Add 2x LUNA-UST leveraged farm borrowing LUNA

Currently we have a 2x LUNA-UST leveraged Bull farm borrowing UST. We also don’t have any use case for deposited LUNA.

If we add a 2x LUNA-UST leveraged Bear farm, borrowing LUNA instead of UST, we add a product that complements our existing product.

Properties of the 2x LUNA-UST leveraged Bear farm are potentially useful to clients:

  1. the LUNA price delta from the Bear farm is much smaller than from the Bull farm. For a given amount of money in the initial contract, the delta of the whole position is (2x the delta from the LUNA-UST LP) - (delta from the borrowed LUNA). With small price changes, the position remains very close to delta neutral.
  2. The position risks liquidation if LUNA price goes up, instead of down.

Importantly, implementation of this proposal would add a borrowing use case for Red Bank LUNA deposits, and would improve the capital efficiency of the protocol.

1 Like