Real cost of borrowing stablecoins.
This is part 2 of the series, I will go through different chains in the next parts.
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This is part 2 of the series, I will go through different chains in the next parts.
🧵
https://twitter.com/DeFi_Made_Here/status/1485972078033399812?s=20
1/ Today there will be a short thread about the real cost of borrowing stablecoins on #Terra and does it worth it?
2/ Just a quick math on the very popular borrowing protocol @anchor_protocol on #Terra. Might be a little painful topic for a true #Lunatics
3/ You can borrow #UST against #bLuna at 60% LTV with NET APR -2% and after that the most popular strategy is to stake your #UST at @anchor_protocol for 19.5% APY. You can lp $UST with another token for a much higher APR but here comes IL into account.
4/ Let's talk about conservative way. I am considering 30% LTV to be safe for borrowing if you want to stay away from possible liquidation during market volatility. Another option to stay safe is to look on the charts from time to time.
https://twitter.com/DeFi_Made_Here/status/1484611560685424644?s=20
5/ So what is the real cost of borrowing $UST? Let's assume you have 1000$ of #LUNA and borrowed 300$ of $UST against it and deposited for a 19.5% APY. By the end of the year you will get (1000-2%)+(300+19.5%) = 1038.5$ -> 3.85% APY
6/ Just by delegating your #Luna you would get ~8% APR on your Luna and possible airdrops. So the real cost of borrowing against #Luna is the missing gains. There might be much more interesting ways to get yield on your #Luna, but this is outside today's topic.
7/ As always thank you for your attention.
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