Try Quests to earn crypto140. Anchor Collateralization
How much of the collateral provided on Anchor is bLUNA vs. bETH? How has this changed over the past 90 days?
Conclusion
In summary it can be said that the falling prices have a massive impact on the deposited collaterals. Firstly due to the liquidations and secondly due to the withdraw of bLUNA and bETH. Secondly, probably out of fear and to keep losses in check as prices continue to fall. The users prefer to have their tokens in liquid form in order to react more quickly.
Beside these, bETH in the last 90 days showed still a strong appearance with an increasing amount of Total Collateral.
When we look at the bigger picture (Anchor Total Collateral (bLUNA & bETH) over time) and the numbers for the entire period, they still look very good and solid. The last 90 days look here more like a consolidation phase than a strong decrease. But we see also a big drop beginning in August and a strong decrease till the beginning of September.
What we can say is, that providing collateral (and borrowing UST) is still very popular on Anchor, as it is one of its core features and a nice way to get liquidity without selling your assets. I am pretty sure that we will see higher numbers here in the near future as soon as the prices of Luna and ETH pick up again.
It also will be exciting to see what happens here in the near future, especially as more assets are announced for Anchor as bAssets.
What is Anchor protocol?
The Anchor protocol is a simple and robust savings protocol built on the Terra blockchain. It offers a stable yield of 20% for the UST stablecoin.
Anchor offers a few ways to earn interest, yield, ... you name it. In this case I will focus on providing bAssets as collaterals.
bETH and bLUNA as collateral
bAssets or bonded assets are tokens that represent a staked asset. bAssets give out block reward to the holder and are fungible and transferable like the staked assets. Currently you can bond ETH and LUNA, after bonding they are called bETH and bLUNA.
Those bAssets could be used for different actions, just holded and earn rewards with it, deposited to anchor to borrow UST or used on other projects like Nexus Protocol for example to let them 'work' and earn yields with it.
Collaterals are bAsstes, which can be deposited to Anchor. They are taken as a security to allow borrowing from Anchor. After you have provided bETH or bLUNA as a collateral to Anchor, you are able to borrow UST against it.
bLUNA & bETH price chart
When we look at the chart (last 90 days) above we see two totally different courses. While bETH (or ETH, it has a 1:1 ratio) is struggling since the middle of November until now, bLUNA was climbing since the beginning of November and had its all time high at the 26th of December, but is also struggling after this till today. This downtrend will have impact on the collaterals ... I'll come back to this later.
Note: Reporting date for all charts is 2022-01-31!
Why are bETH numbers lower than bLUNA numbers?
In my eyes there is a very easy answer to this. bETH numbers are way smaller than bLUNA in most charts, of course, because we should not forget, that Anchor is a service in the Terra ecosystem and LUNA is the main actor here. The barrier to entry is significantly lower within the ecosystem. bETH is 'just wrapped ETH' from Lido, which seems not too popular in this case. It is more complicated to move ETH to Anchor. And maybe, I don't know the ETH ecosystem very well, there are other better opportunities within the ETH ecosystem. But still the numbers of bETH are not low, they are high, but bLUNA number are much higher.
Liquidations
There is a possibility of getting liquidated! It is possible to be liquidated if the loan-to-value ratio (LTV) is too high and set to close to 60% or the prices of ETH or LUNA decrease significantly. Falling prices reduce the value of your deposited security and the LTV ratio increases. If the LTV exceeds 60%, you will be liquidated.
These liquidations have to be considered in our calculations and charts of the Total Collateral! The calculation of the Total Collateral must include deposits, withdraws and liquidations.
Note: Liquidations obviously reduce the volume of Total Collateral.
Collaterals
The following charts show only the summed up in- and outflows of bLUNA and bETH per day. So on some days the sum is positive, which means more bLUNA or bETH were deposited than withdrawn, and on other days the sum is negative, which means more assets have been withdrawn than deposited.
Note: Inflow means providing a collateral, outflow is withdrawing a collateral.
... as already mentioned at the beginning of this analysis, the price chart has massiv impact on liquidations.
When we look at the two charts below, we can see that with every drop in price the number of liquidations spike up.
Compared by the number of wallets and transactions, we can see that bLUNA numbers are much higher than bETH. Way more wallets in the Terra ecosystem are using Anchor to provide bLUNA as collateral than bETH and also more often.
Note: Sorry for the distorted chart, before the introduction of bETH on anchor, please just ignore these two lines. The rest of the chart is perfectly fine and the numbers are correct. It is only the optic that is a bit confusing.
In the last 90 days 4.3 million bLUNA and 'only' 4,630 bETH where liquidated.
When we look at a larger period of time, in this case the complete period of collaterals on Anchor, we see a total of 17.25 million bLUNA and 6750 bETH were liquidated.
Comparing these results with the numbers of liquidations of the last 90 days, we could see that 4630 out of 6750 bETH were liquidated. So most of all bETH liquidations happened in the last 90 days and only around 2000 before that period. Looking at bLUNA the numbers are a bit different 'only' 4.3 million, which i still a very hight number, out of a total of 17.5 liquidations were executed in the last 90 days.
As already mentioned, seeing this numbers it is totally clear that this is full based on the massive price decrease of the last two month.
Checking this numbers, we can see that till 31st of January the Total Collateral of bLUNA was 75.6 Million bLUNA and bETH has around 140k of Total Collateral. (Liquidations not included!)
Checking this numbers, we can see that in the last 90 days the Total Collateral of bLUNA was affected in a negative way. More withdraws than deposits in collateral, with a total of -2.815 million bLUNA. The bETH number are way more positive. In a difficult market, the Total Collateral of bETH could still grow, by about 59200 bETH. (Liquidations not included!)
