[Proposal] Increasing LTV ratio of vaults from 45-50% to 65-70%

The Anchor Protocol community has opted to raise the max LTV to 80% (Raise LTV to 80% - General - Anchor Protocol) from the current 60%. This will allow borrowers to borrow up to 70% with the liquidation point set at 80% rather than previously 70%. A governance vote is currently ongoing, and it stands a high chance to have it approved.

Since Nexus vaults derived its yield from its Anchor Borrow strategy, raising the LTV ratio for Nexus vaults from the current range of 45-50% to 65-70% will allow higher yield on the Nexus vaults.

With a borrow at 67% LTV, each $1000 bLUNA will borrow 670 UST to be deposited into the Anchor Earn, giving a yield of 670 * 19.5% = 130.65 UST/yr equivalent to 13.065% APR vs the current $1000 * 47% * 19.5% = 91.65 UST equivalent to 9.165% APR. Since the current borrow % & distribution % is giving a net APR of 0.01%, it cancels each other off.

Screenshot 2022-01-30 at 6.51.34 PM


As far as I know, this is automatic since Nexus values are set as 80% of Max LTV, not a specific amount. So if the LTV on Anchor should increase from 60% to 80%, it should automatically increase Nexus vault LTV from 48% (80% of 60%) to 64% (80% of 80%) as well.

Seems like there’ll be a governance vote going up after Anchor’s vote completes.

Seems so! I figured it was automatic given the way it was worded. I guess that’s just the way it was manually calculated rather than automatically set.

yes we will push out proposal to change the parameters once Anchors parameters change; the main reason being to be certain over the parameter changes on the anchor side, as the proposal will include embedded parameter change , which will be forcefully be executed once the proposal is passed. (Meaning that in very rare circumstance where Nexus governance proposal is passed, but Anchor Proposal is delayed in execution, vaults will make positions at automatic liquidation level.)

Although there may be 5~6 days gap of having relatively lower target ltv (48% vs 64%), performance difference of 5 days translated into less than 0.35% APR; which does not worth the systemic risk imo.

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