There is $135M UST on Mars that’s earning 4%. But why?
I propose to deposit 85% of that UST into Anchor protocol to earn 20%, while keeping the remaining 15% on Mars as “working liquidity” to satisfy borrowing demands.
Ideally, we want to deposit 100% of the UST into Anchor and then convert aUST to UST on-demand as borrowing demands flow into the system.
This is NOT looping (degenbox strategy). This is simply getting the appropriate returns on idle capital.
- Monitoring system to ensure there’s always at least 15% of UST available to be borrowed on Mars
- Anyone can call the function to replenish the UST to the 15% threshold
- Start at 85% UST Deposit into Anchor and 15% “Working Liquidity” UST left on mars
- Objective is to one day have 100% Deposit into Anchor with on-demand conversion of aUST to UST when a borrower on Mars borrows UST.
What if there is not enough UST liquidity in anchor? If anchor gets very high borrow utilization we might get locked-out of our UST liquidity.
Red bank needs to have UST liquidity available at all times. Depositing in anchor breaks this constraint. Anchor liquidity is partially stored as bAssets and partially as UST.
I feel this could be easily addressed.
We would just need to have a if anchor utilization is X% then with draw X amount UST.
Total UST deposit is about 9B more then borrow.
an important role that Mars protocol is supposed to play in the Terra ecosystem is to provide an alternative, sustainable source of yield for UST, so that we are not overly reliant on Anchor which is not sustainable. putting Mars fund in Anchor defeats this purpose.
if increasing deposit yield on Red Bank is the objective, the best way to achieve that is to increase borrowing demand by 1) adding more collateral assets, 2) adding more strategies to the Fields of Mars, and 3) increasing the borrowing cap of existing Fields strats.