The Anchor DeFi ponzi collapse journal

Discussion in 'Crypto Assets' started by Pekelo, Mar 23, 2022.

  1. Pekelo


    In this thread we are going to journal the obvious, easily predictable collapse of one of the biggest DeFi ponzis called Anchor. And yes, it is a true ponzi. They promise 20% APR.


    Explanation post by DontMicrowaveCats

    "The Anchor platform has rapidly become one of the biggest Ponzis in all of crypto (surpassing $16 billion worth of *supposed* locked asset value)

    The premise is they offer an infinite fixed 20% APR yield to anybody who deposits UST on their platform.

    They are supposed to pay for this through people borrowing UST from those deposits (who would pay interest back to the platform on it.)

    However, of course there is a huge amount of deposits earning yield, while there is comparatively very few people borrowing to pay for it.

    And even dumber, they only charge like 11% APR interest to borrowers. So it's impossible to ever pay for the 20% yield.

    So what is happening is the platform's reserves they're supposed to pay depositor yield from is being rapidly drained every day.

    I posted this 2 weeks ago showing the situation then.

    At that time, the developers had just recently injected "$500 Million UST" into the reserve fund to top it up (just in time before it ran out completely) .

    After just 16 days, the total amount of deposits on Anchor has swelled an additional $2.4 Billion UST. Meanwhile the borrow amount has barely notched up at all.

    The reserves are being depleted by around $4-6 Million per day at this rate. If deposits keep going up, within just 8ish weeks the reserves will be totally gone.

    Making the matter worse, there are other Apps like Degenbox which create infinite loops on Anchor, allowing users to constantly re-collateralize their UST yield to earn more APR. So the growth in yield-obligations is exponential. They can't stop this.

    TL;DR - At the current rate, Anchor is once again just weeks away from completely depleting their reserves.

    The developers can top it up again by burning LUNA to mint UST, but the system is beyond repair at this point without dramatically dropping the yield %. Collapse (and a run on UST) is the only way out."
    Last edited: Mar 23, 2022
    zdreg likes this.
  2. Pekelo


    Since I am a nice guy, here is a counter argument, we shall see which one is right:

    User pgrijpink

    "With Anchor, investors are not paid with money from other investors. They’re paid with money from the yield reserve. This reserve was recently topped up with 500 million which was gained from selling Luna the development team owned. Nothing sketchy here.

    Something unsustainable doesn’t have to fail just because it’s unsustainable now and definitely not in the same way a ponzi would. When the yield reserve runs out, the yield on anchor will drop to the real yield the protocol generates which currently lies around 5%. Principal is not lost and neither are past rewards. All that will happen is that future rewards will be lower."
  3. SunTrader


    Bitchers gotta bitch.
    johnarb likes this.
  4. Specterx


    Who is paying 5% (to say nothing of 11%) to borrow UST, and what are they doing with the cash?

    Am I to understand that the Anchor development team made $500 million (at least) from literally nothing by speculating in Luna, and is in effect giving this huge fortune away to random people on the street?
  5. Pekelo


    I wouldn't be surprised...
  6. Wow, someone is running a ponzi scheme again. Excuse me while I call CNN

    Here the OP thinks this is a big surprise to everyone. When in fact everyone already knows that giving your money to anyone with the promise of extreme returns is bullcrap, just like this thread is.
    johnarb and SunTrader like this.
  7. MKTrader


    More like "Old Failed Trader/Geezer Upset People Are Making Money in Crypto and He Doesn't Even Understand How" journal.
  8. LuckyMac


    There isnt much substance in this journal just some speculations that it isnt going to work without a logical argument saying why
    johnarb and MKTrader like this.
  9. Pekelo


    Oh really, you want logical? Please list the number of HFs, financial institutions that were able to pay out 20% APR year after year. If they drop the rate (as it is expected) capital will start to flow into the next ponzi promising 20%, speeding up their collapse.

    Madoff was a god with 10-11%...
  10. johnarb


    You are thinking that things will collapse soon™️

    Cryptos market cap valuation is $2T currently

    When it goes to $20T, you will miss out and continue to feel bad and look for negative stuff to post here

    When it goes to $50T, you will miss out and continue to feel bad and look for negative stuff to post here


    Take advantage of the opportunities of the very high growth and volatility in cryptos assets and manage your risks and capital, properly

    There's very good alpha in this crypto assets ecosystem

    Will you keep missing it for the next 5 years or 10 years, Pekelo?

    #10     Mar 24, 2022
    SunTrader likes this.