On Wednesday, Centralized cryptocurrency exchange Binance has launched its new staking program for TerraUSD (UST). Although Binance did not name the underlying decentralized finance protocol responsible for the staking rewards, Do Kwon – co-founder of Terra Luna (LUNA) – attributed the origins of high performance to Anchor Protocol, Terra protocol insignia.
Anchor rate is now available to 30M+ binance users
The anchor yield of web3 is living up to its name.
https://t.co/awubGdRJgP
— Do Kwon (@stablekwon) April 6, 2022
The Terra (Luna) ecosystem consists of its algorithmic stablecoin UST and governance/balancing token LUNA. Anchor Protocol claims that it works like a “cryptocurrency savings account”, allowing users to deposit their UST and earn up to 20% APY. The savings rate is financed through a combination of borrowers paying the interest on UST’s loans and the proceeds from its guarantees.
At press time, there remains an imbalance between borrowers and lenders, with UST 12.4bn in deposits dependent on income generated by just UST 3.47bn in loans. Anchor must draw on its reserves to pay the promised APY when this occurs. According to data from an unofficial tracking resource called Terra.engineer, Anchor has less than 340 million UST left in its reserves, down from roughly 450 million UST last month. Despite the decline in reserves, the Terra development team is using initiatives such as injecting more reserve capital and launching more revenue generation methods to maintain the protocol.
Earlier in the day, data from the official Luna Foundation Guard (LFG) Bitcoin (BTC) address shows that the entity purchased another 5,040 BTC ($222 million), bringing its total holdings to 35,768 BTC ($1,577 million). millions). LFG was launched in January to grow the Terra ecosystem and improve the sustainability of its stablecoins. Previously, Do Kwon said that he wanted to build a decentralized currency reserve, for UST, using both LUNA and BTC. LFG plans to expand its BTC reserves to $10 billion, with additional purchases after that based on how much UST is minted.
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