My opinion on Anchor Protocol
Before I dive into my current strategy on Anchor Protocol, lets start with the basic infomration and background about Terra’s token.
Terra is a programmable money for the internet that is easier to spend, and more attractive to hold
Terra is a blockchain protocol that supports stable programmable payments and open financial infrastructure development — sourced from Terra.money
Terra is developed by Terraform Labs — co-founded by Do Kwon and Daniel Shin in 2018.
If you are interested in reading up more about Terra, launched projects and upcoming projects, details can be found here.
- Luna is Terra’s Token
- ANC is the airdrop you can receive when you stake Luna in Terra Station
- TerraUSD (UST) is the stable coin of Terra, pegged again the US dollar.
I was first introduced to Luna on March 21, I didn't know much about the projects backed by Terra at the time. I purchased a small number of tokens back then but mainly for trading purposes.
Anchor Protocol (a Defi protocol) launched in late March 21, the platform built on the Terra blockchain, allow users to deposit the stable token (UST) to earn 20% APY (Annual % Yield). Far greater than the returns you would be getting from traditional banking.
What Am I doing on Anchor Protocol?
- I purchase Luna from an exchange (Binance, Kukoin, Coinbase)
- Transfer the tokens to my Terra Station Wallet
- Collateralised my loan by minting Luna to Bluna — then I take out a loan in UST against this.
Why am I taking out a loan? Isn't that risky?
Well, there are risks in everything you do, depositing your funds in a traditional bank is a risk, purchasing crypto is a risk (as you should only be putting in as much as you are willing to lose).
You get incentivised for taking out a loan on Anchor, at the time of writing this post, the incentive is 191.86% Net APR (Annual % Rate). The returns is paid out in the form of ANC token in real-time.
What to do with the loan?
With the UST loan, you can:
- Purchase more Luna — mint into Bluna and borrow more $$(high risk). This is because it will take 21 days if you want to burn the Bluna and claim your Luna back.
- Use the loan to purchase stocks such as Apple, Amazon, Airbnb in Mir Protocol
- Swap half of the UST to ANC token, and provide ANC-UST to a liquid pool, APR at the time of writing this post is 57%.
- The safest option is to put the loan into Anchor Earn, you will get 20% APY. This can be instantly withdrawn, should you need to access the fund quickly to repay the loan.
Overall, I am bullish on Terra tokens and their projects, I think there are alot of potentials. By being a Luna staker you will be privileged to all of the new projects’ airdrops.
In saying that, this post is not financial advice, DYOR. This post is a very simple summary of why I chose to take part in Anchor Protocol, you can participate in the official discussion on Terra’s telegram group and raise any questions you may have.
You can check out Anchor Protocol Dashboard here.