I disagree. The return could just go down over time. The idea of taking more loans out against your borrowed loans is risky and can be done with any other loan provider. It opens you to a lot of risk because if you get liquidated you will lose a lot.
>Then this resembles a classic Ponzi scheme.
Anchor itself isn't. A Ponzi scheme is where earlier investors are paid with the funds of later investors and is not sustainable without growth. In a Ponzi scheme not everyone can withdraw their money as the total reported money is more than the money deposited. In the case of Anchor the money reported is actually the same as the money deposited. Everyone is able to withdraw their UST. You can still get 18.06% APY on UST from Anchor right now.
The actual issue is with how Terra handles contraction of UST demand. As it turns Luna into an inflationary currency instead of a deflationary one. This is the danger of having your collaterals value tied to the growth of the stable coin itself. I can see how Terra + Anchor can look like a Ponzi scheme, but I personally don't see it that way. I personally just see another algorithmic stable coin deegging as demand for it goes down. The same thing would have eventually happened even without anchor. People could just get board of the project and decided to pull out.
I disagree. The return could just go down over time. The idea of taking more loans out against your borrowed loans is risky and can be done with any other loan provider. It opens you to a lot of risk because if you get liquidated you will lose a lot.
>Then this resembles a classic Ponzi scheme.
Anchor itself isn't. A Ponzi scheme is where earlier investors are paid with the funds of later investors and is not sustainable without growth. In a Ponzi scheme not everyone can withdraw their money as the total reported money is more than the money deposited. In the case of Anchor the money reported is actually the same as the money deposited. Everyone is able to withdraw their UST. You can still get 18.06% APY on UST from Anchor right now.
The actual issue is with how Terra handles contraction of UST demand. As it turns Luna into an inflationary currency instead of a deflationary one. This is the danger of having your collaterals value tied to the growth of the stable coin itself. I can see how Terra + Anchor can look like a Ponzi scheme, but I personally don't see it that way. I personally just see another algorithmic stable coin deegging as demand for it goes down. The same thing would have eventually happened even without anchor. People could just get board of the project and decided to pull out.