This protocol needs to come to terms with reality

This is a lie and it’s wrong. People won’t leave simply because anchor cant keep its unsustainable APY at 19.5%. A 11% it’s still and incredibly attractive APY…

Dropping the borrow rate and ensuring a 100% guaranteed subsidy with anchor incentives would actually lead to crazy amounts of borrowing. Do you want to take a guess at what happens when people want to borrow a LOT?
I dont care if incentives are expected to last for 3 years if they are not being properly used…

This is also wrong because you are assuming that depositers are the only users of this platform. This is the very reason why borrowing is not increasing. Borrowers are simply not being taken into account and are not being ensured an attractive borrowing proposition. SPECIALLY when they are the ones that are actually taking a lot of risk, paying high APRs, and resigning their opportunity to recieve their staking rewards! It’s insane and if mars starts offering LUNAx borrowers will just leave anchor for good…

And that’s how it should be. We want serious investors who really have a lot of their money at stake being the ones that make the best decisions for their own investment. Because if their money is at stake either they make the right decisions or they lose money.

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I would leave if dropped down to 11%, it’s too easy to get a yield like that in crypto.

Yeah I was just referring to only depositors as users in my last post.

You are forgetting it’s about Net APR, which at this time is 2.3% cost to borrow. Which is competitive. Looking at the borrow rate right now without taking into account incentives then yeah it looks super high. It’s about Net APR.

And I wasn’t arguing against the fact that high cost of governance is bad. I think it’s good. The quote you had is taking out of context what I was saying. Which was having a gated yield for depositers.

Yeah I’m gonna leave this thread. You getting real hostile.

Well good for you if you would leave. Anchor provides convenience, if you are a farmer looking for the absolutely best rate good for you. I dont think most people are like that.

Plus decreasing the borrow APR actually would lead to a much higher sustainable APY given that more people would be incentivized to borrow leading to an increase in funds payed to depositers…

Also you are arguing this out of pure WHIM without realizing the current apy is simply not sustainable. There is nothing you can do other that suck it up and realizing a 19% is not longer possible. This is the very essence of this thread.

The net APR means nothing when you have to speculate that those tokens will not constantly dump and make you have to pay the price of being forced to hold an extra volatile token. I would add at least a 5% MINIMUM to that of the current borrow rate and thats assuming the market doesnt continue dumping. The high APR actually eats into your collateral and forces you to buy a token which you then have to sell to cover the very HIGH APR you are being charged… It’s inconvenient.
Its much nicer to recieve a small % of a token as a reward for having used the protocol (thats marketing being used well) than to use that reward to finance an entire protocol, it’s absurd and unsustainable.

Borrowers are the ones that give life to this protocol, they risk liquidations, resign their staking rewards, and finance depositors APYs by paying high borrow rates.

If you want high deposit APYs you should take good care of borrowers. And by good I mean exceptionally good. This also implies using the yield reserve to repay for the oracle bug that screwed a LOT of people and discourages borrowing…


Some people leaving deposit if the APY goes down is an expected effect and also a good thing (for now). Currently there’s way too many people depositing, because the product is literally too good to be true. Lowering the APY would doubly-decrease the pressure on Anchor by reducing cost of paying to depositors and total value locked on deposit

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I actually support a lot of mariano’s comments.

I had been beating around the 20% apy earn myself but I think it makes sense to come to terms with reality sooner than later…

The way the tokenomics are working out is unsustainable. We are better off paying depositors in anchor rewards to bump it up to 20% apy and lower the borrowing rate to 6%. That will tighten up the yield reserve and still give depositors their garunteed 20%.

Actually that’s creative solution to pay depositors in ANC if lowering Earn yield. Then can reduce borrowing rate, but also reduce borrowing incentives.

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There are several points that need improvement, but I do believe we can reach a sustainable 19-20% APY over time…

  1. Right now borrowing isn’t attractive or fair, bETH providers get the same benefit while providing less yield, soon bATOM and bOSMO or whatever is coming, they all will have different yields and to put everything under the same basket is easy, but unfair, and will lead to subpar utilization. However this is something that can be fixed…

  2. Also I do believe the current incentives formula isn’t doing what it is supposed to do, to attract enough yield to sustain the APY, if the reserve is being drained the incentives should be net positive, not negative, and I believe this is due to the previous point and some manual values that haven’t been tweaked (target utilization ratio is one that comes to mind).

  3. The idle UST should be used in safe and unlocked strats, insured if possible and on whitelisted protocols, to provide even more yield to the Anchor protocol, right now Terra native options don’t exist but cross chain ones do, Curve pools on Ethereum/Fantom, Beethoven.x on Fantom, etc… Once Vertex Protocol launches, which could take a while, we should have a pretty good Terra native option.
    Astroport could also launch USDC and USDT pools, to allow for easy swaps on Terra, Anchor could be a liquidity provider with little to no risk, specially if we get Ozone or some other provider to insure the capital.

