2/ tldr:
Mars = a decentralized credit protocol with volatile rates
Anchor = a Saving-as-a-Service (SaaS) protocol with predictable rates
Mars = a decentralized credit protocol with volatile rates
Anchor = a Saving-as-a-Service (SaaS) protocol with predictable rates
3/ As a savings protocol, Anchor is designed to achieve one overarching goal: making it incredibly easy to earn a relatively fixed rate on stablecoin deposits.
4/ As a decentralized credit protocol, Mars is designed with a different goal: enabling the borrowing and lending of virtually any Terra-based crypto.
5/ As mentioned above, Anchor's interest rates aim to be stable. This generates more predictable income for stablecoin depositors.
Mars' interest rates are volatile and based on market demand.
Mars' interest rates are volatile and based on market demand.
6/ The yields are different because they come from different places.
Anchor uses Proof of Stake (PoS) yield to help generate its fixed interest rates.
Anchor uses Proof of Stake (PoS) yield to help generate its fixed interest rates.
7/ Bc it only allows PoS assets as collateral for borrowing (assets like $bLUNA and $bETH), it is less dependent on utilization/demand for borrowing. That’s because it can use PoS validator rewards to target a stable yield for depositors, even when borrowing demand is low.
8/ Here’s how it works: Anchor accepts stablecoin deposits. Other users borrow those stablecoins by using yield-bearing assets like $LUNA and $ETH as collateral. The PoS yields earned by that collateral are then distributed to stablecoin depositors.
9/ Anchor describes this as a "risk-free rate" (similar to treasury bills in the real world).
Since PoS yields are relatively stable, you can use them as a way to enable yield-bearing savings accounts for depositors.
Since PoS yields are relatively stable, you can use them as a way to enable yield-bearing savings accounts for depositors.
10/ The design goal for Mars is different. It’s aimed to be a more generalized credit protocol for the entire ecosystem.
To that end, Mars is designed to accept a far broader range of collateral to borrow against.
To that end, Mars is designed to accept a far broader range of collateral to borrow against.
11/ Mars launched with support for depositing and borrowing $UST and $LUNA. However, governance has the ability to add additional assets that satisfy Mars' risk framework.
There is no requirement that any of those assets generate PoS returns.
There is no requirement that any of those assets generate PoS returns.
12/ Instead, Mars lenders receive returns purely from borrowers (including individuals and other protocols) who pay for the privilege of credit.
Because assets in Mars don't have fixed yields, Mars’ deposit rates are not stable. Instead they are driven by demand for borrowing.
Because assets in Mars don't have fixed yields, Mars’ deposit rates are not stable. Instead they are driven by demand for borrowing.
13/ The more demand there is to borrow a token, the higher its borrowing rates will be on Mars.
Currently, those rates are determined by a standard, 2-slope mathematical curve similar to Aave and Compound.
Currently, those rates are determined by a standard, 2-slope mathematical curve similar to Aave and Compound.
14/ After usage of the Mars Protocol stabilizes, governance may activate Mars’ unique dynamic rates, which use Control Theory to respond to actual market conditions.
15/ By allowing anyone, anywhere to deposit or borrow whatever assets they’d like, Mars will enable lending users to seek returns on a broader spectrum of assets than they currently can on Anchor.
16/ Mars is designed to enable attractive rates to lenders in part bc it allows smart contract systems to be borrowers, thus increasing overall borrowing demand.
17/ In fact, other protocols and smart contracts could be the single largest source of borrowing demand on Mars. This unique C2C lending is described below:
mars-protocol.medium.com
mars-protocol.medium.com
18/ Ultimately, Mars and Anchor don't compete.
They complement one another, and we could potentially see some interesting mash-ups of functionality across the protocols within the Fields of Mars.
They complement one another, and we could potentially see some interesting mash-ups of functionality across the protocols within the Fields of Mars.
19/ Anchor = predictable
Mars = versatile
Together, they dramatically expand the utility of all Terra-based assets.
Mars = versatile
Together, they dramatically expand the utility of all Terra-based assets.
20/ IMPORTANT – all financial terms above are metaphors
Mars and Anchor do not involve debt agreements; they consist of peer-to-peer software incentive systems
Please read the Mars disclaimers: mars-protocol.medium.com
Mars and Anchor do not involve debt agreements; they consist of peer-to-peer software incentive systems
Please read the Mars disclaimers: mars-protocol.medium.com
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