Whitelist cLUNA from Prism Protocol as an accepted collateral for Anchor Protocol. Similar to bLUNA, the staking yield from yLUNA can be directed to Anchor Protocol to increase the protocol revenue and to supplement the yield reserve of Anchor Protocol. This creates an alternative LUNA liquid staked derivative to be utilised as a collateral on Anchor.
The proposed max LTV is 60%.
Prism Protocol is a Terra native derivatives protocol that allows users to refract digital assets into two distinct parts: a yield component & principle component. This allows users to access the utility of its individual parts separately. Since Prism’s launch on the 1st February 2022, it has surpassed over $500mil TVL with over 6mil LUNA locked.
With the Earn deposits outpacing the Borrow demand, there is a pressing need for more collaterals to be accepted as collateral within Anchor. Liquid staked derivatives (LSDs) like bLUNA, bSOL, bATOM redirects the staking yield to Anchor to supplement its Earn interest. Auto-compounded LSDs like LunaX & stLUNA will not direct its staking yields to Anchor as the yield is auto-compounded back into the token.
The current staking APR yield for bLUNA is 6.67% whereas the staking APR yield from cLUNA is 7.54% (yLUNA Staking Base APR / (Price of yLUNA + pLUNA)). cLUNA has a higher staking yield from bLUNA since Prism Protocol’s validators are limited to a 5% commission charge on staking rewards versus an average commission of 8.5% on staking rewards from bLUNA’s validators. Additionally, genesis airdrops and ongoing airdrops for cLUNA can be claimed and directed back to Anchor to further increase its yield.
An additional benefit for having cLUNA as a whitelisted collateral is the increased utility of Prism assets. At anytime, the borrower can withdraw his or her cLUNA collateral from Anchor, and immediately refract it to participate in the yLUNA farm, staking or to be LPed. The increased utility allows cLUNA to be a rather flexible asset to the borrower while translating greater yield to Anchor.
Benefits for Anchor Protocol:
- Similar to bLuna, yLuna yield is directed to Anchor, albeit at a much higher APR rate + airdrops. Staking yield for cLUNA is 7.54% APR whereas bLuna yields 6.67% APR.
- Increasing diversity of validators and decentralising voting power of delegated LUNA.
- Increasing the number of accepted collaterals that will contribute to the yield reserve of the protocols rather than depending on auto-compounded LSD assets in the future.
Benefits for Anchor Borrowers:
- Provides an alternative collateral to borrow UST on Anchor
- cLUNA allows the borrowers more flexibility on how they manage their LTV positions while maintaining their ability to withdraw, refract, and participate immediately in various opportunities for pLUNA and yLUNA across the Terra ecosystem.
On a general note, currently all voting on staked LUNA delegation is managed by Lido, which does not have governance native to Terra. Users of bLUNA are not able to vote on Terra Governance Proposals whereas with Prism Protocol, pLUNA enables proxy governance and controls how the underlying LUNA votes, this decentralises the voting of LUNA staked with Prism.
Since cLUNA will be a new collateral to Anchor Protocol, I propose to have its max LTV set initially at 60%.
At present, the LP pool in Prismswap has over $7.44mil TVL, and should the proposal on Astroport to incentivise Astroport cLUNA-LUNA LP with ASTRO emissions is passed, the stableswap pool in Astroport will see approximately $17mil in TVL. (assuming ASTRO = $3.45)
CW20 cLUNA Token (Terra native): terra13zaagrrrxj47qjwczsczujlvnnntde7fdt0mau