Hello and welcome to The Ether. Today’s Wednesday, December 22nd 2021. This is the Anchor AMA hosted by danku, Ryan and a bunch of other friends. There was a bunch of technical difficulties. so if you hear weird cuts it’s because Twitter apparently did not want them doing this Space. So we fixed it as best we could. Let’s take a listen.
Your test is working, mister.
Thank you, Mr. danku.
How are you?
I’m doing very well. It is a bright freezing… Well, it’s actually not freezing. It’s even colder than freezing. It’s like -14 where I am, so…
Well, -14 in which way?
Oh, there you go.
Yeah, it’s Celsius. It is 6 Fahrenheit.
That’s really cold. I mean, it’s cold for me over here as well in Germany, but it’s at round zero, so…
Not even close.
Yeah, this is actually warm for Minnesota. It’s surprisingly warm at this time of year. But anyways.
Why do you do it in Celsius? Or is it just that you know that I’m from Germany, and that’s why you recalculated? [chuckle]
I’m originally from Australia, so I think in Celsius. And I try to pretend that not everyone’s American, and not everyone knows American ways. I still haven’t fully converted to the, “We are one world under America.” And I should stop that before I start getting into trouble with other people.
Celsius… Even as an American, Celsius just makes more sense, right? Zero is freezing. [chuckle]
Look, next, you’re going to say that miles are a bad way of doing things as well, and use metrics system.
[chuckle] But no, it was cold here in Mexico this morning, compared to what it normally is. It was like 15 degrees, which is pretty cold for down here.
Yeah, tell me more… bitN8 is muted for me. I have problems hearing him.
Yeah. Well, there was one guy we have, Cain, who was… He might be on on here sometime. He was complaining that it was gonna be hitting 45 on Christmas time. So welcome to Western Australia.
There you go. Mr. Ryan is also joining us, right?
Ryan Park 3:06
We got Zion on, awesome, what a All Star panel. So we’re just waiting for RyanLion, who hopefully will hop on soon.
If he posting gifs again. Do we hit another all time high? I think he’s just, I don’t know, pre-scheduling.
He might be lost in the charts right now.
I’m sorry. Something with the internet is wrong. I’ll be right back.
I think we got RyanLion on now. It should be…
Good morning, good afternoon, gentlemen.
There he is.
We’re just thinking about if you did pre-schedule, now, a few tweets Ryan, if you have the juice to be focused here.
Yeah, it’s been a crazy couple of days, eh? What a great couple of days. I’m running out of gifs, so if anyone on this call wants to make me any special gifs, please do feel free to send them over.
I thought you just reuse that Southpark one all the time, but…
It can get a bit much in the timeline, there, if it’s several times a day.
Hey, Brian, can we commissioned somebody for LUNA $100?
I know. We need some… Honestly, people need to be drumming up some new creativity. $100, come on, it’s been a long time coming, and we really… They’ve got their pockets full now. So they should be able to sit back and really be creative here.
Is CryptoPB in here? Crypto PB, is he in here? I don’t know. I don’t see him because he needs to come up with one of those great videos again, right, with the Pump It Up. But then a special version for the $100, that would be amazing. Maybe he’s doing something.
I think he’s been working on something but maybe it snuck up on him a little bit quicker than he expected.
Problems right. First world problems, I guess.
Well, I think maybe it’s about time to kick it off. RyanLion and danku, I just want to thank you guys for hosting our third annual Anchor AMA, it’s lovely to have you both here. Such great hosts, such great community members. And like I said, what an exciting time to be doing this with LUNA teetering right at that $100 level.
Wild times. And thank you again for the invitation to hosting this one here. Last time, I had a feeling it was very much danku focused in terms of hosting. So Mr. Ryan, I’m more than happy to, for the first time, co-host something with you. So give you, here, the first steps to feel free to hosting it.
I think I think we can just riff off of each other, danku, that’s all good. I don’t have the host privilege here. So I can’t see who’s queued up to ask questions.
Oh, you’re right.
So. you might have to lead from that perspective. But, I was on the last call that you and Joe hosted. And it’s a real privilege to be up here with all the guys from Anchor. Similar to yourself, it’s the first… One of the first apps and one of the apps that really dragged me into the Terra ecosystem. And it’s a real privilege to be here with everyone today.
There you go. So yeah, I’m putting people up here. We have lil jj in here. And Danny, I see Danny as a speaker, because jj is still connecting. So Danny, if you can hear us and unmute. Feel free to go.
Hi, guys. I hope everyone’s well, and congratulations on $95, $97 even. But my question is, I guess quite simple and probably quite an old one that you’ve heard quite a lot. But my simple question is, what happens when the deposits from Anchor exceed the borrowed amount? So is there like some sort of reserves? I’ve heard about Mars Protocol being a protocol that might help with this, but I just want some more clarification, as I’m trying to get some sort of big boomers on board. So obviously, they’d like that clarification too. My second question is…
Are you talking more about the yield reserve here? I just wanna make sure.
Yeah, yeah. So yeah, the yield reserve, basically. So what happens when the depositors exceed the amount of yield reserve that is available? Yeah, that’s simply my question.
Cool. Who wants to take it? Nate or Ryan? I think we lost Nate?
No, I think… Ryan, you want to talk about that? I mean, it probably goes to the mechanics of the system.
