Jan 27
Terra U | Anchor Protocol Lesson 1: The Basics
Anchor is a Savings Account and Lending Protocol. Deposit your UST, and earn 19.5% APY. Take out loans in UST against your Luna or ETH holdings.
Savings:
Anchor savings provides a stable yield on UST deposits of 19.5%. This yield comes from a diversified portfolio of staking-yields and interest payments from borrowers.
You can access Anchor Savings through Terra Station, or directly through the Anchor Web App: https://app.anchorprotocol.com/earn
Lending:
Anchor allows users to borrow stable coins using LUNA or ETH as collateral, up to 50% of the value of the collateral.
Users are incentivised to take out loans by being rewarded in ANC tokens, but have to pay a UST interest rate on their loan. Currently the interest rate on Anchor Loans is around 12%, and the Anchor rewards is around 10%. This results in a net borrowing fee of 12% -10% = 2% annually.
If the value of the loan rises to 60% of the value locked, user funds will be liquidated to repay the loan.
Anchor Loans can be accessed through the Anchor Web app.
ANC token:
The ANC token is the governance token of Anchor Protocol. Users can deposit ANC to create governance polls, or stake ANC to vote.
ANC stakers receive a share of Anchor Protocol fee revenues.
ANC is also distributed to borrowers from the platform to encourage borrowing.
Step-by-Step Walkthrough:
Check out Lesson 2 for a step-by-step walkthrough of the platform!
