Transcript: veANC AMA with Jose Maria Macedo and Retrograde Money


Finn 0:42
Hello and welcome to The Ether. Today is Thursday, March 10th 2022. This episode of The Ether is brought to you by Glow Yield. Glow Yield is the ecosystem of Terra decentralized apps like Lotto and Creators all powered by DeFi yields. Glow Creators helps artists and influencers give their fans exclusive perks through membership NFTs and more. Glow Lotto is a price link savings account with a weekly chance to win the big jackpot. Tickets are free and perpetual which means there’s zero chance to lose money. Be sure to follow Glow Yield on Twitter and join the Discord community to stay up to date with all the glowing projects and check them out online at This episode of The Ether is also brought to you by Talis. Talis protocol is the NFT platform for independent artists on Terra. Talis helps to provide artists with the tools and resources needed to transition from traditional arts into the NFT world. With their V1 launch coming soon, Talis will be the place to see real world art reflected on Terra. Be sure to join their Telegram and follow Talis on Twitter for updates on their roadmap, validator, and other Talis news. Find your next favorite artist on TerraSpaces appreciates the support from all our sponsors. Today on The Ether the veANC AMA with special guests ZeMariaMacedo and Retrograde Money. Let’s take a listen.

danku_r 2:07
Hello, everybody. Quick mic test.

Anchor Protocol 2:09
Hey, what’s up danku.

bitN8 2:10
Loud and clear. Welcome, everybody.

danku_r 2:12
Hey, how are you, gentlemen? I’m surprised, Nate, last time you didn’t drop out at all. Do you have a new phone?

bitN8 2:18
Nope, it’s Twitter. They finally fixed the Android glitch. [chuckle]

danku_r 2:25
Well, thank you, Twitter [chuckle] for making that one happen.

bitN8 2:30
I left them some pretty nasty reviews. [chuckle]

danku_r 2:34
You are the one. Okay, I recognize now. [chuckle] I know more or less your 20 other accounts probably to just leave all the different reviews down there. [chuckle] Great. Should we wait a few more minutes before people are onboarding here?

bitN8 2:50
Maybe let’s just give it another minute or two. And then we’ll kick it off at a minute or two, I think.

danku_r 2:55
Good one so we can have a little bit of fun about the price action that LUNA is giving us in the last days. I think it just… Go ahead.

bitN8 3:04
No, it’s least expected, right, from a trader perspective I was noticing the relative strength in Bitcoin compared to equities, right. And that’s a typical change in the sentiment that we’ve seen. Over the course of the last several years you typically saw… With a sell off in the stock market like we saw a really high beta sell off, the magnitude of sometimes 5-10 in LUNA, right. And we saw a bit of a sell off but it completely retraced despite equities still being hit pretty hard. So it’s almost like the global world as maybe recognized crypto is a risk-on asset now, which would be interesting to see if that trend continues.

danku_r 3:54
It’s always impressive when I’m listening to you. Sometimes I forget that you have been a professional trader, right. And you’re way deeper into all of this than people might expect.

bitN8 4:03
Yeah, sometimes I forget I’m not talking to my crypto derivatives trader friends.

danku_r 4:11
No, but it’s cool. It gives also a different perspective to this. Me as a complete non-trader just aping in and holding, right, and hoping that long term it works out. I think it gives always perspective of how does it right now work, what do I still need to check out because yeah, I myself also checking this stuff out of curiosity in terms of what does this mean right now. And of course there are certain… How to say it, structures that you can recognize, as you said, right now there are certain pieces when they fall together they have a certain meaning.

bitN8 4:41
Yeah, absolutely. I mean, I think it’s just… At least to me, it’s fascinating even if you’re not trading just to kind of watch these things happen. It’s kind of like… I see them as nature patterns, right? Nature doesn’t always move in the same way. But there’s typically patterns that exist with different influences and different correlations that’s just really fascinating stuff.

danku_r 4:59
And Nate, did you dump on all of us? Now Anchor is again below $4. What’s happening there? [chuckle]

bitN8 5:04
I know, I got too excited. And I just couldn’t look at my… The trader in me came back and I sold a few million dollars worth of Anchor… No, no. [chuckle] It’s funny I actually… Being an options trader, I used to take profit based on metrics really, really quick and I lost out on a lot opportunity in crypto taking that mentality in, I’d be like, “Oh my god, I made 1,000% I gotta take 50% profit.” Little did I know, there was another 10,000%. So I’ve learned my lesson there. These price movements don’t affect me at all and I’m a long term holder. [chuckle]

danku_r 5:40
And before we jump into the topic, then, of tokenomics, I think there were… Well, we had amazing discussions last time we were all here together. I don’t know if you can give a bit of insight what Anchor is right now also cooking behind the curtain. I got yesterday, a ton of messages. People are just jumping on the testnet and seeing, oh, there’s sAVAX, right. It seems pretty, pretty close.

bitN8 6:02
Yeah. We move faster than we thought we would on that one, the team has really come together. And there’s AVAX live on mainnet on Anchor now. So I don’t want to give false details, but it’s testing right now. Things are looking good. It’s an exciting time. There’s a lot of things that are about to flow out. We’ve got bATOM nearing the pipeline too, I know we’ve been dangling that carrot for way too long but we’re finally there pretty soon. But yeah, the AVAX is really interesting, because this is the vision we’ve been laying out. danku you’ve done some AMAs with us, and this is the first of this, right. This is the first xAnchor version that we’re going to have on Avax, you’ll be able to connect your Metamask wallet, and you’ll be able to borrow against sAVAX natively on Avalanche chain. At the same time, you can take that rabbit through Wormhole and borrow against it on Terra. So really exciting. Really, really excited.

danku_r 7:15
Well, that’s cool. I mean, when I’m also right now as I’m also a cross-chain degen going on different platforms, I’m usually looking to accumulate from the beginning those liquids taking derivatives that are yield bearing because it’s just way easier. Why should I even buy the normal, I don’t know, AVAX token, so I first move my stuff over to sAVAX. And I’m looking forward to once I can use it then on Anchor Protocol, be it on Terra or also on the Avax side, as I’m understanding that probably both will be possible. One question quickly that I wanted to address to you, Nate, I don’t know if you can talk about this. I had somebody asking me, “Will there be a different yield reserve or also a different, let’s say, Earn side if you are right now moving with Anchor Protocol to other platforms, or is it still basically all the same in the background?