Ryan Park 7:34
Yeah. So, I guess the question is related to the recent droppings in the yield reserve. So before all of this, I think it’s very worth noting, if you make the calculations, if you do the calculations based on current metrics and everything, which are visible on Dashboard. So Anchor is… Even not accounting for the subsidies, Anchor is currently able to support just from the borrowing demand, and the staking rewards it gets from the bAssets, bLUNA and bETH collaterals, it’s able to support a 17%-18% deposit APY. Which means there’s only a 2% or 3% difference target, compared to the threshold deposit APY of 19.5%. So I believe this difference, although I cannot say for sure, it’s really up to market dynamics, but with the addition of a couple of new collaterals, this borrowing demand that has been missing, can definitely be supplemented. I think we lost Nate.
Yeah, we lost Nate. One more question, Ryan, that you can maybe elaborate because I think Danny’s question is good in terms of… And if you’re just onboarding new here on Anchor in general, and in Terra. Can you elaborate on, let’s say today, the yield reserve would be zero, right, I think you hinted at this already. But what would be the APY? I think this is very important also to talk about.
Ryan Park 9:06
Oh, with current metrics, very simple. It will be around 17%-18%.
Yeah, and that’s exactly, right. This is a good point. I don’t know, Mr. RyanLion, if you want to also give your two cents as a retail user yourself, that for me was really an eye opener, the terms of when I understood, “Okay, even if we hit zero, it’s still far beyond two digit APY,” which is still outperforming probably any other stableyield. I don’t know if you have any insights from your perspective, Ryan? And Danny, if it makes sense for you?
Yeah I think because there’s an expectation, right, that we’re not going to hold at 19.5% forever. So I think as long as we can hold that, the better. And there are some conversations around, I’m sure some people will come on to but utilizing the yield reserve for other things, I think the yield reserve, the longer we can sustain it, the better. And it’s absolutely fundamental to the success of Anchor. But as you say, if we’re still able to maintain whether that be 16%, 17%, 18%, without the yield reserve, I think that’s pretty, pretty positive from my perspective.
Danny, you had a second question?
No, no. So just to clarify, so like 16%, 17% will be held obviously through the bonded and the staked LUNA that you’ve got, so that’s sort of like a guarantee, and then the yield reserve is just the extra 2% on top. Is that correct?
Based on the current setup, that’s correct. Which, of course, could also… I mean, if it outperforms the 19.5%, it adds to the yield reserve, which happened in the last weeks, based on what I’ve seen. But feel free also, Ryan and Nate, or Ian to add there, but that would be the case. Yes.
Yeah. Just making sure you guys, can you hear me now? That was a little bit of tech…
Cool, yeah. And so what I was saying, I don’t know if you’ve heard it, there’s a target utilization rate too, right. So that it tries to incentivize more borrowing when deposits get higher. So that’s something to consider too. There’s a whole mechanism behind all of this. And there’s a lot of fear out there right now about what’s happening with the reserve. And I think it’s very, very… You really need to understand that there’s a lot of thought behind this. And it’s already been covered pretty clearly that we’re gonna see this continue to work correctly.
Great, cool. Danny, thanks so much for your question. I’m not sure who’s next in line, I believe it might be Jcrypto. J, do you want to come in with the question?
Thanks for having me.
We’ll move on to Anthony. I think he’s next in line.
Anthony R. 11:44
Yes, thank you. There are a lot of, I think, options for depositors on Anchor to ensure their, their deposits, and you get charged anywhere from 2%-6%, up to 7% of your deposit for insurance, smart contract insurance, and UST peg insurance. My question is, I mean, obviously, if you want to be prudent, you would buy into that insurance, but for those who don’t, who are not willing to or don’t want to pay up that extra 5%, 6% That would eat into your interest profit, right. Does Anchor have any sort of contingency plan for… In case any black swan event happens? Are there any contingency plans for making it up to the depositors or borrowers?
No, currently, at this point, there’s not. So it’s kind of, buyer beware, in that sense. Really, you’re putting your faith in the smart contracts, just like any other DeFi protocol out there. That said, there are some… Ozone, which is now become part of Risk Harbor. And there are some plans that are moving forward that hopefully will be released sometime within the New Year. That should be… It should look a lot better for helping to protect borrowers, or helping to protect people on the deposit side.
Cool. Thank you, Mister. Let’s try again with Jcrypto. Mr. Jcrypto. You have a good chance. Ryan, you want to count him out?
I’m not sure about this guy. I think he put a pinned tweet in the spaces, which was relating to an NFT project. So I think he needs to be removed.
Let’s remove him. Cool.
Next up, I think we’ve got ENT.ust. Do you wanna come up with your question?
My question, basically, is if we leave the reserve yield outside of it, and basically the distribution APR, how much can Anchor sustain just from the borrow? So just purely the productive assets that are employed currently?
Can you reframe that a little bit? Just so I’m 100% clear on what you’re asking there.
Okay. My point is, if we leave out the distribution APR and the yield reserve, how much APR can Anchor actually sustain? Basically, just from the staking of bETH and bLUNA.
I think Ryan mentioned earlier in the answer in our previous question that it was around 17%, if I’m not mistaken.
Yeah, that’s correct. We, yeah, we just covered that for a second, right.
Oh, sorry. Then I might have misunderstood what the question was, so I didn’t… I heard this 17% thing. Okay, so that’s just purely from the staking rewards from the assets provided, right?
Correct. The way it works is there’s a utilization ratio that incentivizes borrow side to match the deposit side.
Ryan Park 15:06
Well, if you’re referring solely about the staking rewards and nothing about the borrowing interest, which also takes up a significant portion. Well, even if that were to be removed, it will still be around 10%, just making quick calculations.
Yeah. Okay. Sorry. Last thing, and I’ll let somebody else. Is there any Google Sheets about this? I actually tweeted earlier, and if not, probably, I’ll try to make one but I don’t have all the aspects about it. Or any sort of analytics regarding this? Like, pure numbers regarding the generation fees, and all that.
