Today, I borrowed $UST through @anchor_protocol to expose myself a position to do LP on @StarTerra_io...
3 hours in, I think I discovered why using borrowed $UST to do LP is much better, more rewarding, and much more calming to my opinion
Thread below 🧵
3 hours in, I think I discovered why using borrowed $UST to do LP is much better, more rewarding, and much more calming to my opinion
Thread below 🧵
First off: You don't risk your actual assets.
Taking an example of this, assuming I take a loan of 20k $UST from my b $LUNA collateral, this means:
1. My loan is self-repaid (in the long run) through a net APR of ~12% (at time of writing) in ANC tokens
Taking an example of this, assuming I take a loan of 20k $UST from my b $LUNA collateral, this means:
1. My loan is self-repaid (in the long run) through a net APR of ~12% (at time of writing) in ANC tokens
Continuation of 1:
This means that before taking into account of LP rewards or LP value going up (or down), my $UST loan WILL BE repaid sooner or later, by selling off my ANC
2. With respect of 1, when my loan is repaid off, the LP position you enter later is essentially, free.
This means that before taking into account of LP rewards or LP value going up (or down), my $UST loan WILL BE repaid sooner or later, by selling off my ANC
2. With respect of 1, when my loan is repaid off, the LP position you enter later is essentially, free.
3. While you don't risk any exposure of your actual assets in question, you already have exposure to the underlying protocol; in my case STT-UST LP for "potential" airdrops and also $STT tokens as LP rewards (I can keep it to stake later or sell it to pay down my loan)
And remember, all these while, the LP value isn't a problem, it can go to 0 for all I care later but as long as I'm paid in ANC and [insert LP reward tokens], I'm gaining and repaying my loan closer by the day
So what's the caveat? What's the cons of doing this?
I think there's two.
Opportunity cost and safe borrowing procedures to follow.
I think there's two.
Opportunity cost and safe borrowing procedures to follow.
[Opportunity cost]
You could've used the borrowed $UST to do a lot of other things, eg buying the underlying tokens and single staking ( $MINE for example) or even just putting it back into Anchor for safer but lower returns
You could've used the borrowed $UST to do a lot of other things, eg buying the underlying tokens and single staking ( $MINE for example) or even just putting it back into Anchor for safer but lower returns
[Safe borrowing procedures]
I'm borrowing at around ~40% LTV and of course I'll be liquidated when $LUNA drops drastically till 60% LTV
There'll always be a chance I might get liquidated if a crash occurs and I legit keep monitoring my LTV 😂 despite having a notification
I'm borrowing at around ~40% LTV and of course I'll be liquidated when $LUNA drops drastically till 60% LTV
There'll always be a chance I might get liquidated if a crash occurs and I legit keep monitoring my LTV 😂 despite having a notification
Some things I can do: Setting up a anti-liquidation bot (but I definitely need to read up more into this)
But I do hope that this realization open a new path for you to farm more dry powder to buy more $LUNA in the end
wagmi frens 🤝🌕
But I do hope that this realization open a new path for you to farm more dry powder to buy more $LUNA in the end
wagmi frens 🤝🌕
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