bitN8 8:01
So really the only difference, and I’ll try to make this really simple, everything still runs CW20 standard and that’s where Wormhole comes in, meaning everything still runs on the Terra side. We’re using Wormhole and Wormhole messaging contracts to move everything from Avax, even though you’re doing it natively on Avax on the backend so the user doesn’t even know back, over to Terra. So all the liquidity, all the liquidation queues for now are still going to be on the CW20 Terra side of talking with Kujira and Lighthouse, they’re close to getting a possible Metamask integration to allow a native Avax liquidation queue that would, again, would have to run through Wormhole. So a lot of things happening. So things will change as we’re going forward. But right now, just a very simple version. And the Wormhole is doing all the work.

danku_r 8:56
Nice one, very cool. And I think the Wormhole also shown with the backers that there is some financial power behind Wormhole in general. So looking forward also to use the funds that are basically enabled cross-chain via the Wormhole. Cool. So if it’s okay for you, let’s maybe move on to the topic of this AMA for veANC. Again, we have José here from Delphi Labs. José, quick mic test, are you there?

José Maria Macedo 9:25
Yep, I’m here.

danku_r 9:27
Very good. How are you? How are things for you since two weeks? I don’t know, was your head around the all time veANC and how to… Or what are you right now thinking of?

José Maria Macedo 9:35
Yeah, no, I’ve been catching up on all the proposals today in prep for this. Yeah, really impressed with the kind of standard of discussion about this on the Anchor forums. And there’s some really cool proposals.

danku_r 9:50
I agree with you. I think the last weeks there have been a ton of people either on the forum or on Twitter, that I’d have also popped up on my timeline where you think of, “Okay, this community is already taking the next step and thinking of how to improve stuff.” And then we have also Retrograde with us here. So if I’m not mistaking Atari, Tetris, Pong, and I told you guys already, please call me Nintendo in this Space. Quick mic check with you guys.

Atari 10:16
Hey, everyone. Yeah, I wanna echo a lot of what José had just mentioned, I think our original intention with the veANC proposal was really just to kick things off, and really get things instigated. And it’s been awesome to see all the different ideas, I think there’s a lot of really good improvements and additions that we could discuss.

danku_r 10:40
As an intro, maybe Atari, can you give an overview of what the proposal is about? Because maybe not everybody here which is listening right now has read it. So maybe you can give a high level kind of in a nutshell, what this is all about and what might change also for Anchor Protocol.

Atari 10:55
Yep, yeah, I can give a quick refresher for everyone in this call. The original veANC proposal that we had really thought through, pretty much think of the overarching goal as to better align the Anchor token and token holders, with the overall success of Anchor Protocol. And what the broader vision is to be a foundational money market, across not just Terra, but all of DeFi. The way that our team has sort of thought through the ways can potentially make that happen, is to create a locking mechanism for the ANC token. And a lot of this entirely is built around how do you incentivize users, and how do you incentivize people to lock up the ANC token. We thought of it through two different buckets. The first side was the lending side, and then the second side is the Borrow side. And a lot of this actually goes to a big part of this discussion that we’ve been seeing in the community. Lending side pretty much points to the 20%, and the Borrow side points to the Anchor token admission subsidy that is offered to people who borrow on their staked asset. And then a layer deeper is of the incentives, there are two types. There’s the economic incentive of where Anchor emissions and future Anchor emissions go to. So folks who lock their Anchor token for longer will get a higher economic incentive. And then the second and much harder side of things is the governance incentive. And that’s exactly what we thought through with the gauges on potentially actually directing future Anchor emissions to specific collateral types. tThe idea was a part of that aligns with how folks have been thinking about Anchor V2, and adding more collateral types like sAVAX among others. So hopefully that gives a brief background.

danku_r 13:16
Yeah, thank you, ser. I think how I also then understood it for myself was the topic of now the Anchor token becomes very important for the Borrow side, right, because they have in high interest to… Well, make the Borrow as attractive as possible. And that’s right now happening by the ANC tokens. So if you are somebody who’s providing, I don’t know, bLUNA, you probably want the gauges, right, a lot of the ANC token goes also to the bLUNA holders so you have an interest to just hold ANC to make a decision or basically influence the gauges itself so that a lot of ANC token hopefully comes back to you if you are borrowing. And all this comes back to the topic of the vote escrow, right. We have seen it, I think, pioneered also by the guys from Curve, I don’t know José if you can give additionally a bit of background of why right now this model has been one of the driving forces for also different projects to become maybe the tokenomics right now.

José Maria Macedo 14:15
Yeah, I think it’s mainly been driven by the success of the Curve model on Ethereum. Obviously veCRV was really successful for Curve on Ethereum in not just driving liquidity but making Curve very difficult to vampire attack because of the reasons kind of mentioned earlier, where with these models the three main benefits of locking up your CRV for veCRV are it’s the only way to get fees, you get to vote on governance, it’s the only way to vote, and an important part of that is voting on the gauges. So voting on which pools receive issuance. And then the third benefit which is the boosties, right, where you can boost your LP yield by also having the veCRV. And so those benefits mean that if you’re an LP on Curve, you’re really incentivized to become a token holder. Because otherwise you can’t get the boosties, and you also can’t vote for the pools that you want. And at the same time, if you’re a token holder, you’re really incentivized to become an LP because otherwise you’re not making the most of the boostie benefit and some of the others. And so because the veCRV token is not transferable, it’s a rebasing token and the balance declines over time, and it’s illiquid, you had this Convex DAO which emerged and basically created a so-called liquid staking derivative for Curve and for veCRV, which is the cvxCRV. And that basically… People would lock up their CRV with Convex, and they would get back the cvxCRV, which would give them yield, but more importantly, liquidity, because Convex incentivize this peg of cvxCRV to CRV. And so yeah, users would get liquidity, they get some extra yield, but mainly the big benefit is liquidity.