So there’s docs, which you can go to when you go to Anchor, and you can go into the docs that talk about how this stuff works. Really, really great stuff to read through. And I’ve been intimate with Anchor for a while, and I still reference it myself, not gonna lie. There’s just a lot of moving parts here. And we’re also… A little bit of cool stuff we’re doing, we’re working with Flipside to hopefully get some more data to create maybe a more analytics based page so that we can see some of this data more in real time.
I was gonna say, Flipside Crypto is probably a good place to go if you want to get access to on-chain data. And people have already built out queries around stuff like the yield reserve and how that’s progressing over time. So that might be a good place to check out, ENT.
Okay, thanks. I’ll leave… I’ll let you move on. Talk to you later.
Cool. Thanks for your question. I think we’ve got David, next up. David, do you want to come in with your question?
Hey, guys, thanks for taking my question. Sorry to keep asking about the yield reserve, but to maybe take it one level deeper, it sounds like a lot of the assumptions right now are based on the deposit of productive assets like bETH, and bLUNA, and potentially bSOL and so on. One thread that I’ve seen lately is like with the MIM-UST partnership, my understanding is that because there’s so much leverage going on, it’s a bunch of UST coming in that’s going into deposit, but there’s no corresponding productive assets to support it. So my understanding, and let me know if it’s wrong, is that it’s a bunch of UST coming in, that’s getting paid interest, but there’s nothing supporting the yield reserve. Is that understanding correct? And how does that work if MIM continues to take off, and there’s just more UST coming into the Anchor? Thanks.
I mean, yeah, you’re understanding that partially correct, I would say, and fundamentally, yes, the mechanics are you need deposits to be matched with borrow?
Did you guys lose Nate? Can you guys hear him? I can’t hear him for some reason.
Speaker 1 17:55
I also can’t hear him.
No. Same for me. We lost
Is there anyone else on the Anchor side who can come in on that question? Ryan, or Ian?
Ryan Park 18:05
Yeah, just checking on Nate. Right, with the recent MIM-UST thing, and then a bunch of UST deposits flowing in. Yes, as Nate said, it’s partially correct. But there are other things to consider. And starting with the correct parts, I’ll say, yeah, the ends don’t meet as of right now, where the UST that comes in doesn’t really contribute to the yield that’s being generated and given out. But other thing to consider is, the protocol itself is not just static. There’ll be constant improvements submitted from the community and they will be improved… Used to improve the core protocol. And now that people realize that, now that, I think, everyone in the committee realizes there are better stuff to be… Potentially better mechanisms to be implemented, especially regarding this endstop meeting issue. I believe, I have like…
I mean, Jack Dorsey is not that big on Web 3.0, right? Probably he was listening to this Spaces here and he said, “No, come on, 20% on a stablecoin? Not possible,” and he shut it down.
Yeah, some of the other DeFi [chuckle] lending and savings protocols are trying to shut us down. [chuckle]
Yeah, they hacked the Space. I agree.
I think we’ll wait a little bit for some more people to trickle in. Was I kicked… Did anyone get any of what I was saying about Abracadabra or were we all kind of…
No. You were off.
Alright, so I think we’ll address that when we get some more people back on here
I think, yeah, I think Ryan was in the middle of talking about something when we dropped, but who knows.
Yeah, give it a minute here, we’re back up to like 150 plus, so.
Talking about the magic on Abracadabra happening, and they’re not even live with the degen box. That will be fun.
I know. I watched, I’m sure you guys probably all saw, the Congress tweet with I forget who it was from Congress was like, “And you’ve gotten Magic Internet Money. It’s literally called Magic Internet Money. And you’re gonna put your faith in that?” And I just had to laugh because, sadly, it’s got more backing than the US dollar, right.
It’s wild, I was thinking of how interesting would it be to just rename UST to something else. I mean, we have the universe’s tripple dollars? All of it? In that direction, right? Maybe we should employ now.
I think we could double it. I mean, we’re talking $10 billion soon. Maybe we need just to rename it to get up to like $50. All right, I think I will start talking about Abracadabra again here. So what I was saying is there’s two different strategies on there. And I know, danku, you’re extremely familiar with this. And so one is just borrowing against UST, right? That has nothing to do with aUST. What they launched is the cauldron degen strategy, which is what is looping over aUST to… Or looping over the shuttle to deposit in Anchor. And so we have seen, according to Flipside, it looks like just yesterday alone, a majority of that was MIM Abracadabra. So yeah, if that continues, and I think people think that things happen in a vacuum, right. And we’ve seen this yield reserve question come up before in the past. Yeah, if we just assume that we’re not going to be building things out on Anchor to help bring in more deposits. And we’re just gonna sit here, and as a community, allow the deposits to be hijacked in that kind of way. And I don’t even know hijack’s the right word. The protocol is being used the way it was supposed to be used. It’s an open decentralized protocol, that allows anybody, any protocol to come in and put deposits, and it’s doing exactly what it was supposed to do. And so yeah, I think, making sure as a community that we’re looking at ways to create even more new yield sources as well, on top of this, I think that is really what we need to be looking at.
Ryan Park 22:48
Yeah, just continuing on with the other response I’ve been having. So I believe community different protocols, when they find an issue, they usually end up finding a resolution for that issue. So yeah, I believe, as a community, there will be consensus on what sort of, say, modifications would be required. One of the things that maybe is worth considering is, a lot of the deposits, it’s just like sitting there. And then it’s very liquid, which means if people, if depositors think UST… If there’s a greater opportunity to utilize their stablecoin, they immediately move out. So those mechanisms, those current mechanism has allowed these loopings to occur. But perhaps we could change how we see deposit a little. We still want to keep deposits as simple as possible, like just put in money, and then just consider as just put in money and then just put out money. It’s not money, but it’s stablecoins. It’s put in stable coins, put out stablecoins. But if there would be some mechanism to lock in those deposits for like a certain amount of period, then that would increase the utilization of the capital that’s locked in. So in that case, deposits wouldn’t act as simple, to be honest, like rent seekers, but it will be actively contributing to the protocol efficiency.
