Suggestion: Short-term Enhancements for Anchor Protocol

Mechanism
21

I’m 100% against emergency protocol changes. It suggests that

  1. the team is unable to do its due diligence and proper testing of its code prior to release
  2. corners will be cut because it’s an emergency
  3. emergencies will/could cause other emergencies the emergency was supposed to fix

If you need an emergency vote on something you aren’t doing something right the first time. Why? I would rather you address the inadequacies of your existing system than rush fixes in that would be built on or amplify those inadequacies.

I don’t see it improving the protocol and it could lead to sloppiness and overall detrimental to the project.

22

I have around $20k on the platform, mostly in the ANC-UST LP Pool. My 2 USTcents:

  1. I hate the idea of an emergency protocol. The system should be designed to be antifragile enough to not need an emergency protocol. If an emergency protocol is required, it suggests to me that the system is running uncomfortably hot, and there’s an underlying misalignment of risks and rewards.

  2. I don’t understand why the ANC-UST LP incentives are so high right now (it was 40% for a while, now it’s 100%+). What was the logic of taking LP rewards from 40% to 105%? It doesn’t seem very “algorithmic,” and I liked the stability of your APY’s as opposed to Sushiswap and other platforms where the APY is pretty much a meaningless marketing gimmick. Don’t get me wrong, I love the fact that I am getting so much more issuance without the price dropping, but what was the purpose?

  3. As someone with a ton of tradfi experience and a modicum of crypto experience, I find the accumulation of different fees / rewards/ high issuance / buyback rate / etc. circular and confusing. You guys have a much better UI than most protocols. As we go from 2% global crypto to 20% crypto adoption, a comprehensible system in all aspects is really important to win market share. I feel like the accumulation of different fees, buybacks, etc. is adding complexity much faster than it’s adding utility, tho I don’t have a very good understanding of how all the parts of the system work.

  4. Where, exactly, is the ANC-UST Pool? Is it inside your Web app? Is it on a generic Terra station (since I can’t swap into ANC tokens on Anchor, it seems like I can only claim rewards or make UST deposits in the webapp.

  5. In the 100-105% ANC-USD LP APY, what is the split between distribution APY and fee APY? What was it when yields were at 40%? Did the transaction fee structure change?

  6. I think a lot of newer crypto users feel really gouged by fees, and your low fees are a precious competitive advantage. I’m against raising fees for things like buybacks, it is basically mortgaging a precious competitive advantage so that we can all enjoy a slightly higher ANC buyback; it’s short-termism. We should prioritize a low-friction, clean UX – they stay here partly for the low fees, and low fees incentivize lots of virtuous economic activity that isn’t viable at higher fee levels. Fees are like a drug, the marginal impact always feels low, but they are a very bad long-term substitute for genuine innovation and competitiveness.

Thanks.

23

Hi 4lex, I think I can add some comments to your question :slight_smile:

  1. I think the emergency protocol is a system to prepare any unexpected circumstance just in case, not to make people feel good. Why would you feel bad about preparing precaution measures ? I believe this is part of building antifragile protocol

  2. 125m of ANC-UST liquidity was withdrawn by big whale, lowering the total LP pool size which increased the LP incentives for remaining liquidity providers

  3. You provide liquidity to DEX, which is TerraSwap rn.

  4. APY you see from LP comes from inflationary incentives (= distribtuion) afaik. You can check trading fee and volume on Coinhall - Realtime price charts for the Terra blockchain

1 Like
24

Anchor definitely has to de-incentivize ANC-UST LP and allocate this emission to incentivize borrowers.
And please, stop air-dropping anc to luna stakers. Why anchor should incentive luna stakers? they’re not collateral providers. Anchor has to incentive collateral providers at most.

btw, I like the idea of making self-repaying loan.

We can use bANC as collateral and take

  1. staking yields from ANC, 2. distribution APR - to increase the collateral value, and lower the LTV at the same time.

And I’d like to hear devs thoughts on accepting LP as collateral ? I think this is what Mars protocol is doing, but why can’t anchor natively support this to increase reserve ?

1 Like
25

I just submitted this proposal about lowering the ANC voting deposit. Currently, Anchor has a higher deposit for submitting an onchain governance poll of 1000 ANC than both Mirror and Terra itself. Would love your thoughts @ryanology045.