any value of holding it, which is the case for now) … what makes you think once they are given 25% ANC token, they will keep it?

What probably makes more sense is a more simple concept:

  • If you hold ANC token, then you will get 20% yield otherwise is lower.

That’s a more simple value proposition for ANC token holder, I think.

These proposition has actually been proven at some extent on the CRO tokenomics, that’s basically saying:

  • IF YOU HOLD CRO TOKEN, YOUR AMAZON, NETFLIX, SPOTIFY WILL BE FREE.

Hope this helps.
Danny Iskandar

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my thoughts on the proposal:

Is it just me, or are there a lot of underwater ANC investors looking for ways to make a quick buck?

Instead of trying to create clever ways to pump ANC, focus on why people borrow in the first place. And not opinions. Data.

Has anyone polled existing borrowers to gain relevant insights into their motivations and concerns? Are mechanistic solutions to increase ANC investor returns drowning out other discussions that might actually yield useful solutions to stoking borrower growth?

I’ve seen hundreds of comments and posts discussing technical fixes to what is equally likely to be partially a behavioural issue.

Where are the PR campaigns targeting borrowers on other platforms? Are we really so drunk on the idea that code is law that we overlook fundamentally human aspects of borrowing and investing?

https://www.sciencedirect.com/topics/economics-econometrics-and-finance/behavioural-finance

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I believe also that giving 25% on ANCs is a really really reaaaally Bad idea.

So this proposal probably won’t get the support of major stakeholders. There is a big proposal from Jump capital coming on capital controls. This will probably garner most of the major staking holder’s support as they worked with major stakeholders and community members. It will require locking aUST up for greater returns. More to come out on this in the coming weeks.

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Serious? Many terra users mint their mAsset by aUST. If locked aust is required for high APY, it will push down mAsset supplyment and make incredible high premium much higher. Finally, it will stop flywheel of terra ecosystem. If team want to held aust staked proposal, please dm me. I will run away from terra first.

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I think you need to run away.

No need to accept the all proposal.

Can’t implement all proposal easily.

ve proposal can implement fastly, so team adopt the that proposal

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Hi Folks,

The Terralytics team created a video that highlights potential scenarios of how our proposal would impact ANC token pricing. Our fundamental hypothesis is that more valuable ANC Token will increase borrow demand by improving capital efficiency for borrowers. In essence, providing collateral to obtain UST + a valuable ANC token.

The link for the YouTube Video is here … Terralytics Anchor Proposal - Data Forecasting Simulations - YouTube
A previous YouTube video on Borrower statistics is here … Terralytics - Primer To Anchor Governance Proposal - YouTube

We will be sharing things on Medium in the future as well.

Thanks

Yes,

They want to AIRDROP ANCs to Depositors also.

Thanks, but no thanks.

The “free ANC far all” attitude is no good.

@daniskandar @victorsica The moment this proposal gets implemented we would “AUTOMATICALLY” have over $600 million in buyback pressure on the protocol. Again this is AUTOMATIC BUYs, not airdrops. This means if depositors were to sell their ANC they just would be selling it back to themselves.

The protocol would force everybody to buy the token around the clock/daily but everybody has to 1st want to sell and 2nd remember to sell.

But the buyback feature could also be implemented when you make a deposit 5% of that UST goes to buying ANC. We would be making a BIG mistake if we dismiss this proposal.

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I’m a major stakeholder and I would say if we dismiss this it would be a bad idea. I see people on here not understanding this proposal. “people on here talking about this proposal giving FREE ANC AIRDROPS”. :person_facepalming:

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