Yeah, and I think as community members, we need to look hard on that and think about how we do that, staying true to being able to keep it simple, but making it so that these things that aren’t maybe not necessarily benefiting…
Did we lose bitN8 again there?
I’ve been getting on and off all the time.
Yeah. It seems Twitter has not a good day today, but I don’t know if we should still move on with TeFi Luck and see if Nate is coming back.
See if you can bring us some luck.
What we need is we need to focus, people, on short and concise answers so they can get their message across before they get disconnected.
Maybe we need to get Do in here.
Just like a two word answer. Yes, no, or something like that.
Cool. TeFi Luck, you want to come in with your question?
TeFi Luck 25:16
Okay, so yeah, I honestly was also getting disconnected all the time. I don’t know what’s wrong with Twitter. But nevertheless, I was really impressed by the Anchor Protocol when I first found it. And I found it by early danku_r videos, thank you for this. So the slogan of the of Anchor is pretty powerful, “Earn 20% sustainable yield on on stable coins.” And I have a question out of this powerful slogan. So considering you have such nice and powerful thing, which absorbs new users into the system, which basically brings new LUNAtics, are you planning any new marketing path, any new marketing ways to just spread the word about Anchor and really make it to the masses, so the mass adoption of LUNA, and Terra ecosystem kicks in? Because you’re, basically, guys are the flagman of the Terra ecosystem right now. So are you planning any marketing?
Are you calling us the four horsemen? We have got… I don’t know about marketing, per se. But there are plans and I think Ryan can probably talk a lot. I think he tweeted about it last week about moving Anchor across into different platforms. I’m not sure if it’s traditional marketing, but expanding what they call the target addressable market is one of the key areas that they’ve focused on. And hopefully Nate, and Ryan, and even Zion. I’m not sure if he’s… Wants to speak about this. I’m not a marketing guy. But yes, getting into different areas is definitely… Ah, here he comes.
I’m here, hopefully, I don’t get kicked again, I’ll try to keep it short, because I seem to be getting kicked off. No, marketing is a complex thing, right? And there’d be so much spillover, and actually what we consider direct marketing. It’s definitely more about expanding the protocol reach just as Ian was saying, right. And…
And he’s dead again. Okay. So did that help answer your question? I’m just trying to keep the answers short, because we’re having a lot of challenges, connecting and reconnecting.
TeFi Luck 27:31
Yeah, I generally understood. What do you mean by marketing, basically, you just want to expand on other chains. For me marketing for different protocols is like reaching to people who are not yet into the DeFi, like people who are looking for investments for right now. There are some people who are paying their tax advisers to provide 8% yearly yield on their investments. And if you manage to market the Anchor Protocol to these people, I think…
Yeah, we have to be very careful when we start marketing, at that level, educating different people. Mainly because what is financial advice, and what is not financial advice, is one of the key things as everybody is aware. But yeah, talking to registered financial advisors, there are some who are aware that it’s a good idea. And it’s just a matter if… What kind of hot water we can get into if we can actually talk to those kind of guys in there. But typically, people discover us as most DeFi protocols work that way that we don’t go out and they discover.
TeFi Luck 28:44
Okay, thank you. I understood your position.
I think what’s interesting to me about Anchor as well, is you don’t need people necessarily go in direct to Anchor. I think that’s what Ian was saying is that you can do this through partnerships, through integrating with… And I think this is what Matt spends a lot of his time doing, is trying to build partnerships with, whether it’d be FinTech applications or centralized exchanges, for example, where you can essentially have Anchor under the hood doing what it does and let those third party companies white label it with their own branding.
Exactly. And we are… Actually, I don’t know who approaches who, but those kinds of conversations are definitely happening.
Ian, let me also ask you, but also then the question here from a retail perspective, RyanLion, [chuckle] I need to call you, always, now RyanLion because we have two Ryans here, in terms of how do you see marketing maybe could be from your perspective for Web 3.0, right. Because I’m myself personally a big fan of the good word spreads itself, right. There is no marketing, you want people to understand it like for Terra LUNA, a lot of people are always saying, “There is no marketing.” Well, it’s no top 10 without marketing, because just good work pays off over a long term. I don’t know, if it’s just my retail perspective or if you, Mr. RyanLion, see it similar, or you’re more on the side, “Yeah, let’s do advertisements,” before we move on to the next one.
It’s a tricky one, isn’t it? I think as you say, maybe Terra hasn’t been at the forefront of, let’s say, big crypto influencers’ minds. I’ve been trying to make the point that, I think part of that is because Terra and TFL haven’t paid influencers to talk about their products, that they’re making products that speak for themselves. And then word of mouth has done a lot of work to get the word out there around things like Anchor and Mirror, which have got great ubiquitous use cases. So it’s a tricky one. It’s a tricky one, because it would be good to get people to see this, a wider audience.
But can I just chime in for a sec, I don’t know if you’ve covered this. But fundamentally, we should not be marketing Anchor ourselves. Starting from scratch, trying to go to the retail investors is just nonsense. What we should be doing is partnering with other institutions who already have the retail customers, and letting them market to their clients. So fundamentally, go to the wholesalers, and offer them the product in their portfolio of different things that they can offer to their retail clients. They have the clients, they have all the different marketing, they have tons of that.
