Difference between revisions of "Anchor"
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More notes on Anchor relative to UST
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(More notes on Anchor relative to UST) |
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Anchor is a savings, lending and borrowing platform on the Terra blockchain. It offers passive income opportunities of up to 19.5% on stablecoin deposits and provides borrowers easy access to collateral-backed stablecoin loans. The platform was built by the South Korea-based Terraform Labs and launched on March 17, 2021. It was created in part to boost the overall demand for Terra's native stablecoin, UST. The current TVL of Anchor is over $15b<ref>https://defillama.com/protocol/anchor</ref>. | Anchor is a savings, lending and borrowing platform on the Terra blockchain. It offers passive income opportunities of up to 19.5% on stablecoin deposits and provides borrowers easy access to collateral-backed stablecoin loans. The platform was built by the South Korea-based Terraform Labs and launched on March 17, 2021. It was created in part to boost the overall demand for Terra's native stablecoin, UST. The current TVL of Anchor is over $15b<ref>https://defillama.com/protocol/anchor</ref>. | ||
== | == Overview == | ||
Anchor protocol has three main components: Bonded assets, a money market, and loan liquidation. | Anchor protocol has three main components: Bonded assets, a money market, and loan liquidation. | ||
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=== Loan Liquidation === | === Loan Liquidation === | ||
All loans on Anchor are over-collateralized, that means that the value of the collateral must be greater than the value of the loan. If the loan-to-value ratio falls below a specified percentage, Anchor starts selling the collateral to repay the loan. They use liquidators to observe and liquidate loans with a borrow amount above the allowed borrowing limit.<ref>https://docs.anchorprotocol.com/protocol/loan-liquidation</ref> | All loans on Anchor are over-collateralized, that means that the value of the collateral must be greater than the value of the loan. If the loan-to-value ratio falls below a specified percentage, Anchor starts selling the collateral to repay the loan. They use liquidators to observe and liquidate loans with a borrow amount above the allowed borrowing limit.<ref>https://docs.anchorprotocol.com/protocol/loan-liquidation</ref> | ||
== History == | |||
Anchor Protocol's yield reserve has been replenished on two occasions: once in July 2021 for $70 million<ref>https://agora.terra.money/t/bolstering-anchors-sustainability/1516</ref> and once in February 2022 for $450 million<ref>https://agora.terra.money/t/capitalising-anchors-reserve-with-450m/4236</ref>. In March 2022, Anchor Protocol governance voted to make the yield rate dynamic<ref>https://forum.anchorprotocol.com/t/dynamic-anchor-earn-rate/3042</ref>. | |||
== Significance == | |||
Anchor Protocol is widely seen as the primary driver for the expansion of UST usage. Through March 2022, Anchor provided a static 19.5% yield for UST deposits, funded by borrowing fees and the Anchor yield reserve. Deposits vastly outpaced borrows during this entire period, leading to near-depletions of the yield reserve. Anchor conducted two rounds of top-ups from the Luna Foundation Guard. | |||
== The ANC token == | == The ANC token == | ||