APR going negative. Like most parts of Terra , one component usually has another balancing component that will activate when levels are maxxed or depleted. If net APR got to -10%, what would incentivize borrowing?
nothing!
Ok, so the balance is that if there’s no incentive then borrowers withdraw their collateral and no new borrowers take out positions. Anchor requires borrower collateral to function so Net APR rises again to attract borrowers
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