Yeah, I think we might have lost Ian there. But I just wanted to add on to what he was saying there. Yeah, I think, one of the big things in crypto and Web 3.0 is really taking advantage of the people that are already in the DeFi ecosystem. Because one thing I realized is, it’s really hard to bring in someone that has, really, no conception of what DeFi is, and kind of onboarding them, as I’m sure a lot of us have tried to do with family members of ours or friends. It’s just challenging to try and have them wrap their head around things and trust something to put their money into it as something like a savings account. So I think Ian’s spot on with this. Targeting institutions that already have retail investors, and having them market that to their customers is probably the right route, and at least in the short term, and then maybe down the line, we can come up with some more creative ideas as well.
Definitely. Great points all around there. Thank you. And I think we’ve got Julian lined up for the next question. Do you want to come in and ask your question, Ser?
Yeah, thanks. Thanks for having me. Thanks for taking time. Following up on the marketing, I think a lot of other apps are actually doing that already with Alice Finance and stuff. But kind of going in on that don’t… If MIM is already bringing in a lot of borrow, or earning side pressure, how much of a priority are other assets like bSOL, bATOM, bDOT to be incorporated so that there can be better yields on Anchor? How much of a priority solving that is? ‘Cause I feel like the growth on Anchor has been pretty good. There’s no reason to do any extra marketing as it’s been growing pretty intensely, like $10 billion in the year is kind of ridiculous compared to any other startup. So when we’re looking at long term growth, and like, really keeping Anchor as a long term protocol, how much of a priority is actually the borrow side, growing that?
So, yeah, $10 billion is just the start. We have to get to $100 billion. And you know, the first 10 is challenging, but we need to go out there because… Well, we don’t need to, but fundamentally, we have a…
No way, did we lose Ian again? [chuckle]
Did we lose Ian again? Me and you, danku, seem to have got really stable connections here, but everyone else is…
We are the true stablecoins.
Yeah, don’t know what’s going on. I’ve been on other Twitter Spaces where this happens, and it just plagues the whole thing. Must be a week like this. But yeah, I think we’re just gonna try to keep going here.
Yeah, just remember, I’m gonna developer, not in marketing, and every time I speak about marketing, I get kicked. I think that’s God’s message to me.
Yeah, it is. The universe is saying, “We’re in DeFi, we don’t fucking market.” [chuckle]
Yeah, but I guess that kind of goes back to my question on how much is a priority on developing the Borrow side to have more yield? That’s kind of growing the Treasury versus just growing the Earn side.
I think that’s a number one priority. I think that… And from the community as well. I think we need to rally around this and really come together on this. I think we’ll drop a little bit of alpha here since there’s been so many questions about it, right? Anchor is gonna go cross chain. And with Wormhole, there’s tremendous opportunities to be able to build a user interface that is somewhat chain agnostic so that on the back end, the contracts point in the right directions, and the user doesn’t have to… Doesn’t even have to think about whether they’re on Ethereum, or Terra, or where they’re at. And that’s where we need to be going. And that will help facilitate a lot more borrowing.
Can I ask just as a follow up to the last AMA that we had? Ian gave us a bit of an update in terms of where you were on bSOL, and that that was in the middle of audit, has there been any progress on that at all?
Ryan has some… A little bit of alpha to share here.
Ryan Park 35:48
Yes, audit and testing, they’re taking quite a while. But if you go search really hard on Testnet, I believe you can find some contracts that have similar stuff. So [chuckle] it’s like a treasure hunt now.
So it sounds like we’re not too far away, then, Ryan.
Ryan Park 36:11
So we’ve been doing a lot of testing and other integrations, we’ve also been doing a lot of testing. And, yeah, it’s just that those are quite difficult to find, and it’s not really… There’s no good interface to properly see those. Hence, I believe there’s a lot of questions around this. But it is ongoing very rapidly. Also being out that like… Bringing yield bearing tokens, not just for the tokens itself, but the yield as well, over into different blockchains, you’ve got to consider that this is something that’s the pinnacle of cross-chain. You’re essentially building an asset that doesn’t live on a single chain. But it lives on multiple chains. And not just for the asset, but also for the yield.
Okay, thanks for the answers, guys. And Julian, I hope that at least partially answers your question, you managed to squeeze a couple of bits of alpha out of the team there. So it’s a great question. I’m just gonna move on to the next speaker here. I think next up, we’ve got Matena House. I’m sorry to the guys that are queued up, I’m trying to get to all of you.
Matena House 37:30
Hey, so I just want to get back to the yield reserve question and the MIM strategy and certainly get that new things are being worked on to get this more balanced, but I’m just trying to better understand this. And this seems like a pretty core… An essential component here, is the yield reserve stable? And is there likely to be any reduction in this MIM strategy, which it sounds like is over time reducing the yield reserve to some degree, and are there… What are the actual potential options that Anchor’s looking at to, I don’t know, incentivize the borrow more, because that’s probably what’s needed. Just trying to understand that picture better. It’s kind of been talked around here a little bit, but I just kind of really wanted to dial in on that. So, appreciate it.
We’re gonna all be experts on yield reserve by the end of this call. [chuckle] I’ll dial into it one more time. I mean, I don’t think you could get any more incentivized on borrow. You are getting paid to borrow. That’s unheard of. It’s really about making
Matena House 38:59
But that’s a temporary phenomenon, right?
That’s a temporary phenomenon for now, yes, but…
Matena House 39:04
So that’s not a sustainable… That…
Well, actually, it is sustainable. It is sustainable, because we get more interest or we get more yield than we’re paying. So as far as that component, it is sustainable, because we’re getting 12 and we’re giving one.
