Is the whole Terra/Anchor and 20% earn going to shit

the bed in the next few weeks? What are latest plans to avoid reserves being depleted. Why don't they start reducing the APY to help slow this down!

I think Do probably wants the reserve to hit 0, just to demonstrate that everything will be fine

Luna price would fall so hard, because the terra ecosystem is all about anchor. And that because of the 20%😂👍

Read above , and stop believing blindly what you read on Twitter

Why would anchor start reducing the Anchor rate if the yield reserve can still help to serve it for now ?

Luna has an elastic supply, meaning that it expands/contracts according to the UST demand. Your assumption that a reduction of the anchor yield from 20 to 13/15% will trigger an exodus of capital is disingenuous. It also discounts the fact that aUST has utility as a collateral as well (mirror)

Thought experiment; if everyone dumped their UST, how would that impact the price of Luna?

You don’t have to imagine sir https://twitter.com/kariyakanav/status/1486930300773056516?s=21

Well, we just saw that with Degenbox unwinding. When people burn UST LUNA goes down. However as LUNA goes down its staking rewards go up making it more and more attractive and as people withdraw deposits from Anchor the sustainable yield goes up. It's all a balancing act.

Market cap for ust is $11.2B, and Luna MC is $17.8B , so if UST mc went to 0 then Luna MC would go to $29B ? That assumes price of Luna wouldn’t depreciate, but I’m guessing price of 1 Luna would go down nearly 80% ? Not sure 🤔

Not how this works

Well yeah that’s why I’m asking, this relationship between ust and Luna is interesting, somewhat complex. In general though if people pull out of a market that is tied to another market I believe they would both go down in value

When you burn UST you mint LUNA, so the more you burn UST the higher is LUNA supply and price goes down.

Do you think if it went down far enough it would cascade and cause holders to panic sell, bank run, and then basically kill the whole ecosystem? I’m wondering how much stress the system can handle; we’re kinda on a bear market now and it’s likely to continue so my guess is we may find out

We’ll if that happens we’ll see if luna is a great project

This is a dip mate... relax

If people want to exit UST , they’re not constrained to exit via a UST/Luna pair, so they could for example swap to USDT. When that happens , this puts a downwards selling pressure on UST which eventually leads to a depeg vs 1$ (ie 1 UST = 0.99x$) That’s when it become profitable for anyone to burn 1 UST in exchange for 1$ of Luna so as to pocket the difference between 1$ and 0.99x$ By the time enough people have minted Luna and burnt UST. The supply of UST has adjusted down and the peg is restored. The supply of Luna would have expanded in that case in order to accommodate for UST contraction

Yeah, I’m trying to predict in advance worst case senarios. We should use this dip to better understand weaknesses and risk, to make better decisions on risk exposure.

No one knows. I personally think this ecosystem is mature enough to withstand even very significant drawdown of UST marketcap and price of LUNA. There are usufull dApps that people want to use and need UST and LUNA for it. But it's my personal guess, no one knows for sure.

I’m only investing in LUNA and anchor

Yeah, I think it has shown some degree of resilience, not as solid as btc or eth long term, but I think they have a shot

I think we’ve seen worse back in May , where our liquidity parameters for expansion and contraction were not allowing on-chain swaps to happen fast enough .

Why not diversify? Spread your risk a bit to other projects ?

Everyone is focused on Anchor yield reserve but its a red herring. The real make it or break it issue is expanding utility of UST. If all the dApps that have been announced go live in 2022 there will be plenty of demand for UST going forward. We shall see!

The one concern I have is as things get bigger, TFL eventually won’t have enough capital to bail out in a crisis

Yeah, it’s a very interesting time

As they get bigger they are also more sustainable. See your point though.

Also more people are investing on anchor and luna so the project will keep growing

We’ll see, if they can get Anchor to be sustainable and grow a yield reserve than that would be a great milestone; so far though there is no indication that that will be the case. They have to compete with Curve and other ecosystems for borrowers

do you invest on anchor ?

It’s not TFL bailing UST out in times of crisis lol. There are some big players arbing UST depegs now

Yeah, I have UST, some Luna and a bit in AnC-ust pool, but my main amount is in Ust earn

I have 1000 LuNA 2000 anchor

Tfl is planning to top up the yield reserve again I heard, but yeah I understand that isn’t the only player

Yes and I do think LUNA price will go up quite rapidly once the current FUD over Anchor reserves are over, as it will further attest to the stability of the chain and its main stablecoin