A quick update of the current state of Anchor Protocol and the "holy" 19,5% APY.
With only $15M in the yield reserve, people are starting to get worried.
Let's take a look at the facts and what's next for Anchor:
/THREAD
1/18
With only $15M in the yield reserve, people are starting to get worried.
Let's take a look at the facts and what's next for Anchor:
/THREAD
1/18
First of all, the yield reserve is built for times like this.
If the yield reserve goes to zero, then Anchor Protocol will provide market rate.
ATM around 10% APY.
I've already written a detailed thread about this, you can check it out here:
2/
If the yield reserve goes to zero, then Anchor Protocol will provide market rate.
ATM around 10% APY.
I've already written a detailed thread about this, you can check it out here:
2/
The yield reserve is decreasing approx. $1,5M per day, and with $15M in the yield reserve it should go to zero within 10 days.
A hot topic these days is: "Will the yield reserve be refilled?"
I think it will, let's look at why:
3/
A hot topic these days is: "Will the yield reserve be refilled?"
I think it will, let's look at why:
3/
1) Anchor Protocol faced the same issue in the summer of 2021.
At that time they created a $70M yield reserve as a one-time solution to sustain the 19,5% APY until Anchor Protocol could be sustainable in itself.
This yield reserve has worked perfectly for...
4/
At that time they created a $70M yield reserve as a one-time solution to sustain the 19,5% APY until Anchor Protocol could be sustainable in itself.
This yield reserve has worked perfectly for...
4/
over 6 months with good help from a bullish market.
In order for Anchor and Terra to continue to grow, they would buy themselves some more time by refilling the reserve.
Some people say that the worst case is that Anchor goes over to a market rate.
5/
In order for Anchor and Terra to continue to grow, they would buy themselves some more time by refilling the reserve.
Some people say that the worst case is that Anchor goes over to a market rate.
5/
However, I don't think providing market rate will be good enough for investors to choose Anchor Protocol over other options.
Why?
- There are several options to choose from for stablecoins around 10% APY.
- $USDT and $USDC has a longer track record...
6/
Why?
- There are several options to choose from for stablecoins around 10% APY.
- $USDT and $USDC has a longer track record...
6/
and are generally assumed as safer options. If they really are a safer option is another story though.
Not refilling the yield reserve would mean that they would slow the growth of the Terra ecosystem IMO.
7/
Not refilling the yield reserve would mean that they would slow the growth of the Terra ecosystem IMO.
7/
2) @Stablekwon tweeted this:
A solid hint that the CEO of Terra doesn't have any plans of letting Anchor Protocol's yield reserve go to zero.
8/
A solid hint that the CEO of Terra doesn't have any plans of letting Anchor Protocol's yield reserve go to zero.
8/
3) A proposal has been made from the Luna Foundation Guard (LFG) to refill @anchor_protocol's yield reserve by $450M.
Having $450m in the yield reserve allows Anchor to sustain its 19-20% APY over the next year.
cont.
9/
Having $450m in the yield reserve allows Anchor to sustain its 19-20% APY over the next year.
cont.
9/
Thereafter, in the long run, Anchor achieves mass adoption and becomes self-sustainable:
10/
10/
4) Also, @Nexo has launched a campaign where they give 20% APY on $UST until March 1st.
I don't think they would have launched this campaign if Terra didn't have a plan for Anchor Protocol.
11/
I don't think they would have launched this campaign if Terra didn't have a plan for Anchor Protocol.
11/
5) A refill of the yield reserve would mean more time to work out a sustainable model for Anchor:
-More bAssets coming to Terra (bSOL/bATOM confirmed, and I'm sure there will be more)
This will increase the collateral = more staking rewards and more borrow = more income
12/
-More bAssets coming to Terra (bSOL/bATOM confirmed, and I'm sure there will be more)
This will increase the collateral = more staking rewards and more borrow = more income
12/
-Make a use-case for the $ANC-token in Anchor Protocol. Eg. if you want 19.5% interest you have to have X amount of $ANC in your wallet. If you don't have it, you get 15% APY.
-V2 model: can add several bAssets (eg. $SOL or $AVAX). More income and higher staking rewards
13/
-V2 model: can add several bAssets (eg. $SOL or $AVAX). More income and higher staking rewards
13/
If the Anchor rate is lowered, some people will flee from $UST to other opportunities --> Reduce mcap of UST and increase Luna supply = reduced Luna price
It's hard to say if this will happen to an extended degree or not, but it's one way to look at it
14/
It's hard to say if this will happen to an extended degree or not, but it's one way to look at it
14/
Think of Anchor Protocol as a startup.
In my opinion, there is no way they would give up this project now, and I think the team knows very well that if they want more users and to grow faster they need to sustain the 19,5%.
15/
In my opinion, there is no way they would give up this project now, and I think the team knows very well that if they want more users and to grow faster they need to sustain the 19,5%.
15/
I do think Anchor Protocol will continue to grow no matter what, but an upfront cost of $100-450M seems small compared to the long-term benefits of faster growth, more users.
/16
/16
They could continue to have almost zero marketing because their products are so good that no one can compete with them (word of mouth).
/17
/17
Let's just end this thread with a poll.
Would you stay in Anchor Protocol if the rate was lowered to a variable interest rate, eg. 10% APY on average?
/18
Would you stay in Anchor Protocol if the rate was lowered to a variable interest rate, eg. 10% APY on average?
/18
If you liked this thread, I would love it if you could retweet the first tweet
👇
/19
👇
/19
Loading suggestions...