Luna, UST, & Anchor

Every time UST is mentioned on r/cc inevitably someone in the comments asks about Anchor Protocol's APY and it's sustainability. Which is fair enough, people are looking for information and this subreddit seems like a reasonable place to get it. From my perspective though there's a problem with the answers those questions get. A lot of them say that about 12% is sustainable and don't give any specific information on how they arrived to that number. I assume at least some of the responders got that from an interview a while back where Luna Foundation Guard member mentioned that according to simulations 7-12% is sustainable. Not withstanding the potential source giving a wide range and responders only giving the highest number in that range the numbers come from simulations a.k.a. predictions so I wanted to know how Anchor's financials look right now and made a simple spreadsheet.

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https://preview.redd.it/78n9pdicjhu81.png?553&format=png&auto=webp&s=4831a27eb5ba57c5dc269918f53f14c36264b47d

Bear in mind I don't claim to be an expert, rather this is my understanding of the mechanics at play in Anchor. Green is the most straight forward just meant to show how long Anchor's yield reserve would last if there was no additional input or output to the protocol. It's also slightly misleading since the Protocol has already decided to drop the yield rate each month by 150 bps ( 1.5% ), but it's also used to calculate what "Market Rate" Anchor could pay out right now to UST depositors without the yield reserve. Yellow is where I get into speculation myself, not because I'm trying to predict the future but rather because I wanted to quantify the borrowing incentive Anchor uses. To be clear ANC, as it's currently designed, is an expense to the Protocol but what's shown here is marketing in the same way as yield reserve being topped up by LFG and as such is blown way out of proportion. Lastly Brown is just some fun to see how high I needed to pump up asset prices ( LUNA, ETH, AVAX, & ATOM ) to get market rate to roughly 12%. Don't take it as serious information since there is too many real variables to make it as such. It's to give you a sense of scale.

Lastly I'm not trying to convince you that any of the assets listed here or Anchor itself is good or bad. My hope is try to educate people. And if something in my numbers or understanding of the protocol is wrong I hope people in the comments will educate me.