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Simply put:
ā
Depositor interest comes from the rewards for staking bLuna (collateral) + borrowing interest + reserve (if fall short)
ā
Scenario 1:
Depositor interest 19% = yield for bLuna is 4-5% + borrowing interest 12% + reserve (2-3%)
ā
Scenario 2:
Depositor interest 19% = yield for bLuna is 4-5% + borrowing interest 15% + reserve (0%), additional yield will go into the reserve
ā
Borrow interest rate increases proportionally with the utilisation ratio where, utilisation ratio = UST lent / UST deposited. Meaning that the borrowing interest rate will increase if more ppl borrow. To create sustainability, they need to capture the demand of borrowers and currently, they are working on introducing new collaterals such as ETH (Sol, etc will come in the future) and to increase the LTV for borrowing (50% - 60%).
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The 20% is unsustainable and will collapse when the $ runs out.
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Do research first before you sus anything
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Chang Yue Sin
Edited 21 Jul 2021
Consultant at Capgemini
Assuming that this post is not after watching my video, here is a guide on how anchor works: https:/...
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Def sus