Matena House 39:22
Question, how the… What you’re referring to is being incentivized with Anchor rewards, right? Or am I incorrect there?
I wasn’t talking about the Anchor rewards. I was talking about the actual yield, borrow yield, which can go positive.
Matena House 39:39
Okay, I mean…
Staking returns are what are powering this whole mechanism.
Yeah, basically, just to clarify, I think if I’m understanding both you guys correctly, basically, what Ian is saying is the borrowing demand, although the deposits are increasing, the yield reserve, I’m sorry, the borrow side is outpacing, and Ian, correct me if I’m wrong here, but it’s still outpacing what we need to pay out from a deposit perspective. So it is sustainable in that respect, is that what we were saying here?
I was saying that the actual Borrow side takes care of itself. There is obviously the reserve, where the borrows aren’t equal to deposits. And that’s what I think Ryan mentioned earlier, that we stable at 17%, I think is what he was… What he said earlier. But that’s where we are at the moment. So we might… So again, as you said, we may need to lower the deposit yield to stabilize, but it’s a function of borrowing versus lending, sorry, earning. And at the moment, as a team has said, we are trying to encourage more people to borrow, because that is ideal thing. But yes, with MIM, if we get more and more of that kind of stuff, then there are… The yield will get taken.
Ian, can I add there from… Or Nate, from my perspective, just looking from outside and when I’m talking to people, and also kind of explaining them Anchor Protocol. This is a fair question, right? I think it’s good that it’s raised. I can just add and you as a team can also correct me how I see this. So what I… So probably, we as LUNAtics, we have been accustomed that we get paid for boring, which is wild and should not be the case in the real world, right? Fine. How see Anchor reward is more right now that Anchor Protocol is giving away governance of the most important and core protocol of Terra itself with the 20% for, let’s say, taking a period of time of onboarding more bAssets. So it’s basically exchanging government rights for future yield. That’s how I see it, because the more bAssets are coming, the easier it will be before the protocol to sustain itself. That’s how I see it right now. I think we’re right now, at the base where we are almost at zero. And it’s decreasing more and more, because more and more bAssets are coming. So that’s how I see it right now, in terms of the borrower needs to be paying something. And it’s impossible that somebody can borrow money without paying interest, and we are paying interest. But right now, because the protocol is still hungry for new bAssets, the amount of Anchor that is given out is high, but this will be also reduced over the next years, right? Because it’s a finite supply. So this is just how I usually think about it. I don’t know if this makes sense. So if you guys say now, because you are also being working with a protocol say, “No, that makes no sense.” Right?
Well, that’s a very good answer.
And Nate wanted probably to answer, but he dropped again. [chuckle] And then it was awkward silence. So we are really the stablecoins, Ryan. It feels good. I mean, you are the Pound, I’m the Euro. Right? It seems that that works out.
We need to work on getting those currencies into Anchor itself as currencies, right?
I don’t know. Can you reflect on my points so I don’t look like an idiot here nobody wants to tell me it doesn’t make sense? [chuckle]
I think you made a great point, danku. I think Ian confirmed it as well. So yeah, absolutely. I mean, ultimately, Anchor needs to find its feet. But it’s got a couple of years to figure out how to move on from paying Anchor incentives to becoming a safe, sustainable platform.
Feels better now, thank you for answering. [chuckle]
So I think we’ve got a couple of people lined up here. So I think it’s Tim next. And then after Tim we’ve got Tokenpaddock and then we’ve got Mr. Pantera lined up as well. So, Tim, come in with your question.
So, just a quick question I deposited this morning into Earn like, say, $1500 and on the… After the deposit went in and everything looked fine, it went from $1500 to like $1294 So I was kind of confused on why. I feel like I lost money by depositing $1500 into Earn. Or am I just not understanding how it works?
Yeah. So this is a confusing point for anyone who uses Anchor for the first time. I had the same problem when I first used Anchor. So when you deposit UST into Anchor you receive a token called aUST which is not pegged to one to one with UST. So essentially whatever you see within the Anchor UI in the Earn section, that is representative of what your aUST, which you’re holding in your wallet, is worth. So I hope that answers your question.
Oh, yeah, no, that makes sense. I just didn’t want to… I just felt like, I’m like, “How did I just lose money? That doesn’t make any sense.” But that takes care of my question. Thanks.
Yeah. So the current rate is, I think one UST is equal to up… Oh, one aUST is worth 1.15-1.16 UST. So it’s just a representation of the UST that you’ve deposited. So you didn’t lose money, don’t worry about it.
Thanks, Tim. Good luck with your journey.
Thank you, sir.
Cool. So I think next up is Tokenpaddock. Token, do you want to jump in here?
Yeah, sure. Thank you. Hello to everyone, Anchor community. I’m very pleased to be part of the Anchor community. I’m also holder of Anchor token. And LUNA, of course. My question is about the future of Anchor, is are we going to see anchor as a multi-chain platform? Because I see multi-chains being the future of Web 3.0 and all this development. And I think it’s the key for network 3.0. So what’s the plans for Anchor in the future?
Okay, so we already are multi-chain. You can use your Ethereum, and soon, Solana and I think ATOM tokens, which are off-chain, as collateral. As Ryan and Nate said earlier, which maybe when they got disconnected I think 100 times, the plan is to bring Anchor to those platforms. When, where, how, we’ll leave that alone. But yes, that is the plan of bringing Anchor there. Because we think we’ve got a great thing. It helps UST be the standard, which we think is a great thing. So yes, is the answer. We are not going to talk about when but that is the answer. We are going to go multi-chain.
Thank you for your answer. And I was looking forward for that.
