As far as I am concerned we need a higher TVL to be able to push out more AV. I understand there is a limit to the AV in general before we saturate the market but to make Alpaca really shine we need to move users from other protocols to Alpaca to get the total TVL up!
From my own experience, others and I think most people dont bother moving from protocol to protocol if you only get a few % extra. For instance if you get 8.5% at a platform for lending out stablecoins but you can move it to another platform and get 10% I dont think most people do it. So normally when people have deposited their stables somewhere it stays, unless a great opportunity arises.
We need to give users on other protocols a great opportunity to move their funds as lenders to Alpaca from the current protocol.
Why not incentivize lenders with some of the total AV profits that Alpaca and users will be making? rise the lending % from around 6-7%(the current) to around 12-13%(on stables) for a few months with a sliding scale going down to like 7-8%.
This should incentivize a lot of people to move it over to Alpaca and then they wont move out because 7-8% is still very good. But as I stated earlier, it takes some to move over people, but then they stay.
As you mentioned there is a limit to automated vaults because the farming rewards are limited and get further diluted with every additional vault/position. The limit can be somewhat stretched if the borrowing rates improve( more tvl in lending). Giving a temporary benefit/incentive is just artificially stretching it further over the limit.
Going from 6-7% to 12-13% means you’ll need an additional 1.2m per month for funding this incentive (1.2m is just for bnb and busd), which is money you’re taking away from AV users. It might work, but what if they do leave after the incentives end? utilization increases and AV users are again paying for it. Also, adding additional vaults has a similar effect: temporarily increases utilization and increases lending rates. So the problem solves itself to some degree.
I don’t think that competing for the best APR is the best option, increasing the utilization of ibtokens and vault tokens is in my opinion a better solution in the longer run.
so in short, a better solution would be to:
- Fix the peg for AUSD so it better maintains 1$. Find mechanics or set aside a budget too actually buy back AUSD.
- making it easy to loop AUSD so more busd/… can be deposited
- make it possible for vault users to mint AUSD
- create other alpaca tokens besides ausd (aBNB,…)
The lending assets have been increasing steadily on BNB. It appears the main bottleneck is farming rewards.
We had a sudden departure of a big volume of the BNB pool last days. Any idea on that? Was a whale or many small people moving it out? It shocked me somehow since the APY was very good for BNB at that moment, even better now of course.