Thread by @ZeMariaMacedo

During the lockdrop event next week, users will receive $MARS for depositing and locking $UST in the lockdrop

Their locked $UST will also accrue interest while locked as it's loaned out by the Red Bank

But what will this interest rate look like?

This is pure speculation, but it seems to me that the Mars $UST rate will eventually converge on the 20% @anchor_protocol rate. Why?

If it's <20%, users will just borrow $UST on Mars and deposit on Anchor to arbitrage the yield

This becomes even easier if Mars governance chooses to accept $aUST as collateral. In this case users can execute their very own Terra-native degenbox strategy

Deposit $aUST in Mars --> borrow $UST --> deposit in Anchor --> deposit $aUST in Mars --> rinse and repeat

I'm not sure this is a good thing since it makes borrowing on Mars expensive, pricing out any borrow use cases generating <20% yield

Perhaps this can be solved by subsidising borrowing in some way, although we'll have to ensure this can't be gamed either

One idea might be to only subsidise borrowing by SCs and reject any SC credit line depositing into Anchor

Another idea might be not to allow $aUST as collateral, although this will only serve to delay the inevitable

Community discussion is gonna be interesting 👀