In my deep and continuous research about the latest DeFi projects, I have stumbled upon one of the most interesting projects yet.
The Anchor Protocole is DeFi app built on the Terra Network for savings and staking. Their catchphrase emphasizes that matter "Better Savings".
So in this article, we will dive deep into what is the Anchor protocol and why is it an attractive saving solution that might raise eyebrows on why are we still using traditional financial tools.
Anchor Protocol (ANC)
The anchor protocol is built by Terraform Labs (TFL), It was created mainly to complete the portfolio of Terra and allow for more attractive offerings for its stable coin UST.
What makes ANC very attractive?
I will not dive into the history of "anchor" but more of what it has to offer for us investors.
Traditional banks offer 0,1-0.8% annual returns on savings and people used to see that as attractive "FREE" money.
Then what if I told you to create a wallet compatible with Terra Luna, transfer your hard-earned USD, and exchange them at a 1:1 ratio with UST (ex: 1000 $USD supposedly is equal to 1000 $UST) and up to them in your DeFi savings account to earn an approximate APR of 20% per year.
If that is not one of the most attractive deals for stablecoins in the crypto market today then I do not know what to tell you.
Let us dive into numbers:
Regular banks: 0.5% (Most common %)
10,000 USD * 0.5%= 50 USD per year
I mean we cannot complain it's free money but have you ever considered the opportunity cost? This 10,000 USD invested elsewhere could earn you much more than the saving account.
Anchor Protocol (ANC): 20% (APR tend to change)
10,000 UST * 20%= 2000 UST per year
This is a big example of how decentralized finance is allowing users to benefit from much larger APYs on their investments.
Anchor could be the gateway to DeFi for most people since it is not a risky coin or token that might change in price giving a 70% APR. UST is the stablecoin used on the Terra Luna network and can be purchased on any major exchange before being transferred into your terra wallet of choice.
Is there any risks?
If you are already in the crypto world you might know that stablecoins are a form of safer investment than other types of highly volatile crypto.
However please do your own research (DYOR) before investing in any type of assets.
This is not financial advice and not a paid advertisement. This is knowledge and experience in the crypto market put to greater use for everyone.
If you want me to write a full article on how does Anchor protocol exactly works and manage to get the 20% yearly payout to users on a stablecoin please leave a tip and follow my blog!
I hope you enjoyed the article and it was beneficial for your pockets. I would be more than happy with any comments to enhance the content!
Head to the companion article for a step-by-step tutorial!