TERRA: 'Dry powder'

"Dry powder"

Let's talk about bonded assets on @anchor_protocol for a second. I got this idea from where @DeFinalFantasy gets his dry powder on the Terra blockchain.

Okay, there are several different ways to use bonded assets (like: $bLUNA), e.g.:

• bLUNA-LUNA LP
• bLUNA collateral @anchor_protocol borrow
• bLUNA autocompounding vault @NexusProtocol 
• nLUNA-PSI LP
• ... and 'dry powder.'

Each * CAN be a thread. We'll focus on the last one.

So: what is 'dry powder'?

$UST.

#thatwaseasy 

How do you get dry powder? That's easy, too:

1. buy it 
2. swap for it (but my precious LUNA!?!?!)
3. borrow it on @anchor_protocol borrow (but you have to pay it back, maybe, someday).
4. the fourth way @DeFinalFantasy showed me.

Let's focus on that fourth way. Getting protocol tokens on Terra is easy: you stake or you LP-up that protocol token, usually with $UST, and you get more of that token. This model is repeated vociferously throughout the blockchain.

Except for $UST, so I'm always $UST-poor. 😢

So, I'm $UST-poor? The fourth method: @LidoFinance TO THE RESCUE!

Lido allows you to 'BOND' your (underlying) assets to (bonded) assets (implicitly: with them).

You can go to their main page to see what's the rate of return for each asset-type.

Okay, but that's @LidoFinance ... who cares?

Well, I do, and everybody on Terra does, because Lido is the platform that owns the bonded assets on Terra.

You wan' proof? 😎

Let's go to @anchor_protocol bAssets page. What do we see? 

Our bonded assets generating $UST. SWEET! 

As you see, I'm accumulating a little bit o' dry powder with my little bit o' bonded assets. The more bonded assets you have lying around, the more dry powder you accumulate. It's that simple.

Now let's talk

• advantages,
• disadvantages,
• alternatives.

Advantages

You have $LUNA lying around, doing nothing.

You have $bLUNA lying around, THE EXACT SAME THING (almost 😅), earning you $UST at 7% (now).

NO BRAINER! ... maybe.

Disadvantages

There're downsides.

1) You have to BOND your asset, meaning arbitrage opportunities (at a usual 20%+ gain) basically evaporate.

2) You have to have your assets LYING AROUND, LOUNGING ABOUT, DOING NOTHING!

These are very serious concerns for me, a yield-farmer.

Alternatives

1. You can get dry powder in (a very few) other ways than bonding assets
2. You can do other things with your assets that get you better rates of return.

Let's break down these alternatives.

Alternative methods to get $UST:

• @anchor_protocol EARN at 18%.
• @Reflectaverse $rfUST which I measure to be 31%. Not bad, actually! 
• @SpecProtocol 180-day locked $SPEC stake at 14%. m'kay
• @RVRSProtocol $RVRS stake at '400%,' ... they claim. My measure is ~24%.

There are a couple other alternatives and two alternate $UST capital-preserving approaches:

1. @TeamKujira pays 12.5% on ACTIVE $aUST bids
2. @WhiteWhaleTerra pays ~0.5% over @anchor_protocol EARN

Capital-preserving δNeutral strategies:

1. @mirror_protocol
2. @ApertureFinance 

So, dry powder.

The thing is, it's a trade-off, right? You make 5-20% $UST on your asset, or you apply your asset to grow many (many, MANY) times faster, and sacrifice the dry powder.

I'm choosing the latter for now, but it's good to know I can do the former down the road.