Great idea, locking anc for veANC and veANC for boost.
I’m all for it.
Few things i think worth mentioning
veANC locking for 4 years, so that borrower can earn up to 1.5x boost of distribution.
ANC distribution will end at year 4. And we are currently close to the end of year 1. Are we planning to extend it? If so, how?
Borrowers are the only source of revenue and they are the risk taker.
ANC yearly distribution for borrower incentive stays the same 100m/year. In my opinion, this could backfire and have the unintended consequences, like the loss of revenue from borrowers that do not wish to lock for 4years for obvious reason. “ANC borrower incentive distribution only last for another 3 year from now, why lock for 4 years?”
I agree with veANC lock and incentive for borrower. But is it possibe that we make it a little easier for them? Perhaps introducing less requirement.
- We have tons of easy depositor. Earning nice 20%.
For profit company doing easy business. Making fat margin. Offer 10% to user, while earning 20% from anchor. We have few example of it.
Can we actually introduce veANC boost for depositor?
I can guess, tampering with target rate is off limit.
But we can actually add boost on top of the target rate.
That boost is going to be paid for with UST and in my opinion, is in fixed percentage terms.
For example : add 2.5% If wallet have veANC worth at least 10% of the deposit amount. If target rate is 20%, for a wallet with 10K in deposit.
In one year, the wallet will earn $2000 (20%x10K) + $250 (2.5%x10K). Additional 12.5% (250/2000).
2.5% on top of 20% seems small.
However, i believe we can agree, that long term, target rate will be much lower.
If we have “fixed percentage” for boost. The lower the target rate goes, the bigger the impact will be.
In my previous example with 10K deposit, if we have target rate of 10%. The impact will be bigger.
1000 (target rate) + 250 (boost).
25% (250/1000) additional interest.
It will be even bigger impact for a for profit business fighting for profit margin.
When the times comes for lower target rate, it will most probably be in part of market cycle where mood is risk-off. Like we currently have now.
We could have for-profit companies actually fighting for veANC for bigger profit margin.
And this way, we can support ANC price and borrower incentive will stay relatively higher than if there is no buying support.
They are for profit business. Let them fight and compete against each other?
- Also worth mentioning. Borrower will only hold veANC because it makes them borrow cheaper, and even farming and earning more than the rate.
However, saver/depositor are in for the long haul. They will make better target for veANC.
There are projects that build on top of Anchor borrow, farming it. (Nexus, Neptune)
There are also projects and companies that build on top of anchor earn. (Glow, Sayve, Kash, WhiteWhale UST vaule, outlet, alice, just to name a few)
If the goal is Anchor wars. Saver/Depositor and borrower have different priorities.
Why not have those two group battle each other?