José Maria Macedo 16:05
And this was really successful for Convex, they acquired over 50% of Curve governance power. And Curve itself is a sort of an eight figure value protocol, so it’s very valuable kind of governance power. And so I think other protocols are looking to replicate this, but I think it’s yet to be seen whether the ve model works as well for something like Anchor, for instance, as it does for Curve. Because I think… And obviously some people pointed this out on the forum, made some really good contributions about how controlling liquidity is super important. And on Curve specifically, it’s the stablecoins, right, every decentralized stablecoin, including actually UST itself, was participating in the in Curve Wars, because they wanted to own Curve and influence the gauge weights to make sure that their pools had the most incentives, and therefore the most liquidity and this is kind of existential for a stablecoin. But the same isn’t really the case for borrowing, right, or arguably isn’t the case for borrowing. We haven’t seen it yet. So yeah, I think it’s a really good model, the ve model. And I think even all the proposals that have been discussed are better than the current ANC tokenomics. I’ve done some reading on the different proposals and have my own thoughts, but would love to hear the discussion from the community. And yeah, let me know if that answers your question, danku, on why the model has been successful.

danku_r 17:32
Yeah. 100%. Thank you, right. And as you said, we probably will also see something similar with Astroport, right, which is going with vxASTRO within the same direction. So I myself super curious who will become the Convex of Terra, or maybe in the future we have also multi-chain Convex, who knows. But you made a good point at the end that there are a lot of great feedback also in the forum. I would have addressed this question to Mr. Nate, because he is the Anchor forum guy. I know, but on the other side you also putting here José, a little bit of a question mark, in terms of is the ve model the right one. I don’t know if Retrograde, Atari, if one of you guys would like to just reflect on this because, I guess, you have anyway also ask yourself the same question, right?

tetris 18:15
Yeah. Hi, this is Tetris, by the way. Yeah, we thought about different models. And we’ve looked at the ve and the PTP, as the two leading models. But the idea that we believe is good about ve is that it aligns those who govern Anchor with the long term health of Anchor, as well as those who are rewarded by Anchor resources. So by making token holders lock up their tokens for some amount of time, they sort of become price exposed to the ANC token, and therefore the overall long term health of the Anchor Protocol itself. And yeah, that’s pretty much why we believe veANC is long term good for the Anchor Protocol and the Anchor token.

Atari 19:07
Yeah, I can add a bit on top of that. The ve model is by no means perfect at all, especially when you think of there’s no precise case study of ve working perfectly well with a lending protocol. The nice thing about the ve model is it’s one of the single most battle tested token models in DeFi. And it is not actually very intrusive with an existing tokenomics model. So if you look at how the ANC token works today, adding ve locking doesn’t actually impact it as much versus changing the token system more drastically. So it serves as a very incremental step towards improvements. So that’s one thing that I think we very much understood is it doesn’t necessarily need to fit the borrowing model perfectly, but it is a good step towards improving and better aligning incentives. The second is, Anchor is also a very unique lending protocol, in that it is far more wide reaching, far more foundational, and just much larger scale than anything else. So I think it also can’t be treated as your every day, run of the mill lending protocol in terms of the incentives, in terms of how much governance power will eventually matter. We want it to be more and more important over time, that is far more important than sheer price action. I think governance is absolutely the long term priority over just ANC token price action. But it’s a far harder problem to tackle.

bitN8 21:03
Yeah, and I mean, there’s definitely some well made points there. And obviously, a lot of those were looked at through the lens of what Anchor is now. And I kind of want to make that point is, yes, we don’t know the future but we certainly can’t really project the future based on what the ANC collateral composition looks like right now. And to Retrograde’s point, Anchor is a very unique lending platform, there’s really not any platform out there like it. It takes liquid staking derivatives as collateral asset types. And so we’re starting to see an atmosphere where there’s a lot of different competing liquid staking derivatives. And I brought this up in last call is if you look over on Solana, there’s already four different liquid staking derivative protocols out there on Solana. On Polygon, which is going to happen pretty soon you’ve got Lido, you’ve got Stader. On LUNA, you even have LUNA or even have Lido and Stader. On sAVAX, Lido’s actually working on stAVAX as well in the background. So you’re gonna end up having another one there.

bitN8 22:23
And I think we’re going to continue to see more and more competing liquid staking derivatives. And that can act very similarly as an LP protocol, right, because these different liquid staking derivative providers have a mandate to control a certain percent of the actual staked underlying token. If you look at the proposal over on Polygon for stMATIC, right, they have a revenue sharing agreement with Shard Labs over there based on how much of the token supply actually gets locked up into it. So you’re gonna see these different liquids staking derivatives compete against one another. And that’s why it puts Anchor in an interesting position because it actually incentivizes the borrow side with rewards, which are then going to be used to incentivize users to lock up in one liquid staking derivative versus the other. And that’s where these type of bidding wars will come in. Obviously, if we look at Anchor right now, we’re nowhere near that point. But we’re looking towards the future of what the future landscape is going to look like with liquid staking derivatives. And what it will look like when we have a diversified borrow side on Anchor right now it’s just LUNA and ETH. But once we start having ideally, hundreds of different collateral types on there, it’s going to become a much different landscape and it’ll look a lot more like an LP protocol in that sense.

danku_r 23:48
Nate, as I said earlier, right, that you are the Anchor forum guy, I think you have a notification of every time somebody posts something in there. What have you seen as the kind of most important topics discussed out there? Was it, I don’t know, maybe lockup period? In general, what are the topics that people have been talking about? Because when we had a small debrief before this session, you also said, “Hey, let’s try to open up to the AMA as soon as possible so that people can ask some questions.” I see also, Xulian is right now requesting so I would say maybe you can give a little bit of insight what you have seen there. And then if everybody is okay with that, I would start bringing people up so that we have a great discussion here. What do you think?

bitN8 24:31
Yeah, I think that’s great. I mean, maybe we could have Retrograde too, give a brief overview of their tokenomics a little bit too, I think that would be fitting as well. Nothing deep, deep, but just a general overview. But yeah, going back to that. There’s definitely a lot of relevant points made and as we’ve said, not one model of vested escrow tokens are better than the other. It’s just a matter of what we think is best for the current model. One of the things that keeps being brought up is the Earn side. And I tend to agree that we need to look at that but I think patience is key. Obviously, we’re doing an experiment here. And I think we need to see how it works on the borrow side before we go over to the Earn side. The Earn side’s a bit more complicated as well, as we talked about, you talk about fungibility issues, you can’t just change aUST like that right away, you have to create vesting contracts based on how much veANC you hold, you have to query that at certain periods of time, that costs money. So it can’t be an autocompounding thing at that point, because it would be too expensive if you have to query the chain every time, right, especially if you’re only shaving off a few percent, it could actually cost more for smaller balances to just actually query the ve…

bitN8 25:55
So there’s a lot of things that have to be explored there. It’s not impossible, I think it can be done.

