A huge percentage of mirrors and edge protocols, collateral comes from aUST as collateral. It is a win-win and I think it can make us overtake edge protocol as money-market since MARS protocol like MIR earns from fees, it would make money to MARS holders, borrowing of assets would grow, meaning depositors earn more money, and since MARS doesn’t take cut for insurance, it would give depositors better rates. Meaning MARS holders win, depositors win, and borrowers win.
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I get your point, but i think this would just be like a different MIM-degenbox version all over again, with edge protocol using aUST as collateral as well now i don’t think it would be good nor sustainable for the ecosystem in the mid-long term
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Awful idea imo.
Degen-box strategy is detrimental to the Anchor reserve and to everyone not directly participating in it. Delphi Digital themselves said they are not very keen on adding it.
We should focus on getting rid of current looping strategies, not adding them.
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Edge protocol doesn’t allow degen box, and neither will MARS, degen box only works with static interest. , from my math, you will get at around 30% APR, which is lower than delta-neutral protocol on mirror protocol.
Degen box only works on abracadabra, because abracadabra uses Kashi Lending Technology to provide isolated lending markets, keyword ISOLATED, that means if all money of market gets drawn out, APY still stays same, and that applies for other markets.
This is the reason why “degen box” on edge doesn’t give insane rates like on abracadabra. Bcs every time you loop your rate increases
the thing is degen box doesn’t work on money markets, only isolated markets, look at edge protocol, with UST interest being at 15-17% range, so degen box on edge now only gives around 30% at most, delta neutral strategy gives more. And when more assets come it becomes even less profitable, since UST gets borrowed for shorting.
You do know that the edge supply APY is a function of the utilization of the asset? If you have 3 protocols thats ledning and borrowing aUST/UST you don’t see the risks?
And also no, Atm Edge the rates to borrow is 13% APR - they also allow you to borrow up to 95% of your total aUST value + 0,5% supply APY - That means you’re able to get SOME leverage just with the simple example: Deposit 100 UST on anchor - get aUST - supply aUST on edge - borrow 95%value in UST - repeat step 1-3, in this scenario you are not even taking Mars’ future dynamic interest rates, the fact that depositors get maUST from depositing UST in the red bank nor that Edge could vote to use maUST as colletaral into consideration… sure it’s not Mim-UST level right now, it’s also not worth it? Taking aUST as collateral doesn’t actually benefit the protocol and would just drain UST supply from the Red Bank and increase rates for everyone that’s actually using the protocol, you then have aUST, maUST, UST and also vUST… that’s not a sustainable ecosystem
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I told you in the post above, that “degen” box on edge protocol is not very profitable, doing a delta-neutral strategy on mirror is more profitable. But how doesn’t this help MARS protocol, people like to use aUST as collateral, bcs then their positions generate interest. You said “drain UST supply from the Red Bank” isn’t that the point of bank, to find lenders and give their money to borrowers for interest.
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Yes as of now the fields of Mars are a huge success but it is only early days(5m each strategy), however the Red Bank as of now is un-utilised this is a problem and aUST collateral is one solution.
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Kirito040, there seems to be a misunderstanding. What Mivex39441 is saying is that when you borrow MIM on Abracadabra, there is only a 1% fee upfront, and you are only charged 2.5% in interest.
When you compare that to Edge, there is at least > 10% in interest, and if you were to loop that, the difference also grows, meaning that you cannot really compare Edge to Abracadabra as it is not as nearly effective due to you paying so much in interest.
I have answered most of things you wrote above, in other answers, about having aUST, maUST, UST and also vUST, we have LUNA, BLUNA, nLUNA, LUNAX, stLUNA, yLUNA, pLUNA, cLUNA, and each of them have their own function
Yeah, no i got that, it’s not AS profitable, however simply imagine the scenario of one person:
Deposits 1000 ust into anchor - gets 800 aUST - uses aUST on edge - withdraws 760UST - Deposits back into anchor - gets around 600aUST - deposits aUST into Mars (because now APY is higher there) - withdraws atleast 500ust to deposit back into anchor for aUST
well you get the idea… then imagine a ton of people AND other protocols doing the same thing.
Theres also the possibility that edge takes on maUST as collateral which would even further increase the looping.
