Do Kwon 🌕 on Twitter: "@CryptoChem0000 @anchor_protocol Reserve is meant to be used when the protocol is running st a deficit Just a month ago it was running at surplus If never used why have a reserve at all" / Twitter

Crypto Chem

| #KUJI Validator

| #SCRT

@CryptoChem0000

Jan 25

1/🧵 The issue isn’t the size of the reserve so adding more liquidity is just a band-aid approach to fix

@anchor_protocol

. The issue is that the deposit rate is too high (~19%) to be sustainable causing the protocol to have to drain the reserve to pay depositors. $LUNA $UST

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Do Kwon

@stablekwon

· Jan 25

Don’t wanna get another DM about the @anchor_protocol yield reserve. What do you want?

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Reserve is meant to be used when the protocol is running st a deficit Just a month ago it was running at surplus If never used why have a reserve at all

1:44 AM · Jan 26, 2022Twitter for iPhone

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and

Reminds me of when people got mad at a

@uniswapgrants

recipient requesting for funding, receiving $UNI as funding, and then actually using the UNI as funding. I don't think people really understand anything they're reading or participating in, even if it's basic as hell.

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I mean I think I have a valid point no? Look at the borrowings vs deposit. I get the idea of liquidity injections but that is just a temp fix.

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· Jan 26

Replying to @stablekwon and @anchor_protocol

I address that later in the thread. I understand the point of the reserve but deposits are growing rapidly while borrowing is declining. Either borrowers need more incentive or depositors need less because without liquidity injections the reserve will keep drying up.

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Replying to

and

I address that later in the thread. I understand the point of the reserve but deposits are growing rapidly while borrowing is declining. Either borrowers need more incentive or depositors need less because without liquidity injections the reserve will keep drying up.

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To paint a clearer picture I built this out in excel to show the shortfall

@anchor_protocol

is currently producing. If we took the borrowings, staked collateral & deposits and annualized the returns Anchor would be have a shortfall of ~665M. The reserve currently sits at $40M.

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Replying to

and

Used the borrow function just now for the first time to make a bid on Orca.. just sayin'💁‍♂️

Replying to

and

you want a peace, prepare for a war. It didn't happen YET. The reserve gives people a calm sleep. so why to change anything now. let it be... PS BUY POLAND

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But if 20% isn't sustainable than people will eventually abandon the protocol when liquidity dries up anyway. I get that 20% is an amazing rate and that's why competitors can't offer it because they haven't found a sustainable way to do it. I hope anchor can trust me!

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