bitN8 26:00
There’s ways around it. But again, it’s a little more messy. And I don’t think we’re ready to move there yet. So that would be my thought on that. Another thing that’s come up that I’ve brought up that I see as an issue is just looking at the duration periods from a financial perspective. If you look in finance, you have something called the net present value, right, that’s what your investment looks like over periods of time. So if you’re locking something up for four years, you have to take a discount, right. The discount rate, if we take Anchor to be the risk free crypto rate is 20%. You apply a 20% discount rate to a token that’s locked up for four years, that’s somewhere around 40%-50% discount you have to assign to the token as soon as you lock it up for four years. That can cause perverse incentives, right, that can cause moral hazard for short term voting to try to make back that heavy discount that they got back. Plus four years is 25 lifetimes in crypto, maybe more. [chuckle] So I think we might want to rethink that as well, maybe four years doesn’t make the most sense because if you constantly keep locking it too, to get the most rewards, then you essentially create a coupon that you’re looking at, right, you’re only getting rewarded by the staking rewards at that point.

danku_r 27:22
Not also that, Nate, right. I don’t know if you would like to quickly tackle upon because a lot of people have been asking me, also José, maybe you can answer this is the reward, or the schedule for ANC is just running three more years, right. That’s maybe also a topic to consider. I don’t know if somebody also wants to give some insight of what happens in three years if there are no rewards.

bitN8 27:42
Yeah, but someone else wanna say something? I can answer that, but…

José Maria Macedo 27:47
I just wanted to maybe ask you a question as well. I agree with the four years thing, we went with two years for vxASTRO. I think it’s… Yeah, obviously, there’s no right answer here. But I think it’s sort of more reasonable. But then I was curious because it seems one of the big splits among the governance proposals is whether the gauge should be on the Earn side or on the borrower side. And I thought one of the strongest arguments that was made by Pedro was the fact that… Well, basically at a high level, borrowers is already the limiting factor on Anchor. So you kind of don’t want to make that harder by also forcing borrowers to earn ANC, and it would also at the same time for borrowers who don’t have ANC would start to make the borrow rates not competitive with stuff like Aave for ETH, and for other assets. And that was one of the things that sort of got me thinking so I’m curious how you think about that. I obviously agree with all your implementation problems with the Arca proposal, but I guess from a higher level, what do you think in terms of incentivizing Borrow side versus the Earn side?

bitN8 28:57
Yeah, I think to be more clear, again, this has to be a community decision so this is my personal opinion. And I know that even on the team building this right now, there’s some internal dissent on it. I think we should explore the Earn inside, it just kind of makes sense to me. That’s why I’m kind of saying patients here, as we wait for this to really come to a consensus, I think because of the questionable application to the borrow side, and I’m not trying to make the point that I absolutely 100% agree that it’s going to be phenomenally successful, I think we have to be open to the possibility that it might not be as successful as we want it to be. That’s crypto, right? This is why we’re here. This is why we’re going through different iterations of governance. But if you can add the Earn side, you make it even more compelling, right. You add kind of a buffer in case the Borrow isn’t as successful as we want it to be. So I definitely think it should be on the table and up for debate.

Atari 30:03
Yeah, and I’ll chime in here. Yeah, it goes back to what we had mentioned earlier about there’s two sides of this, the Earn and Borrow. And I think the interesting thing is if you look at it just within the Anchor Protocol universe, then the Earn side has absolutely a big part of this and serves to even have a heavier aligned incentives with locking up the ANC token. The part where this starts to get a bit tricky and why we understand that this is more of an incremental process is Anchor also serves more but important role in just Terra and broader UST adoption itself, as in a big part of the yield reserve purely serves to attract a new generation of crypto users who can easily understand the 20%, don’t have to think twice, and they can just jump in and start to get more familiar with a lot of the things and other applications around Terra. So almost sort of look at Anchor as a broader top of funnel for everything in every user that comes in. So that’s maybe the one thing that makes this system a lot harder than just looking at Anchor itself. But with that being said, our team has thought a lot about the Earn side as well. We went with more of the conservative approach on just taking the incremental step on the Borrow side. But we’re absolutely open and very encouraging of any changes we make to Earn as well.

José Maria Macedo 31:50
That’s cool, and… Oh, sorry, go ahead, Nate.

bitN8 31:53
Yeah. Sorry about that. Yeah, I just want to add before I forget, also let’s not forget what’s on the table with the dynamic rate, right, that just… I put that up on the forum maybe last week. And there’s a lot of support behind that. So we might want to see how the dynamic rate works first, before we add another layer of complexity on to that.

José Maria Macedo 32:14
Yeah, that makes sense. Just a quick one, because I guess if… I also kind of agree that the Earn side makes sense. But also see the the arguments that you guys put forward that it kind of makes it more complicated for people, but I think then we can… If we kind of agree that the Earn side might make sense, maybe not now, but eventually, there’s also some different implementations that you could do, right. So the Earn side itself could just be another gauge. And then you don’t have to mess with the aUST composability. It’s just a gauge and people can vote to direct ANC incentives towards it. And then basically the different frontends, or the different sort of Convexes can kind of choose what to do with those incentives, whether to pass them on to users and give users effectively a higher rate, or something else. Curious if you guys have put any thought into that. Because we thought about this a bit in the context of Mars, and I think that the vx model is sort of more natural in the case of Mars, because it’s more of a protocol to protocol lending rather than for direct consumers. So it makes sense for protocols to own it. But the way I’m thinking about it for Mars is that we would have a gauge for each market on the deposit and borrow side, and then voters would just be able to vote for what side they want to get incentives, and then obviously boosties are applied on those incentives. But yeah, curious if you guys have put any thought into that, because it’s a simpler implementation, doesn’t break aUST composability.

bitN8 33:49
That’s a really interesting thought I hadn’t actually thought of that. This is why we have these talks. And just to be clear, you mean further ANC incentives on the Earn side, right?

