We’re actually already talking about Terra’s Anchor

forexbrokr (74)in LeoFinance • 3 years ago

Direct from the desk of Dane Williams.

Here on LeoFinance, the latest nervous narrative surrounding Anchor and UST is nothing new.

The mainstream crypto media is finally jumping on the bandwagon and echoing the market's nerves about Terra (LUNA)’s UST and its reliance on the completely unsustainable Anchor.

Check out this excellent article today from our friends over at the massively popular Decrypt:

We Need to Talk About Terra's Anchor

After reading this one, it did what all good pieces of writing should do and stirred me up.

I'm outraged!

Haha yep, I couldn’t just flick it by without offering my 2c from a Hive perspective.

So here we are on the blog, digging up some of the older discussion points that we’ve already worked through on LeoFinance and finishing up by calling for HBD to at least be offered a seat at the table.

Anchor yield comes from 3 sources

The question of where does Anchor yield come from, keeps getting asked.

As we’ve already discussed, Anchor’s yield comes from the following 3 sources:

Interest charged to borrowers
Staking rewards earned from borrowers’ collateral
Liquidation fees

You can click the link above and read the previous post discussing Anchor’s yield for more detail on each, but the key point I want to reiterate here is that these 3 sources are highly imbalanced.

This ultimately means that in order for Anchor to be able to pay out its 20% yields as promised, they have to tap into a reserve fund.

Which over the long term is simply not sustainable!

With so much UST tied up in Anchor simply because it offers the best yields, this is horrendously risky for not only Anchor but UST and even LUNA itself.

Whatever you do in articles, just don’t mention the words death spiral!

Anchor yield can’t be maintained long term

Can Anchor yield be maintained long term is another question that we’ve answered and had a healthy discussion around here on LeoFinance.

And I’m sorry, but it just can’t.

With the 3 sources of Anchor yield being completely imbalanced and unable to support a 20% interest rate without running a reserve fund to zero, it is nothing but a marketing gimmick.

Now throw in this entirely VC funded, centralised $1 billion BTC reserve into the mix and it just gets worse.

An algorithmic stablecoin that relies on human intervention to maintain an unsustainable yield?

Lol

Now a decentralised stablecoin backed by closed-VC money?

Yeah, Terra and the crypto media outlets sprucing UST as algorithmic and decentralised are taking us for a ride.

Hive Backed Dollars (HBD) yield is sustainable

So with the mainstream crypto media starting to see the evolution of UST toward centralisation and collateralisation, I'm calling for Hive Backed Dollars (HBD) to receive more air time in the media.

The upgraded 20% APR offered on HBD is a sustainable alternative to Anchor that is changing the algorithmic stablecoin game.

Yet have we heard even a mention of this change anywhere outside of Hive's own community driven, blogging front-ends?

-crickets.

Getting back to the sustainability of HBD, the numbers simply don’t lie.

As has continued to be shown here on LeoFinance, HBD’s 20% yield is sustainable.

Under even the most potentially volatile, future market conditions, you can see that the HIVE inflation increase to maintain the 20% APR is a non-issue.

When you factor in an increase to the Hive haircut rule that is on the cards and the obvious growth that Hive is positioned to achieve, sustainability is not an issue for HBD’s 20% APR in the same way that it is for Terra’s Anchor.

Rest assured, Hive and its truly algorithmic stablecoin will never go down the same path as Terra and sell their soul to VCs for cash.

At this stage, comparing the community born and governed Hive blockchain to the VC-backed Terra is like comparing chalk and cheese.

So why does UST receive the headlines that would be more suited to HBD?

Hive Backed Dollars deserves a seat at the table

UST’s reliance on completely unsustainable, centralised yields from Anchor have meant that the stablecoin is not so decentralised and not so algorithmic.

So I wrap up by asking this simple question.

How can mainstream crypto media outlets like Decrypt continue to run stories about the market getting jittery about Anchor, without mentioning the only truly decentralised algorithmic stablecoin on the market?

There's just no more denying the fact that Hive Backed Dollars (HBD) at least deserves a seat at the table.

Best of probabilities to you.