mKo, is the only asset that has a minimum collateral of 110 % and it is currently trading with a premium of -7.5% !!!.
This means that, despite the fundamentals of the underling asset that is considered a very good divident stock, Mirror users are borrowing mKO with aUST and selling it in order to have new UST to loop into Anchor and increase the annual yield offered by the lending protocol.
This remember me the MIM-Wonderland Saga that recently put at risk the UST peg.
As per Today, despite the negative premium that should bring buying pressure (the asset is sold at a 7.5% discount), the spiral to hell in not stopping, probably because a yield of 20% per year is a very strong incentive to selling.
In my opinion this is hurting both Anchor, that is giving out yield without any borrowing, and Mirror that has an asset that is not tradable anymore because it’s not following the price of the real underlying asset.
This should make us think about how the Mirror protocol is really used ( a sort of DEGEN BOX STRATEGY) and what are the implications of lowering the minimum collateral Ratio.
I’m personally buyng a lot of mKO and farming it because now its’ very cheap to buy and offers a very good yield on Spectrum, but I’m still wondering what is the solution that can stop this spiral.
Raising the minimum collateral Ratio again ?
Should we put a borrowing fee in addition to the 1.5 % tax ? think about that, if you borrow or short farm an asset you have also your money back and you can put them into Anchor waiting to close the short position ( all the other brokers don’t give you the money back when you open a short position they are freezed in the position) so maybe we shoud put a daily fee to keep the shorts open to stop this loop. ( just guessing)
I would like to hear your opinions/possible solutions to this problem.