José Maria Macedo 34:01
Exactly. Yeah, you’d have the fixed Earn rate, and then you just have another gauge for further ANC incentives. And then you don’t break any of the… You don’t have any complexity on, yeah, aUST,

bitN8 34:10
Right. And you could actually shave off some of the percent interest and redirect those into buybacks for that, right. So that actually worked really smoothly. I think that makes a lot of sense to actually, maybe you just solved this. I don’t know. [chuckle] Because if you think about it, some of the biggest problems with the Anchor Earn side is protocols rent seeking, as I’ll call it, maybe I shouldn’t say that on an AMA. But that’s what they’re doing, right. Let’s just be clear, they’re coming in and they’re just… And why wouldn’t they? If I was a protocol, I would be incentivized to do the same thing at a 20% rate. Just milk it for all you can with these looping strategies and things like that. But if you actually had to vote on a gauge to make sure you get the most out of it on top of a dynamic rate that’s going to the market, that actually starts to make a lot more sense.

José Maria Macedo 35:01
Yeah, that’d be really cool. And then, the other idea I thought, I was gonna put this up on a post, but thought I’d talk to you guys about it here is, because with Astroport, one of the things we’re thinking about is adding an additional multiplier. So just for everyone that doesn’t know how the gauges work, so let’s say you’re in LP in Astroport, you would have… Let’s say you have 5% of the LP, it would basically apply a multiplier. So normally, you would get 5% of rewards in that pool. But there’s a multiplier that’s applied to that 5%, based on how much vxASTRO you own, right, and you can get boosted up to 2.5%. So if you had the maximum amount of vxASTRO, you’d get 12.5% yield instead of 5%. And so I was thinking with this, you can almost do a similar thing on the aUST side, where basically you get your 20% anyway, but you can then get more of the gauge rewards by locking your aUST for different amounts of time. And so if you lock your deposits in Anchor for two years, you would boost like the share of those gauge rewards, ANC rewards that you get. So again, you get incentivizing people to lock, but also you don’t break composability.

bitN8 36:08
So essentially, you’d have vesting contracts that are queried at, let’s say, whatever intervals those rewards are paid out, maybe weekly or something so that you’re not querying all the time?

José Maria Macedo 36:19
Yeah, it would literally… I think it would just be like another… So when you’re distributing rewards you calculate the v… You would always calculate the veANC boost, right. And you would also take into account the LP lock boost.

bitN8 36:36
Yeah, that makes sense. So they’re in separate contracts, though, so that you can monitor the actual blockchain… Yeah, exactly. Yeah. I mean, that could certainly make sense. I think for Anchor that might be a little too complex to start with. But it’s starting to… It could be an evolution of it, absolutely.

José Maria Macedo 36:55
Yeah, it’s gonna be too complex for Astroport to start with as well, I think we’re gonna just go with the normal vx model to start with, this is something we’re going to be proposing to the community afterwards, because I think it makes a lot of sense as an extra kind of multiplier.

danku_r 37:06
This is always impressive, right? In terms of you bring here the people together and that’s what this is all about, right. And immediately, the next stuff comes out that you could be thinking about. So really cool stuff. The question now is also, Nate, taking a look at the time because we are a little bit advanced, should we open it up? Because you also said, and I’m myself super interested to hear a bit more about Retrograde before we then move on, what do you think?

bitN8 37:32
Yeah, I think that’s good. I think, let’s get Retrograde just to touch base on the tokenomics real quick, and then we’ll open up for questions. I know we’re trying shoot for half hour, but we got into the trenches a little bit there, but it was fun. [chuckle]

danku_r 37:47
Got it. Okay.

tetris 37:50
Yeah, I can talk a bit about our protocol mechanics and tokenomics. So the Retrograde Protocol is designed to align users with utility of their tokens. So sort of recognize that some users care primarily about yield, and others, which are often protocols themselves, or DAOs, have more of an incentive to care about governance. And so for those familiar with Convex, we’ve designed our initial mechanics very similarly. We’re offering this convert mechanic where users can offer their protocol tokens, so like ANC or ASTRO. And that token becomes part of our treasury and permanently locked with the protocol that they come from. And in return the user receives a tokenized version of that locked asset, and that asset will receive higher yield and that comes from boosted reward sharing or similar mechanics like that. And during the initial RETRO token distribution, they’ll also earn RETRO incentives to lock or stake those on our platform. So what the user gives up for that is the governance power of their token. And that’s moved over to a capped supply RETRO token, and that token grants proxy voting rights on the Treasury assets own by Retrograde, and it also serves as a Retrograde Protocol governance token itself. Yeah, so we don’t know exactly what will happen with Anchor. Obviously, we want to push a lot of protocols towards a model that benefits lockers. But we do know from the Astroport docs that Astroport is building vxASTRO, which seems to operate very similarly to veCRV. So given these models, we want to give users, protocols, and DAOs the pieces of the token that they’re most interested in, and similar to how Convex managed to supercharge the Curve Wars, and bring in magnitudes more of stakeholders, are hoping the same thing will happen on Terra. And we see that same opportunity here and we want to supercharge foundational protocols like Anchor and Astroport to expand the universe of people that can get skin in the game.

danku_r 40:23
Nate, do you ask my typical question now? Or should I ask? You know which one I would like to ask Retrograde now, right? Wen? Wen token and wen Retrograde, right? So, how far are we away to see your solution on Terra, right, if you can share or have some insights?

tetris 40:41
Yeah, I can’t share a timeline. I will say soon. And I want to urge people to pay attention. We are planning to do an airdrop at some point. So yeah, that’s all I’ll share for now.

bitN8 40:58
I want to tokenize the word “soon”. [chuckle] I got I use it a lot too, I’ll probably go in debt. I actually had to pay for every time I say that. But if we could tokenize that, come on. [chuckle]

danku_r 41:12
Everything is possible, I’ve heard in DeFi as a whole. So maybe we need to do something in that direction. No. But thank you also for sharing that insight. And where can people find more information? So should they go to look at Medium, is Twitter the right place to have this code already?

tetris 41:29
Yeah, you can go to our Twitter profile retrogrademoney. We also just posted our website and our docs, which are available on our Twitter and join our Discord as well, which is linked on our Twitter as well.