We may be going through a suboptimal period, but don’t lose hope.


Sorry but no, you cannot.

This isn’t traditional finance, this is DeFi. DeFi, unlike traditional finance is borderless. Anybody can get access to a loan and bridge it to another platform for profit in a matter of seconds. Add that to the fact that you can tokenize absolutely anything and continuously leverage these tokens and you have an EXTREMELY competitive space. And the abracadabra DegenBox is a testament to that.

In DeFi you can’t put maximum deposit limits because anybody can have an infinite number of wallets. You also cant set up time locks because it is extremely easy to create yield bearing tokens that can continue to be leveraged and exploited for maximum profits.

DeFi is and will forever be and extremely competitive space. There is not getting around that.

Going cross chain and adding other stakable tokens will simply attract more borrowers AND DEPOSITORS in the same divergent ratio we are currently seeing.

The current incentives formula is wrecked. But the problems lays in it’s very essence which is an attempt to keep an unsustainable system afloat. Borrowers cant be charged 16% APR with the excuse that they are being payed ANC rewards (which by the way is useless for almost everybody) and that their net APR is much smaller. That APR has been set up so high not because of demand but because it wants to finance depositors absurdly APYs, which by the way, dont benefit borrowers directly, In fact it’s much more bothersome.

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For someone that acknowledges that the space is massive you sure love to talk in absolutes… The current model is unsustainable, I didn’t argue against that, but there are ways to generate more revenue for the protocol and therefore help us go towards a future that the APY may be sustainable.

You’re doing no one a service if all you want to do is to keep shouting “the end is near!!”, the space is competitve feel free to shop around.


First of all i’m not here to have an argument. I’m here to discuss the elephant in the room that everybody here seems to ignore and pray it goes away on it’s own.

Nobody here seems to wants to accept the fact that the deposit APY has to go down, either because they themselves are depositors or because they simply didn’t sat down to do simple math…

I’m not here to talk in absolutes. But it’s absurd to see proposals without a single logical proyection into the future.

Yeah, sure. There are also a TON of ways to continue leveraging and re leveraging those yields. And believe me people are going to use a LOT of leverage if it’s worth it. A higher APY won’t be sustainable because other platforms will continue to suck the yield out of the protocol.

Abracadabra is one example of a money market that sucks the yield out of Anchor, and is a platform that came here to stay.

So you tell me how it is possible to keep a 20% APY sustainable. Because all I can see is that market forces will make it go down inevitably until it finds equilibrium…

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You have failed to grasp what Anchor is. It is a bootstrapping product to grow UST and the Terra ecosystem. It isn’t designed to be anything else.

If TFL decide they want to retain 20% in Earn for another 1-3 years then they can and will do it. They are targeting a UST marketcap of $100 Billion and they will do what it takes. If they want to stop subsidizing and drop rates then that target isn’t happening, simple as that.

They have facilitated the degen box to the tune of $1.4 Billion. Do you really think they have gone into this blindly? If others want to copy Abracadabra, they need to source the UST liquidity in vast quantities.

Forget all your frenzied paranoid ideas about sustainability this or that and let them us what they are planning to do. You can now pipe down and relax.


We shouldnt be basing this around the idea that TFL has set up a degen ponzi scheme that doesnt have any merit or do anything for us as stakeholders.

The title of this discussion is comming to terms with reality and mariano has brought up good points and we have brought forth good proposals for coming to stability. Most if not all (of the good ones) involve reducing the Earn deposit rate sooner than later.

if you look at the charts a fair chunk of us borrowers have deleveraged or liquidated off protocol for various reasons. Most of which being we’re getting the s**t end of the stick in terms of our borrowing costs and utilization ability and additional risk.

On a positive note Anchor is addressing the Oracle bug that led to undue liquidations so that should be a plus to restoring some faith and good will within the community and protocol.

Way I see it now is as soon as this deposit apy issue is resolved and we have a long term solution around future oracle price risks I can consider it safe to borrow from here again. I would imagine the borrowing rate would be able to sustain around 0 again and the sell pressure would lower on ANC as less rewards would be needed to sustain the borrow APR. This makes the offer appealing for borrowers again as right now I would have been stuck given how quickly ANC price is dropping and rates are rising.

Lot’s of good and little bad for dropping the rate. Fed is looking at between 4-8 rate hikes plus quantatative tightening that would have roughly equal impact to 4 more rate hikes.

Thats a 3% jump on the base interest rate on cash. Deposit rates on USD stablecoins right now is roughly 2.7-6% variable so we can expect another 3% to top it to 5.7-9% rates for the sustainable future.

That’s ontop of Anchor’s ability to leverage the bond yield which I think someone said was another 5% so anchor can realistically run deposit rates of 11-14% which isn’t too far off from 20% but more realistic.

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Has anyone considered modifying the ETHANC deposit rates from 19.5% to 13%? That would slow the bleeding significantly while also maintaining the degenbox yield rates at a level that will make degenboxers stick with the strategy.

