The ANC-UST LP is better provisioned than what the protocol requires at this point, it is still important to the overall ecosystem. LP rewards are scheduled to end after March 17, and this cliff event will most likely cause liquidity flight from the ANC ecosystem, causing price volatility to the ANC token.
The borrower incentive pool is well provisioned for, but incentive levels are dependent on the price stability of the ANC token. Volatility in ANC price will hamper the protocol’s ability to support UST interest rates, which are ultimately supported by this mechanism.
This proposal is to redirect 1.25% of the 40% allocated borrower incentives to ANC-UST LP rewards for 6 more months of LP rewards at half the current rate. This will stabilise the ANC price by tapering instead of having a full cliff event and reduced ANC token price volatility.
The rationale of redirecting from the borrower incentive pool is because borrower incentive payments are directly dependent on ANC price, and so itself would benefit from lower ANC price volatility.
Lower LP rewards will help taper off the size of the ANC-UST LP, allowing it to fall to more manageable levels.