Since Edges APR and APY on borrow and lending is just based on utilization and Mars will implement dynamic interest rates this could see people borrowing against aUST on both platforms at very low rates. not to mention the Arb opportunities? It would put us in a situation were people are earning additional yield on aUST that is not actually utilized to capture any yield, meaning the protocols would have to fund the interest to depositors out of nothing?
what im trying to say is that Mars doesn’t really have any real need for aUST and that even if its not as much as the MIM-UST degen box you would still have a negative impact on the ecosystem.
Anchor could sustain the 20% apr much easier with the option to back end deposit the UST from their earn into Mars - Mars uses it for fields and lending - thus taking some pressure off of anchor.
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Yes and no?
The best use case for the UST deposited into the Red Bank is to have it utilized in the fields of Mars for c-2-c lending? that way it captures way more yield for the depositors? have you read the litepaper and medium articles?
I’m not saying it’s as profitable as “degen-box” im just saying it potentially could be if people, arbers and protocols starts looping around aUST withing our own ecosystem, and that this doesn’t benefit Mars protocol, anchor or the ecosystem.
For a whale those additional 5%-10% aprs gained from just looping is Very profitable, and if more whales do the same there is a potential for a big problem.
LOL yes and stader themselves promoted “DEGEN BOX STRATEGY” with LunaX when edge accepted it as collateral and now look at the arb opportunities theres been on LunaX recently 
It’s a brand new protocol, still low liquidity and safety parameters, not all features active, and still you have Alpha Homora v2, Spec and apollo working on plans to get credit-lines? why go to aUST when UST deposits is whats needed to fund these strategies when implemented, just give it some time.
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here is the thing, you can’t put more aUST on edge, that is bcs of limit, so the max rate you can currently get on edge is around 23%, that is shit compared to mirror, now let’s say you remove that limit, profit goes down, more people want to loop, and interest goes up. And it goes many times above 20-30% for borrowing meaning people how loop lose money. The only reason why someone borrows UST is to “short” UST, or in reality long other assets, now currently I don’t see any reason why anyone would use MARS protocol to borrow, why not use edge protocol with LUNAX, and you get same result on EDGE but with better rates. Or anchor where you get payed to loan money. While fields of MARS have many reason to borrow, and look at it, most of money got borrowed.
Again, those whales barely get 10%, they would get even more with MIRROR protocol if they want to be safe, if they want to risk with a price of LUNA they can get easily around 30-40% APY/APR on LUNA.
Currently, can you give me any reason to use MARS protocol over other protocols like EDGE, Mirror, or Anchor.
Yes, theres a cap at edge, what im trying to get at is that if Mars, Edge, and Mirror all offer aUST as collateral, then by having several protocols collaborating one could deposit aUST on Mars, borrow UST deposit on Edge, put into ANC and simply loop it on mirror with other strategies. Then the other protocol deposits aUST on Edge, supplies UST Mars, uses maUST where it’s accepted as collateral later.
I’m not trying to say that you make a ton of money with this, what I’m trying to say is that by whales, and other protocols this would open up the ecosystem for potential exploit and would not benefit the ecosystem in general. Those 10% gains by a simple low risk strategy for whales could very well be worth it as it could be a lot of money.
The benefits of Mars would be that you could use the Red Bank like Aave? Deposit any collateral - get a maVersion asset accruing value - currently it would benefit Mars to have more people using Edge to get UST for aUST collateral and then deposit that UST into Mars. Would also benefit the ecosystem more that UST is deposited into Mars which can be used with different strategies to generate yied on the UST - instead of having 3protocols with aUST as collateral generating yield from nothing.
Having aUST as collateral would still not really benefit Mars as it’s not going to be something you could use directly in the Fields.
Im not trying to say that I don’t understand your reasoning or be disrespectfull if that how i’ve come of. I’m just trying to say that as José from delphi said I don’t it would be good for the ecosystem and that the risk outweigh the benefits for Mars to accept aUST as collateral
For the first part, that doesn’t make sense, currently, the mirror gives the top rate of 40%, double of anchor, and the average is around 35%. So the return is X * r where X is an investment, and r is a rate of return. Anchor has r of 20%, the mirror has 35%, and so on. Since the return of mirror, delta-neutral depends on using aUST as collateral. If you borrow money to use on the mirror, you don’t get X * r, you will get X * r * R, where R is borrow rate, and is between 0 and 0.95, that is max rate of which you can borrow. So if you put your money in any protocol which gives back tokens for supplying, with no interest, you still don’t get the same rate as putting all your money directly.