That’s great. I’m just glad I can finish an answer without getting disconnected.
Whoops, and there he got disconnected, right?
Nah, just kidding. Just kidding.
[laughter] Well played, I agree on you, but I don’t know, RyanLion, if you see the same, but for me, Orion is the one who also makes Anchor multi-chain in terms of it’s already on Ethereum. It’s even multi-coin on the stablecoin side because of Orion. And then Nexus is even creating now ETHNexus, which is native Ethereum, which can be on-boarded then onto Anchor. So those are the alternatives which are already live. Maybe not that visible. But they’re out there and Orion is even not only Ethereum. They are going on more and more EVM chains like Binance Smart Chain and all of those, which I think is the next step which helps.
Yeah, and don’t forget the… Our fiat brothers. We’ve got Kash, we’ve got Alice. I think Capapult is also planning to do stuff in the dark colds of Sweden or I think that might be Euro as well. So there are people talking about doing it with regular fiat as well. So much has changed.
Ian, you’re becoming very US, because in Sweden, they don’t have the Euro, they have the krona but thank you.
Yeah, that’s right. That’s what I said. I said that they were gonna do their Norse currencies, you know. But anyway, go Euro. Sorry.
Speaker 2 48:45
I got a question for you guys. I stake ANC on KuCoin. And today’s it seems like they’ve removed staking off the entire app. Do you guys know anything about that?
You’d have to contact KuCoin on. KuCoin has its share of issues. I’ll keep it at that.
Speaker 2 49:05
Okay, no problem. Thanks, guys.
Cool. Thanks for jumping in with your question there. I believe next in line we have Panterra. Evan, how are you, ser?
Hey, everybody. Good morning. It’s a very busy day at the bagel shop. I had to jump into a janitor closet to get some quiet to ask my question. So I’m just curious about how validators, especially Terra Bites, can apply to become bLUNA stakers, like when someone goes to stake their LUNA into bLUNA. Is there like a forum or something that we totally missed about that? And then as sort of a follow up there, do you guys see a future where there might be a way that people don’t really need to jump through hoops to change validators? They can just kind of, if they have staked LUNA with a validator, just kind of change that into bLUNA. And I understand there’s a bunch of technical hurdles that I don’t understand. So, thanks for your answer in advance.
Okay, so the validators chosen to stake bLUNA is a Lido operation. They have their own quality bars and gates and all that kind of stuff. My understanding is they’ve done two rounds of intake, and they’re potentially doing a third is what they mentioned. I don’t know where that status is, but that would be a Lido question. As far as using your… Making it easier to do those kinds of things. There is liquid staking, I think LunaX, and I think there’s some other people doing that kind of stuff, which may help. But I’m not sure, maybe Nate, if he’s still around, can help with that. Or Zion. He might know some stuff around the validator network. He’s one of the validators as well.
Yeah, I think you pretty well touched on it there. Yeah. I mean, that’s kind of my understanding, as well, is there’s some form that validators had to fill out with Lido, and that already happened, I guess. I don’t know if… I think I’m gonna try and reach out to them as well, Evan, and just see for all of us validators, how does that process actually look. Because I think they haven’t really changed those validators in quite some time, if I’m not mistaken.
Right. Okay. Wen Lido AMA? Thanks, guys.
There definitely have been several months since the last round of intake of Lido validators. I do remember that happening with Smart Stake. I remember when Smart Stake was added there. I think we saw the proposal, the governance proposal go through on Anchor recently, which was to even out the bLUNA distribution amongst the Lido validators, which I think is a really good initiative. And hopefully, we’ll flatten out the validator voting power a little bit and at the top, because I know some of those biggest… Some of the biggest validators have got that much voting power through the bLUNA distribution. So that’ll be interesting. And hopefully, they will be willing to open up the doors to a wider range of validators again, to help with that decentralization with LUNA staking, so something to keep an eye out for, I think.
Yeah. And also, it’s been brought up before too like, Stader could come in and do the same thing that Lido does, right. And then we can have even more diversification, and how these bAssets are distributed across validators. Any yield staking optimizer could come in with a similar proposal that Lido did.
Thanks. Thanks, Nate. Travis, you’ve been waiting, extremely patiently. Please come in with your questions, Ser.
Thanks a bunch. I appreciate the time. Thanks for everything you guys are doing fantastic platform. My question was related to some of the cross-chain, multi-chain comments that have been made. And that’s very exciting. And I’m curious to know, once more progress is made on that, and a user can gain exposure to Anchor directly on these other chains, does that reduce the complexity of the on-ramp steps that one goes through? So for instance, does it eliminate the need to go through KuCoin to eventually get your UST into your Terra wallet, for instance. Maybe you’re gaining exposure through other wallets to the Anchor Protocol. I’m just trying to figure out ways to simplify the on-ramp process.
Ryan Park 53:37
Yeah, of course, if Anchor expands to change with the higher user base with all the infrastructure for on-ramps, for example, like Ethereum is pretty well accessible from a variety of exchanges, and has a lot of custodian support. And so if Anchor were to expand onto Ethereum, by this I mean not just for Earn, but also for Borrow, which is different from what we have right now on EthAnchor, then, yes, it will become much more easy for regular users to on-board into Anchor Protocol.
For earners, so for people that are wanting to make deposits, you think that that would smooth the on-ramp process a little bit?
Ryan Park 54:24
Yeah, of course. To think bigger, the focus should… My thought is that the focus should not be on just riding things through Ethereum. The focus of the ecosystem, not just for Anchor, but Terra, should be more about making direct on-ramps on-boardings to Terra much more easier. As easy as Ethereum, or even like better because… Just like what we did for all of the decentralized applications, we have a better UI compared a lot of Ethereum DeFi protocols. I think the collective ecosystem here can do a very good job on providing a on-ramping process that’s much better than what’s already out there on Ethereum. And yeah, there’s already a couple projects working on those. So we’ll be excited to have those once they launch.
