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

@ShareWizard , unfortunately I would not support the change. It comes back to our values on how we maintain an equal participation environment, especially for a de-centralized network.

Any solution where a portion of the earn yield is taken away from the original depositors because certain conditions are not met will always punish small wallets first and the hardest. These small wallets have the most difficulty when it comes to finding additional capital to fulfill any conditions, such as purchasing ANC tokens.

Imagine the Big Banks globally around the world. In the US, if your checking account does not hold a certain $ value, you are charged a maintenance fee. The proposed change that you recommend, even though it is with good intentions, mirror the same thing here with Big Banks. The people that have the most difficult time maintaining positive bank accounts, only get hit harder when they have to pay maintenance fees on top.

Our solution was designed specifically so that small and large wallets are treated equally. Therefore, we see this idea as only benefiting whales again. Whales will easily pony up for the 5% ANC, and hit the 20%. Thus transferring that remaining 4.875% to any other wallet except for the original depositor is not acceptable.

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Thanks for all your hard work putting this together. I can tell a lot of research went into this and a lot of these points make sense. However, context is everything; we have considered the bigger picture: that the majority of stakeholders seem to be moving their support towards the vc-ANC tokenomics model. Poll 18 didn’t listen to the community or the current developers expressing why this wasn’t in line and it failed really bad and polarized the community and I don’t want to see that happen again.

The current message that has come out of the most recent AMAs is that while the earn side can be explored for veANC model, the general consensus is that we need to get the dynamic anchor rate to vote first and the ve-ANC tokenomics deployed on the borrow side. Once we see how that goes, it would make sense to see how the community would feel about this current proposal if it was merged with ve-ANC toke model. We also have to consider there are a lot of protocol integrations on the earn side that this doesn’t work well for either.

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Appreciate your response @Gnawkz and again thanks for sharing your dedication and values for equal opportunity. Though this may be moot now as the model may be shifting to support the Ve-ANC structure, what I envisioned playing out were secondary protocols built on top of Anchor that would perpetually accumulate enough staked ANC to therefore return the 20% earn (or close to it…18-19% + their own governance token) in exchange for the users $UST liquidity.

Over time, I could imagine these protocols’ earn rates being more and more lucrative for the end-user…again as they seek to capture the liquidity and attention…in this hypothetical future I saw this as a win for small and large wallets alike…smaller wallets would have multiple competitive options to earn roughly 20% even WITHOUT having to hold any ANC themselves (as the protocols would be accumulating and competing for this to prepare for future scalability). Protocols can be built or adapted (i.e. White Whale) simply to cater to smaller wallets.
IMHO this solves 2 core issues.

  1. Buying demand for the ANC token since the core product is the 20% “anchor” yield and in order to participate, you or your protocol need 5% ANC staked.
  2. Drives more demand for borrowing on anchor platform again due to inherent value and possible price increase of ANC.
    Appreciate the discussion.
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I think this proposal is a good idea for platform and $ANC to grow together.

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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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