So you make less money doing that. The thing is the security of aUST depends on ANC, not MARS, EDGE, MIR or any other protocol, if they all get hacked aUST is still safe. If you are whale, why not use other protocols, that give much higher rates on stablecoin, if you are a whale you can afford transactions of ETH and all bridging you want. It’s better to just use those protocol or degen box
You can use EDGE like AAVE, you deposit any of the assets, and borrow any other asset. APY of UST on edge is 14-18% range, for MARS rate of 0.03% that is just losing money. And how would it benefit MARS, people don’t use MARS, you can’t do anything on it, compared to anchor, mirror, and edge. How are they generating yield from nothing, they make money the same as anyone who uses aUST, the mirror makes you money from LP providing and shorting, it generates money from keeping the price of mAsset pegged.
You don’t need to use it directly in the Fields. I also backed a proposal to list LunaX, ANC, and MIR. aUST allows people to give safety to their positions, it allows you to earn yield while shorting or backing. People like to use those assets, bcs it gives them some sort of insurance, and it offsets the costs of borrowing.
I understand your points, and I sort of agree with some of them. But you are looking small problem, that only benefits a small number of people while ignoring all ways it would benefit MARS system in general.
Here is Edge protocols deposits:
UST 18.1M
aUST 15M with cap
LunaX 7.1M
Luna 5.6M
ANC 3.89M
bLuna 1.37M
MIR 340K
aUST would be higher if there was no cap, but look at LunaX and Luna, what LunaX is to Luna, aUST is to UST, people use it for same reason why people use aUST, it gives them ability to make loans and forget borow rate. Than look at coins that can’t be used for those things, ANC, bLuna and MIR.
Like i said i still get your points, and think a lot of them makes sense, i’ve agreed to some of your posts and would actually like to see them being put up for vote, so for now i think lets’ agree to disagree? i don’t really want to see a division of the community into different camps and a toxic environment this early on and i don’t think that either of us is going to be able to change eachothers minds lol so I’m going to bow out of this topic now.
Also I’m not trying to say that you are wrong. All i am saying is that MY personal belief is that aUST as collateral could decrease UST deposits into the Red Bank making fields less utilized and that I believe that it would benefit an optimal use case of the protocol and that there could be problems that does not benefit the ecosystem, as José from Delphi also seemed to be agreeing on. However that doesn’t mean i don’t agree with some of your points. As i said Mars is brand new, with limited strategies and caps on them atm, once more strategies are introduced and caps raised the demand for UST on Mars will go up hence driving up the APR for UST deposits and taking loans would become more expensive to a point where you can’t take loans with ust and forget borrow rate, also does not help spread UST to other chains.
I think aUST as collateral was needed to be brought up and I think you have done a good job at submitting other assets as well. I just don’t agree with this particular one, absolutely nothing personal, and I think our debate has given the community some different aspects that they can consider and give additional inputs on so we can actually gauge how the community feels for once this gets put up as a proposal.
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I agree with you on disagreeing, but your personal belief is that aUST as collateral could decrease UST deposits into the Red Bank is wrong. Let’s say that we have aUST as collateral, and people right now loop it into degen box with current rates. So your profit per loop is 19%, and your profit on collateral is 0%, no one borrows aUST, that would make the demand for UST go up, meaning the rate on UST goes UP, and if it gets higher than 20%, people would want to deposit UST to get higher rates than anchor offers. Now all those people who put money in degen box and looped are lossing money, some may even be liqidated. So they start unwinding their positions, take out aUST, get UST and return that UST, meaning that rate/demand for UST goes down. Now let’s say no one deposits UST in protocol, then rate would UST would be high AF, probably more than 100%, now I doubt that no one would want to deposit UST for 100% APY.
Here is proof of that. I will release app in next few weeks that tracks interests on terra protocols, specifically of edge, rate of UST goes moves between 14-18%, whenever it gets above 20-25% range, people liquidate their aUST and put it in UST, here is the catch, when rates drops bellow 20%, making it profitable to loop, their positions in UST still remain. This is sort of like manual yearn finance, people will put their money where it is most profitable.
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