Anchor is trying to attract stable farms with an ease of mind, they just need to be a little better than other defi yields. They dont need to be 20% vs curves 10%. Each increase in % yields have diminishing return on TVL attraction due to limits of crypto ecosystem. Even if rates were to be 100% lots of people outside of crypto would still be hesitant to join to farm anchor, but can more easily steal users from other defi. They just need to be better. I would do something like:
base_yield = (weighted average yield of all other defi farms) + 2-5%
yield = max(base_yield, 19.5)
I think what I would propose would be to change the yield number dynamically every week/month.
100k x (19.5% - 10%) = 9.5k extra profit per wallet per year. Transactions costs are not even comparable to benefits.
Managing this is frictionless to sophisticated whales, which is the entity the proposal is trying to limit.
Even if I was unsophisticated whale with $10m, I would still do this meaningless task over few days in order to get extra 100*9.5k ~1m. so still profit > friction
Anchor is trying to attract stable farms with an ease of mind, they just need to be a little better than other defi yields. They dont need to be 20% vs curves 10%. Each increase in % yields have diminishing return on TVL attraction due to limits of crypto ecosystem. Even if rates were to be 100% lots of people outside of crypto would still be hesitant to join to farm anchor, but can more easily steal users from other defi. They just need to be better. I would do something like:
base_yield = (weighted average yield of all other defi farms) + 2-5%
yield = max(base_yield, 19.5)
I think what I would propose would be to change the yield number dynamically every week/month.
enforcing deposit limits to whales sounds like a stupid idea in blockchain era where you can create 1000 wallets instantly
Unfortunately managing 1000 wallets might require a few more instants and transaction costs. Frictionless is not yet a reality.
100k x (19.5% - 10%) = 9.5k extra profit per wallet per year. Transactions costs are not even comparable to benefits.
Managing this is frictionless to sophisticated whales, which is the entity the proposal is trying to limit.
Even if I was unsophisticated whale with $10m, I would still do this meaningless task over few days in order to get extra 100*9.5k ~1m. so still profit > friction
In general, we should include some form of market in the definition of the yield!
Hey great article, how did you make the sexy diagrams?
The AMAZING Excalidraw
Agree, and this point does mainly exacerbate the topics discussed here. Keep up the good work!