Anchor Protocol looks to provide the best DeFi stablecoin yields of around ~19.5% APY with the famous stablecoin on @terra_money, $UST.
A thread on @anchor_protocol, its sustainability & future predictions π§΅
A thread on @anchor_protocol, its sustainability & future predictions π§΅
1/ TLDR:
Due to this high APY, Anchorβs treasury has been depleted twice and required top-ups from TerraForm Labs and Luna Foundation Guard.
Semi-Dynamic Rates was introduced to prolong the treasury until Anchor Protocol becomes more self-sustaining and releases its v2.
Due to this high APY, Anchorβs treasury has been depleted twice and required top-ups from TerraForm Labs and Luna Foundation Guard.
Semi-Dynamic Rates was introduced to prolong the treasury until Anchor Protocol becomes more self-sustaining and releases its v2.
2/ We believe that should Anchorβs treasury reserve be depleted once again, LFG will step in and help by providing another top-up due to Anchorβs overall importance in the whole Terra ecosystem.
3/ For context, Anchor Protocol is a savings, lending and borrowing platform built on the Terra blockchain.
4/ It is the most utilized application in the Terra ecosystem, offering lucrative passive income opportunities for depositors of UST and provides borrowers easy access to collateral-backed UST loans.
5/ Since Anchorβs launch in March 2021, its TVL has grown from ~$500m to ~$18B.
This consists of UST deposits as well as collateral in the form of bAssets.
This consists of UST deposits as well as collateral in the form of bAssets.
6/ Anchor Earn:
Anchor earn is the most notable function of Anchor Protocol. It provides depositors of UST a ~19.5% APY.
Deposit UST and earn UST.
With Anchorβs aim to provide the best DeFi stablecoin yield, it has maintained its ~20% APY since its inception.
Anchor earn is the most notable function of Anchor Protocol. It provides depositors of UST a ~19.5% APY.
Deposit UST and earn UST.
With Anchorβs aim to provide the best DeFi stablecoin yield, it has maintained its ~20% APY since its inception.
7/ Anchor Borrow:
In Anchor Borrow, one can collateralize their bAssets, which are liquid, tokenized representations of staked/bonded assets in the PoS blockchain.
After depositing bAssets, you can borrow Terra stablecoins ($UST) up to a certain LTV ratio.
In Anchor Borrow, one can collateralize their bAssets, which are liquid, tokenized representations of staked/bonded assets in the PoS blockchain.
After depositing bAssets, you can borrow Terra stablecoins ($UST) up to a certain LTV ratio.
8/ The borrowing amount is calculated based on the collateral types, prices and deposit amount.
It is important to note that if you are borrowing close to the LTV limit, any fall in price of your collateral might cause liquidations.
It is important to note that if you are borrowing close to the LTV limit, any fall in price of your collateral might cause liquidations.
9/ Borrowing and Distribution APR:
Borrowers are both charged as well as rewarded for utilizing Anchor Borrow. The picture below shows the current charges and rewards for Anchor Borrow:
Borrowers are both charged as well as rewarded for utilizing Anchor Borrow. The picture below shows the current charges and rewards for Anchor Borrow:
10/ The borrowed APR is the annualized rate of interest charged on the amount of $UST borrowed whilst the distribution APR is the annualized rewards (in $ANC) given to borrowers where the principal amount is the amount borrowed in $UST.
11/ Stablecoins borrowed from the market follows an algorithmically determined borrow rate, the rate constantly adjust based on the market supply and demand for stablecoins and increases as a function of the utilization ratio.
12/ The borrow rate increases proportionally with the utilization ratio, with parameters of the equation initially configured to accrue a 30% annualized borrow rate when the utilization rate is at 66.7% with a minimum base rate of 2%.
13/ Net APR & Effective Yield Calculations on Anchor Borrow:
Based on the current APRs, the Net APR is 15.03% of your borrowed amount if you stake the borrowed $UST in Anchor Earn.
Based on the current APRs, the Net APR is 15.03% of your borrowed amount if you stake the borrowed $UST in Anchor Earn.
14/ However, based on the type of assets deposited, your effective yield on your bAssets differs.
This is due to the difference in LTV, which determines how far you can stretch your borrowing from your collateral.
This is due to the difference in LTV, which determines how far you can stretch your borrowing from your collateral.
15/ Effective yields for bLUNA (80% LTV) is 9.02% whilst the other bAssets (60% LTV) are 6.76%.
These APYs on bAssets are generally higher than those offered by the market and you receive $UST for your $UST stake.
These APYs on bAssets are generally higher than those offered by the market and you receive $UST for your $UST stake.
16/ Liquidations:
A loan is liquidated when its liability is greater than its borrow limit.
However, in the case for anchors, loans with a total collateral value above $2,000 UST are partially liquidated.
A loan is liquidated when its liability is greater than its borrow limit.
However, in the case for anchors, loans with a total collateral value above $2,000 UST are partially liquidated.
17/ For multi-collateral liquidations, collaterals are liquidated proportional to each collateralβs value and inverse to its maximum LTV.
18/ Collaterals with lower maximum LTVs are given higher weight as they require a lesser amount of liquidated value to decrease the risk ratio to the safe risk ratio.
19/ Changes to Anchor Earn: "Semi-Dynamic Earn Rates"
The earn rate will change based on the change in the yield reserve and this will be done on a monthly basis (starting May).
The earn rate will change based on the change in the yield reserve and this will be done on a monthly basis (starting May).
20/ The full report available exclusively to Nansen Alpha includes "Anchor Forecasted: The Bull, Base, and Bear Case".
Special thanks to our analyst @DadaBatman for the report!
For more info, visit linktr.ee
Special thanks to our analyst @DadaBatman for the report!
For more info, visit linktr.ee
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