danku_r 41:44
Nice one, super good, then I’ll check that one out myself, because I was also looking for more information on your pretty interesting platform. So then let’s move on to the more AMA part. I brought some speakers up here. Xulian was the first one. Sorry, ser, you were waiting for a long, long time. So please go ahead. And thank you for your patience.

xulian 42:06
Nah, it’s been super interesting. Thanks for having me up. danku, and everyone here. I want to touch a little bit on the tokenomics side, and kind of how Anchor’s looking to… For funding. I actually recently wrote about tokenomics, and I just keep finding that ve field feels just kind of like postponing of the selling in the end, but you’re not actually solving anything, you’re just kind of freezing and not allowing people to sell for some time. Is there any way that Anchor could look into other revenue sources, like validator nodes, or some other form of, say, partnering with the protocols that are essentially renting the Earn side to either have skin in the game with Anchor tokens or have some type of, almost, tax that goes into the Anchor treasury. That way it’s… Anchor doesn’t necessarily only depend on the Borrow side, but also has other ways of kind of generating revenue for the Treasury.

bitN8 43:08
Yeah, I think it should be a multi-pronged approach. I don’t think that the ve token model takes any of your ideas off the table, I don’t see it is a one or nothing approach. There’s certainly ideas that I’ve thrown out there, that the community has thrown out there, for an example withdrawal tax on aUST that simply buys and burns Anchor, right, that would help drive support behind the price of Anchor, it would help stop people from quickly rent seeking, right. If you charge like a 1% tax on a… It’ll be ike an 18, or 19-day lock period, or not necessarily a real lock but you would need to wait that long just to break even, so it would stop a lot of that short term reward harvesting.

xulian 43:59
Is there any talk to any of the protocols about implementing something like that, or just having them require a certain amount of skin in the game, if they’re going to be using Anchor on the back end? I’m just thinking of protocols like even Orion that isn’t really anything except a front end for Anchor on a different platform.

bitN8 44:19
So I mean, it’s interesting, Sam and I had had a conversation with Nexus, who use the Borrow side pretty heavily and they’re certainly in favor of this new model. They want to own Anchor, they own Anchor, they want to put it to use in governance to support what they’re doing on the Borrow side. As far as the Earn side, I think it’s hard to really differentiate what exactly is a smart contract and then there’s ways to subvert that and obfuscate it. So you don’t necessarily think you look at it in that way. I think you’d look at it more as just a basic Earn way. And what we were talking about earlier on the call is moving more towards a model where the Earn side does require some vested ANC tokens, were to require protocols that use it to actually have skin in the game.

xulian 45:15
Right. Awesome. Thanks.

danku_r 45:18
Thank you, sir. Well, let’s move on with Marty.

marty schoffstall 45:21
So I want to go back to the word “permanent”, and that this Convex-like protocol would require a permanent lock. And I’m just trying to think in terms of Western finance. You got 99 year German Bund bonds, some of the Vatican stuff, historically, was kind of long term, but permanent. Why that concept?

bitN8 45:53
I don’t think anyone’s brought up permanent lock. We’re talking about somewhere between one and four year lock periods.

marty schoffstall 45:59
No, no, I’m sorry, what was the Retrograde people… Forgive me. Sorry. I think he used the word permanent.

José Maria Macedo 46:06
I think… Yeah, go ahead.

tetris 46:09
Sure. So, of course the contracts themselves can always evolve. The idea is for protocols that offer a locking mechanism, Retrograde intends to keep the assets locked. And the end user receives a liquid token version of that locked asset. And that’s kind of necessary for the Convex-like protocol to have max benefit of its strategy.

marty schoffstall 46:43
I mean, Thanks for the answer. I mean, I’m not necessarily heartened by the answer. But thank you for being clear.

José Maria Macedo 46:49
I think the other side of that is just that the vx token, and the ve tokens are non-transferable. And so there’s no way for you to be able to stake that with Retrograde. And so they have to take your ANC, or your ASTRO, and then they’ll lock it up forever, and give you the liquid staking derivative. I think it is possible at some point that there would be a DAO vote so that the Retrograde DAO would vote to unlock the ASTRO or the ANC. But yeah, that hasn’t happened on Ethereum yet. For ASTRO, we’re kind of thinking through a potential withdrawal tax. So if you want to unlock before the four years, you’d just pay some tax that would be distributed to everyone who stays in. Obviously, it has to be pretty high to discourage that from happening. But then that would allow it to not be, I guess, an infinite lock with something like Retrograde because you could just rage quit, what we’re calling it, and pay the tax. I don’t know if that makes sense. And let me know, Retrograde, if that’s not the case.

marty schoffstall 47:53
So I understand that the vx and ve tokens are permanent ties to me, which is different than Convex, right. I mean, Convex, theoretically, you could have infinite recursion, there’s people that could pile into Convex. So, I realized that what Terra is doing is different than the Curve Convex situation. But then this Retrograde aspect of saying…

José Maria Macedo 48:20
Not sure I understand what’s different. Sorry.

marty schoffstall 48:23
Again, maybe I don’t understand what you’re saying is like, I have the ability to give my Convex token to other people, right?

José Maria Macedo 48:33
Yeah, you have the ability to give your Convex token to other people, but not your veCRV, right. And so that’s why you can’t… You don’t give your veCRV to Convex, you give them your CRV and then they max lock it.

marty schoffstall 48:44
But not permanent.

José Maria Macedo 48:46
Well, I mean, how do you get it back? It would have to be… With Convex it would have to be like CVX holders all voting to unlock all their veCRV, which could happen but the liquid staking derivative that they offer is not redeemable. So in a sense it is permanent. You’ve given away your CRV forever unless the DAO votes to unlock it and redistribute it back to CVX holders. But even then it wouldn’t go to you as a liquid staking derivative holder. So when you give them your CRV in exchange for the liquid staking derivative, that CRV, it’s kind of gone forever.

bitN8 49:21
It’s kind of like… Think of it in the real world. It’s kind of like when parents give the right of survivorship, right, they kind of give their house away to their kids, but they still have the right to live there until they die. [chuckle] It’s kind of similar to that but Solidly changes this a bit with their veNFT model, which… Talk about rage quitting. Who knows that this is gonna happen, but yeah, I think it probably could evolve to that point too, where the actual vote locked tokens could be actually fungible.

