Innovation in DeFi: Terra and Anchor

Anchor is driving the growth of Terra’s stablecoins by offering yields of up to 19.5.%. This isn’t just great news for those who lend their coins; it’s a massive plus for the entire community. Here’s why…

Stablecoins are vital to the future of crypto.

Because they’re pegged to traditional physical currencies, they avoid the fluctuations of other crypto monies and so provide a haven for those who want long-term price stability. 

Put simply, they provide the sort of reassurance that you would get in the old fiat world, but with the dynamism and democracy of crypto.

So we’re always keen to see stablecoin projects receive support. And, with this in mind, we’re excited to see the blossoming partnership between Terra, an open-source platform for the creation of stablecoins, and Anchor, a decentralised protocol that allows investors to enjoy low-volatility yields.

Terra, for those who don’t know, hosts a number of stablecoins including UST, the so-called ‘Terra Dollar’ which is pegged to the greenback. These coins are underpinned by a token called Luna, which is burned or minted to keep their value steady. Together, UST and Luna are now worth a combined $30bn. 

Demand for UST has exploded over recent months; during 2021, the coin’s market cap rose from under $200 million to over $10 billion. One of the key factors driving this growth is the surge of new, decentralised finance projects which incentivise the deposit of UST into their protocols.

One leading example is the Anchor protocol. Anchor is built on the Terra blockchain and it allows users to lend their UST in order to earn interest and yield. Users can also borrow UST from Anchor by staking collateral, either bonded ETH or bonded Luna. 

When users lend their UST to Anchor they receive aUST, a rebasing token that gradually accrues interest over time, as well as the rewards from bonded ETH and Luna. Borrowers of UST on Anchor also receive rewards through the issue of ANC tokens, which provide their own returns.

With rewards approaching 20%, Anchor has already built a huge following and is at the apex of UST’s growth, driving the currency towards universal recognition. We see yield as a key driver of crypto adoption going forward, and this partnership is at the very apex right now.

We’ve actually got our own collaboration with Anchor, offering the same 19.5% yields. Find out more about it here.

Why we’re particularly excited about this

 

Stablecoins are a vital counterweight to currencies like bitcoin, which offer greater potential gains but also more fluctuations. For crypto to thrive, investors need these steadier options which are pegged to the physical currencies they’ve grown up using.

 

So it’s great to see protocols like Anchor driving their growth by incentivising the use of currencies like UST and thereby creating a major, self-sustaining market. 

By creating a two-way rewards stream, Anchor allows the free and natural circulation of UST and helping crypto-holders achieve low-risk, long-term returns – just as they could in the old world.

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Earn 19% APY on your stablecoins