Anchor protocol | what is the most important financial protocol on land

by Francesco Coppo
16 December 2023


Anchor protocol, what is the most important financial protocol on land.

Anchor Protocol is a financial service known for its use in the Terra ecosystem, reconciling the liquidity needs of investors in the decentralized world with the ambition for onerous passive returns like never before.

It is a so-called “anchor” system in which there is always a money market, within which those who deal with stablecoin operate. More precisely we have lenders and borrowers of stablecoin.

The benefits are also those of a decentralized monetary economy, where in this case the average annual return approaches an average of 20 percent for the deposit of UST, algorithmic stablecoin that will be explained in a further lecture.

As it happens, however, lenders can also put other tokens to yield, including ANC, native to the procollo, or the native to the Earth ecosystem, namely Luna, and other tokens transposed to the Earth blockchain such as Polkadot (bDOT) or Ethereum (bETH).

In fact, however, this is not the only annuity that Anchor offers; in fact, it is possible to borrow UST by pledging LUNA as collateral or to provide liquidity to the exchange system by pouring cash into the ANC-UST LP pool.

Anchor therefore proves to be a very useful tool when used by cautious and capable investors who are able to manage their portfolio risk.

As for any loss of value of the collateral asset greater than 50 percent, it would result in liquidation of the money disbursed by Anchor.

Author: Francesco Coppo

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