There needs to be major changes. At this point, it’s time for LUNAtics to beg our Supreme Leader, Dosus, Lord of the blockchain, Master of the stable coin, Deity of the Cosmos, Savior of the Moon to save us for our sins once again. Anchor can be fixed, but it’s unlikely to happen overnight. We need an injection of capital to the yield reserve or risk some crazy crazy crazy scary price action in LUNA near the end of February.

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Not a bad idea but I would go one step further.

We should limit all inbound inflow via ETHAnchor to prevent UST being cycled back in.

This in turn will nerf the degenbox and allow funds to flow back out as it searches for a better yield elsewhere. They will still be getting 16%-ish being sat there and gas fees are prohibitive.

If it breaks the Abracadabra leverage system then that’s their issue to address with their users.

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Differentiating the rate for deposits via ETH and any future other chains (half of native Terra rate or so) makes a lot of sense. Among other things driving more deposits via native Terra, helping LUNA, not to mention better security and control. That, and stopping the leeching now done via ETH. Hopefully over native Terra such abuse can be avoided algorithmically (ie, not allow looping).

Why not simply lower deposit rates to 13% across the entire platform? Why discriminate one depositor from another? Why do ETHAnchor depositors deserve to be mistreated? What have They done wrong?

This adds unnecessary complexity and thus makes the system more vulnerable to hacks.
Plus it doesn’t even solve the underlying issue which is unsustainability!


This isnt what defi is about… Again, it adds unnecessary complexity, discriminates one depositor from another (as if one did wrong and the other right) and still has the exact same end as lowering the deposit APY across the entire platform.

@Real1 Nobody is abusing anything. ETH depositors are simply profiting from a market imbalance. If it is cheaper to borrow than it is to deposit people will leverage such a thing until it isn’t profitable anymore.

This idea that differentianting deposits via ETH actually help luna makes no sense at all… People will still find another way to continue leveraging the system, and it will also add unnecesary complexity making the system more vulnerable.

The solution is simple lower the deposit APYs and borrow APRs.

That unless TFL has a very smart reason to pour funds into the yield reserve keeping this 19.5% APY stable for a few more months,. But I don’t see why one would do such a thing.


Why? Because obviously there’s no reason anyone will move capital into UST and across to the Terra Eco for 8-10% APY. People can get those rates from mainstream de-fi providers like Nexo,, Blockfi and such using USDC, some with insurance included.

What’s the incentive to come over here? What you’re suggesting is going to cut off growth at it’s knees and destroy the Terra ecosystem before it even gets going.

Anchor can provide higher returns ideal for growing out UST and the Terra ecosystem if the right choices are made. But it needs to look a whole lot different to what it looks like right now.


Hopefully it breaks the Abracadabra leverage system. This would be a feature not a bug.

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If TFL decide they want to retain 20% in Earn for another 1-3 years then they can and will do it. They are targeting a UST marketcap of $100 Billion and they will do what it takes. If they want to stop subsidizing and drop rates then that target isn’t happening, simple as that.

You talk like this is all part of TFL’s plan, but it was already confirmed that TFL doesn’t have much say in what the APY for Anchor is and it’s on the other stakeholders hands, like bitn8 mentioned in another thread:

Just to be clear, TFL is only one stakeholder in Anchor and not a major one, Hashed, Delphi etc are also big independent stakeholders just to name a few of many. So again, to be clear, no matter what TFL’s mandate, Anchor still has governance that is controlled by more than just one party.

Sadly, it’s hard to get anything passed and I have to try really hard to get people to vote. If TFL controlled everything it would make my job on here much easier…

These words are a bit concerning to me, because it seems like because of inaction and greed from stakeholders they might run Anchor to the ground if nothing changes

Why would we have such a low APY? The current sustainable APY sits a around 14% .
I think that the question we should be asking though is how to get anchor to offer a better service than those platforms though… Those platforms are centralized with their own risks, plus they filter a lot of users by requiring things like KYC or not allowing certain countries to access their platform

The incentive to come over here would be that anchor could still be providing one of the best stable, sustainable & predictable APYs of all DeFi. I dont know of any platform that has been able to offer such a consistent long term 19.5% (or 14% if it eventually gets lowered) deposit APY like anchor has been able to pull off for the past months…

I dont see how lowering the apr to 14% would cut off growth if it is stil a GREAT apy. In my eyes filling the yield reserve without a clear short to medium <term roadmap for anchor would be simply postponing the unsustainability problem. I dont really see how going cross chain would suddenly make a 19.5% sustainable…

I dont really understand how your proposals of a full reserve banking would really solve anchors unsustainability. Plus you would still have leveraged depositors sucking out your precious deposit APY thus forcing it to go down one way or another. As i have said numerous times, Defi unlike centralized platforms or traditional finance is borderless, this makes having exclusive & sustainable offers much more challenging if not impossible long term