Atari 49:55
Yeah, I’ll chime in here. I think maybe one way to look at it is Retrograde serves to supercharge the experience for both the actual Anchor token holders as well as the protocol. In the protocol perspective, they want people to lokc for as long as they can. The idea is sell less and show true long term support. From the user perspective, they want to get the highest rewards, and they want to make the most use out of all of the revenue that Anchor Protocol generates. The way that that happens, is also by locking up the longest time. But the main problem about locking up the longest time is you can’t actually do anything with that ve token. It is locked up. So we provide the liquidity to where you can still make use out of the token, you can trade it, you can sell it, but you get the most benefits out of it. Because all of that is transferred over to the derivative token reward. And then it’s going to be the exact same premise as Convex where the community can always just vote in, give us the token back once it’s unlocked. And each derivative token will be mapped one to one with a token in the Treasury.

marty schoffstall 51:21
Thank you all for the clarifications. Appreciate it.

bitN8 51:25
Thanks for the awesome question that really helped probably people get some insight, deeper insight they were hoping for.

danku_r 51:31
And thank you, Marty. Let’s go on to Apriori.

apriori 51:35
Hey, guys. Thanks for having me on. I appreciate the call and all the sharing of information. A couple questions. I’ve been following the proposals on the message board, talking to some peers about it. A couple things that I’m not sure if it had been discussed, or they might have come up just want to ask a little bit more directly on. Number one, has Anchor considered maybe rather than having users hold an ANC token, or vote locking it to unlock yield, doing something like Osmosis, and just having different tranches of locks 1 day, 7 days, 14 days, where you get a different reward based off of how long you are depositing your collateral for. Whereas it’s not forcing anybody to buy the Anchor token per se, but it is forcing the user to make a commitment for how long they will be providing liquidity in the lending or the Earn portion. And then my other question is, has Anchor considered spinning up their own SDK chain? As we’ve seen that fat protocols tend to accrue the most value, and there has been little proof that the application layer tokens have retained any value. Obviously, crypto is very nascent, but has Anchor consider this as more of a longer term roadmap, especially considering it’s been already integrated within the Cosmos interchain.

bitN8 53:05
Not sure I follow your second question there. Give me an example there and then I’ll jump in.

apriori 53:15
Sure. So if we look at Ethereum, over time Ethereum has accrued all the value of the underlying dApps on the chain and the underlying dApps for the most part have not agreed any value.

bitN8 53:29
Right. So the question is how is ANC gonna accrue value?

danku_r 53:34
Let me also maybe add there. I think I see the point of Apriori which… So Osmosis right now is its own DEX and chain, think about what would have happened if Uniswap would not have paid all the fees in ETH, but in UNI, right, in terms of the value itself came always to the Uniswap token instead of to ETH. So the question is, right, Apriori, please correct me, what if Anchor would be its own chain on the Cosmos SDK like we see Osmosis, Umee, Stargaze and all the others?

bitN8 54:05
Oh, I got you. Okay, I totally get it no. So spinning up a separate SDK, just like LUNA did for the actual Anchor token with its own validator set, is that where you’re going with it?

apriori 54:18
Yeah, absolutely. That’s correct.

bitN8 54:20
Okay, gotcha. That’s a massive undertaking. [chuckle] We’re still trying to get LUNA right. [chuckle] So no, we have not really thought about that. Back to your original question. Yes. We’ve actually talked about it. I’ve looked into it with the different tranches or different periods of time. It’s a lot harder with lending because liquidations come in and then if you get liquidated before the period of time you have to prorate fees. I think that gets tremendously complicated. On the surface I like it, makes a lot of sense. I’m just not sure it makes the most sense in a lending dynamic. The way I thought of it was like maybe you pay all your fees upfront, all your Borrow fees upfront when you lock it in, right, you pay all that and you get a discount on the fees if you do that, that requires you to lock the ANC tokens. But again, it doesn’t feel like a clean borrowing experience. And we want to make the borrowing experience as simple and easy as possible. We want to move more towards a one click model. Maybe once we get to that one click model we can look at more creative ideas around it. But we’re nowhere near looking at more complex strategies like that, unfortunately.

apriori 55:32
no, that definitely makes sense. Thank you for helping me clarify, danku. And also, just while I’m up here, I want to say thank you to José and the Delphi team, a lot of great resources on Terra, especially the Terra Autumn podcast series that’s still out there.

José Maria Macedo 55:48
Cheers, sir.

danku_r 55:49
Nice one. For now, we have no other questions, and we are almost again at an hour. I don’t know why, Nate, lately we always did it perfectly more or less. [chuckle]

bitN8 55:59
We did it. [chuckle]

danku_r 56:01
Which is crazy. I mean, if somebody wants to come up here, you still have a few minutes. I don’t know if the Retrograde team also José would like to add something now we have also listened to some questions and you have added here a lot of great discussion points.

Atari 56:14
Yeah, I’ll add on. Yeah, I was really hoping for Pedro to hop in. We really wanted to pretty much just thank the rest of the community for all of the discussion, challenging every point that was brought up in the original proposal. And I think that this is way more short of thoughtful analysis that we had ever expected. So it’s been incredible to be part of this process.

AndyMan 56:44
Hey, everybody, can you hear me?

danku_r 56:45
Yes. Andy, go ahead.

AndyMan 56:46
Hey, danku. Hi, everybody. I just… Quick question has Anchor considered an autorepay of the UST that’s in Earn. So if you’re approaching, say 80% LTV, it just automatically repays a portion of the value you’ve got in Earn?

bitN8 57:00
There have been some proposals that I’ve tried to get people to put up for community vote to get funding to do, but they seem to kind of stalled out. It’s definitely an area where I think that’s a pain point for borrowers. And I think if anyone out there has a great idea for borrower protection, there certainly could be community funds put towards that. I think community would overwhelmingly vote in favor of spinning something up that does something like that. Maybe not even just aUST but other assets. The problem that comes in with that, though, is you’ve got to give protocol ability to execute things in your wallet, and a lot of risk vectors are opened up when you do that. That’s the most complicated part of doing something like that.