Yeah, that’s cool. Thanks for the time, guys. Thanks for the answer.
Thanks for the question, Travis. And we’re at the top of the hour, pretty much here. So I do see a number of people lined up with their hands up, unfortunately, we’re probably not going to be able to get to you guys this time round. But it just seemed that Anchor are doing regular AMAs here. So hopefully, you can jump in with your question next time, or reach out to the guys, add the Anchor guys, and adding that Telegram or their Discord. I know they’re pretty responsive there. In terms of last question, SizeLord, you have the honor of the last question today. Please come in with your questions, Ser.
Hey, thank you. Thanks for the AMA, and thanks for building this product. I wanted to come back to danku earlier, the discussion about the yields. Looking at the dashboard, we have a total collateral in LUNA of $5.4 billion. Assuming that you are giving up the yield, which is 9.33%, and you have a total deposit of $4.7 billion at 20%. Is it fair to assume that the Anchor team has in mind for a long term sustainable borrow rate somewhere in the range between 7%-11%? Is this something you have modeled in the background somewhere where you have a KPI which you’re targeting? Thanks, in advance.
Ryan and Zion, you’re the only ones who survived this Twitter…
[chuckles] I think Ryan can take that one.
Ryan Park 56:57
They don’t realize, yeah. So just to reiterate the question, is it about whether… I missed a couple of parts, but is the question more about whether the Luna staking reward rate being like 10% was between…
No, no, no. It’s basically, at the current state, the system, we’re earning as a protocol, we’re earning 9.3% staking rewards on the collateral of $5.4 billion, right? We have $4.7 billion given out at a 20%. So we have it covered by slightly half, our interest cost, basically. So we wouldn’t need to take in 20% borrow rate, right, we could easily take in 12% or 11%, or 15%, something like that, at the current state. But long term wise when the protocol is in equilibrium, I’m sure you have some model where you have target borrow rate you are targeting in mind.
Ryan Park 58:04
Oh, well, borrow rates… Well, let me say this, borrow rates constantly change. And especially in crypto markets, where borrowing demand is highly volatile, we cannot really target a specific range of borrowing interest. Because just looking at other lending protocols, whether it’s Compound or Aave, over the past couple of months they had fluctuating where it’s between around 1% or 2% over on to 15% to 20%. So no, we do not have a numerical target. But we have a relative target where at the end, borrowing on Anchor, due to the staking reward, the advantage that we have, would always be better… Well, borrowing on Anchor will always have better rates compared to what’s out on traditional money market protocols. So that’s what I have in mind.
This was perfect. Amazing. Yeah, this was probably the answer I was looking for. In relative terms, it’s also fine. Yeah, I’m asking you like you are the governor of the Central Bank, right, a target. But if it’s a relative target, it’s fine. Thanks a lot for the answer.
Well, I like this… What you said, Size, in the end, in terms of, I guess, a lot of the questions also regarding the yield reserve, just my feeling right, and feel free… I don’t know if you’re still… I think he dropped, also, out is like, we think often also for the fixed 20% in TradFi terms. But this is all super flexible, right? I think the Anchor rate is there to be achieved. And the team said from the beginning that this will be in the future fluctuating this will be maybe in the future in… Will it be the future in three or in 10 years? Would 15% or 12% makes sense? Who knows right? But that’s the cool thing about this is that it will move basically like a smart contract or the algorithm… Algorithms, man, difficult word, saying this makes sense, or this makes sense and then it will achieve this right. I think that’s what I hear from you, Ryan Park, also that the protocol will move together for what makes sense. I think it’s a good point how you phrased it in the end, Size. I like it.
Yeah, 100%. And we don’t even know what interest rates will be like. In the 80s, we saw interest rates nearing 17%-18%, right. So at some point, I think the community might decide that it needs to be more algorithmic and based on certain market conditions where maybe it’s stable for a base period of time, but readjusts every month, every quarter. I mean, the options are limitless, open, the protocol’s meant to be flexible. 100%. Correct.
Ryan Park 1:00:39
Right, so the point here is, it’s not about predicting what the market rates would be. It’s always about no matter what the market rates are, we just beat all other competitive rates.
No, did we also now lose Ryan? At the end? Truly? Or is it me?
Ryan Park 1:00:58
Oh, no. It was a single sentence.
Okay. You played me. You How can you cut so quickly your sentence? I… [chuckle] Crazy.
It was a succinct point, right? [chuckle] We needed to…
A literal fullstop.
Okay. Are we wrapping up here?
Yeah, I think so. A lot of technical issues, I don’t think we can drag it on much further.
Yeah, it’s been pretty painful, especially for you guys at Anchor having to join me but really appreciate you guys taking the time here today. danku, it’s been a real pleasure co-hosting this with you. And really liking the approach from Anchor for coming out and speaking to the community regularly. So I look forward to seeing everyone on the next one.
Yeah, and just to say that we’d love to do these every two weeks. I mean, the holidays… It’d probably be the new year when we do it. And we’re trying to work on time zones as well. So look forward to another one in probably about two weeks.
Thank you from my side as well. Pleasure, Ryan. Pleasure, the Anchor team. I guess, see you soon again everybody.
Thanks for checking out another episode of The Ether. That was the Anchor AMA hosted by danku and friends, recorded on Wednesday, December 22nd 2021. For terraspaces.org, I’m Finn, thanks for listening.