AndyMan 57:49
Got it. Thanks.

danku_r 57:51
And we quickly add another one. We have Nick coming up here, and Mr. Atari, no worries, I’ll give a shout out to Pedro. I’ll just quickly text him and tell him that he should have come next time on here so that we can talk to him. [chuckle]

bitN8 58:05
Yeah. So…

danku_r 58:09
Oh, go ahead, Nate. We have Nick here quickly up, but you go first.

bitN8 58:13
No, no, go ahead. Come on up, Nick.

Nick 58:15
Hey, thanks. It was just sort of a related question. I think everybody… Not related to the token, so if there’s not time to answer this, I just need some help in terms of finding resources, I’m still trying to understand the partial liquidation mechanism and I put stuff out on the forum to try to understand where the fee deductor value gets calculated. And just trying to figure out, nobody wants to get liquidated. But it seems even though after reading the white paper, it’s hard to get assessment of where those values come from. And if it’s possible to actually look those up on real time, just to get a sense of, if a liquidation is going to happen, then what values are actually get thrown in in the fee deductor seems like the one that’s the most cryptic to kind of get a hold of. And if anybody could kind of give me an idea of how to look that up, or if there’s a way to create that so people can kind of see if they’re going to get a partial liquidation, what the consequences would be. I don’t know if that’s a future improvement. This is beyond the topic of what you guys are talking about but I figured I just ask the question. Because I’ve asked on the forums, and I haven’t gotten any responses. So I don’t know if I’m just out in the hinterlands or if it’s just much harder to figure that out. Thank you.

bitN8 59:27
Yeah, [chuckle] it’s not that straightforward, unfortunately. I wish I could give you the exact answer right now. But no, honestly, I can’t either. It’s in the code. You gotta run some scenarios based on that. And obviously, it’s determined on market price and bid depth, right, the discounts there. Yeah, I can’t give you an exact answer on that. But really, even if you knew that it’s still about maintaining a healthy LTV, right. You don’t want to ape in, you really just want to try to have a decent buffer based on what your perception of what market conditions are. Honestly, LUNA can drop 20%, you should really be ready for that at all times.

Nick 1:00:16
So do you… I mean, is that data available? I mean, I saw some post to get a sense of if there’s a partial liquidation, what the average percentage would be of person’s total holdings if it’s above… I mean, if it’s a partial, or is that just fairly based on the market conditions?

bitN8 1:00:35
So it’s a full liquidation if, I believe it’s $2,000 or less, is a full liquidation. And then yeah, above that, they’re partial liquidations, and I actually don’t have the number right now in my head. But yeah, to bring you back to whatever the healthy LTV would be stated at, I believe, but I don’t want to give false information either. I don’t have those numbers in my head. But the way to look it up is to go through the code. And not many people have done that. All the code is on the GitHub, you can go through the different contracts and query them and see the values that come out of it. But yeah, I think…

danku_r 1:01:13
Wait, Nate. So are we talking just about general partial liquidation. $2,000 value of LUNA, right. That’s the only threshold for full or partial liquidation.

bitN8 1:01:22
I believe. I have to check with… I’m pretty sure.

danku_r 1:01:25
Yeah. I am too.

bitN8 1:01:27
And then anything above that’s partial. And yeah, I don’t have exact metrics on that. I think it’s a valid point, though, the fact that [chuckle] I’m a core part of the protocol, and I can’t even exactly tell you what it is, right, it should be simplified. So as we move forward to simplifying the Borrow side, I think that’s definitely something that should be included in that bucket list.

Nick 1:01:53
Thank you so much for answering the question. I mean, if somebody at your level can’t really answer, it just makes me think that there’s no chance of me figuring it out. And I’m more interested in maybe playing around with potentially getting partially liquidated, just to see what the actual calculation is. Because some of the posts I’ve seen, there’s just not enough information out there. And it feels like the liquidation part is kind of a black box. And people are afraid of it, which legitimately so, but just because… ‘Cause there’s been issues with the oracle too, so I’m just trying to get more information about that part. And I appreciate your time.

bitN8 1:02:28
No, it’s really a good question. If we had Ryan on the call, he’s certainly, probably the one that could answer that. [chuckle]

danku_r 1:02:34
Cool. Should we bring it home, Nate?

bitN8 1:02:37
Let’s do it.

danku_r 1:02:39
Very good, then I would say thank you, everybody, for your time. It has been a great hour. Again, thank you, to our guests. Again, José and the whole team of Retrograde and I would say, Nate, we always need to close it with the words of everybody should go to the forum and keep on discussing, right. That’s the way [chuckle] how to get engaged with all of this.

bitN8 1:02:58
That’s the way and as you see, we read those things. And as you see from this AMA it definitely influences discussion, and I’ve seen an uptick in people putting really great ideas out there. So keep it coming. It definitely helps build up a solid protocol when this happens.

danku_r 1:03:13
Cool and thank you everybody, and see you soon again. Bye.

bitN8 1:03:17
Take care everyone.

Finn 1:03:18
Thanks for checking out another episode of The Ether. That was the veANC AMA recorded on Thursday, March 10th 2022. This episode of The Ether was brought to you by Orbital Command, a community validator on Terra dedicated to educating, expanding, and promoting the LUNAtic community. Visit OC’s What We Do page using the link in the show notes to take advantage of some of their other educational resources including weekly meetups to discuss Terra protocols, strategies, and concepts, the Terra Luna Intel Report on Telegram, and YouTube explainer videos on Terra concepts. You can also support their community efforts by considering them next time you’re delegating or redelegating your LUNA. Find out more at This episode of The Ether was also brought to you by Luart. Luart is the first gamified NFT platform built on the Terra network. Luart provides a seamless minting and trading experience all while earning you rewards just for being a user. Be sure to follow them on Twitter and join the community in the Discord server for the most up to date news and announcements regarding all the hot new NFT launches, platform upgrades, and new projects hitting the secondary marketplace. Are you ready to #PutYourHelmetOn and join the movement? Find out more at This episode of The Ether was also brought to you by WeFund. WeFund is a community crowdfunding cross-chain incubator on Terra and it’s the first launchpad that implements a milestone funding release system to protect investors. All money raised for projects is deposited in Anchor Protocol and it’s refundable, and all decisions are based on community voting power. WeFund is community focused and designed to be a user friendly experience for both project creators and investors. Be sure to follow them on Twitter and join the Telegram for more information. Links are in the show notes and check them out online at TerraSpaces appreciates the support from all our sponsors. For, I’m Finn. Thanks for listening.