Since the emergence of Bitcoin in 2009, the field of cryptocurrency and blockchain has advanced. The success of the Bitcoin project has led to the creation of several thousands of other crypto projects. One of them is the Anchor Protocol project.
Though it’s still fairly new in the market, it has so far proved itself to be promising.
Anchor Protocol is a Decentralized Finance(Defi) platform that pays out 20% APY on cryptocurrency investments. That’s quite attractive right? Bet you are already salivating over knowing more about this cryptocurrency.
In the following, you’d learn more as regards the Anchor Protocol project – what it is and whether or not it’s a good investment. Keep reading!
Meaning of Anchor Protocol
On the Terra blockchain, there’s a lending and borrowing protocol called Anchor Protocol. Users can borrow, lend, and generate money thanks to its over-collateralized architecture.
Using the Terra blockchain’s investment protocol, depositors can withdraw their funds in a stress-free manner. As a further incentive, debtors who prove their loyalty to liquid-staked PoS investments will be eligible for an Anchor deposit. As an example of collateral, consider bETH or bLUNA.
Important features of Anchor Protocol
The Anchor Protocol has four key aspects to note. They are;
1. Provision of a liquidation pool.
Crypto assets are not the right alternative for users wanting low-risk, passive income because of their high price volatility. Terra stablecoin currency markets offer a solution from Anchor.
With Terra stablecoins, investors can avoid the high volatility of other cryptocurrencies by depositing stablecoins and receiving them back in the future. Deposit interest rate steadiness provides an additional level of protection against volatility.
2. Combination of stake yields with price yields to produce leverage.
To gain leverage, users can use their assets as collateral. Users can take advantage of lower interest rates. They’d do this by borrowing stablecoins and investing the money raised in assets.
These investments are more profitable than borrowing those coins. The virtual currency of the bank’s assets supports deposit interests. So, there’s no extra stablecoin liquidity for users without incurring extra charges.
3. Its money-saving features
Anchor Protocol stands out from the rest of the pack because of its money-saving features. The volatility of crypto assets is also a problem. So, investors seeking a low-risk passive income may wish to steer clear of these investments.
Anchor offers a solution in the form of Terra’s stablecoin money market. Users of Terra Coin receive stablecoins in return for their deposits, lowering the total volatility of cryptocurrencies.
4. Typical security measures
The liquidation process of the Anchor has resulted in measures to protect depositors’ funds. A high level of debt collateralization ensures the security of deposits.
Using the Anchor liquidation procedure, it can settle debts that are at risk of default of insufficient collateral. As a result, deposits are secured.
The Anchor Protocol’s mechanism
The Anchor Protocol (ANC) is powered by a series of two mechanisms. The two mechanisms are the trading of TerraUSD in the money market & bonded assets. The following are more details on them:
Trading of TerraUSD in the Money Market
Terra financial market is a smart contract built on the Terra blockchain. It allows users to borrow and deposit TerraUSD (UST), Interest-bearing loans from Terra deposits.
To borrow money from the pool, borrowers must pledge digital assets as security. The pool’s utilization ratio is used as a supply and demand indicator to determine interest rates.
It’s known as the “Anchor rate” in this protocol, where the interest goal serves as the backbone of the system. From the collateralized assets, the anchor smart contract interactively separates those block benefits between both the depositor and borrowers.
BAsset (Bonded Assets)
A tokenized stake on the PoS cryptocurrency known as a BAsset Bonded Asset is one of Anchor’s crucial primitives. Proof of stake assets can only be owned by those who have staked this bAsset.
The owners of bAsset, both transportable & fungible, receive block rewards. These owners can gather block benefits while retaining the liquidity and fungibility that are lacking in staked assets.
Where to Buy Anchor Protocol
Anchor Protocol is available for purchase online (ANC). Looking for the best ANC exchange site to buy, sell and trade? Listed here are the top Anchor Protocol exchanges based on their trading volume.
Note: Binance has delisted Anchor Protocol.
Current Worth of Anchor Protocol
The Anchor Protocol’s 24-hour trading volume currently stands at $84,153,284. Yesterday, the value of Anchor Protocol fell by 7.53 percent.
According to CoinMarketCap’s current ranking (84th), the coin is valued at a total of $904,101,445, with a current supply of 257,000,000 ANC tokens, and a maximum supply of 1,000,000,000 total tokens.
How secure is the Anchor Protocol?
The question of if Anchor Protocol is safe is a legitimate concern, regardless of how dependable the Anchor rate may be. It doesn’t if you’re a part of the Terra ecosystem for a long time.
These risks range from de-pegging to a potential crash in yields. Although it’s unlikely that these dangers will occur. As an Anchor Protocol shareholder, you’re to be conscious of the hazards you’re taking on while investing.
Anchor Protocol (ANC) contract address
Anchor Protocol (ANC) makes use of the Ethereum and Terra networks.
Ethereum: 0x0F3ADC247E91c3c50bC08721355A41037E89Bc20
Terra: terra14z56l0fp2lsf86zy3hty2z47ezkhnthtr9yq76
Is the Anchor Protocol a Smart Investment?
If you’re a member of the Terra ecosystem, investing in Anchor Protocol coin is a great way of building your portfolio. As a result of this protocol’s high anchor rate, you can rest assured that you’ll receive regular returns.
Before you invest in Anchor crypto, there are a few things to keep in mind. Any investment in the Anchor protocol coin needs thorough research and monitoring. This is in terms of its potential crash in yields, and also the ever-present Defi hacking danger.
Conclusion
Stablecoins based on Ethereum and UST are gradually added to the Anchor protocol. This makes it possible to earn an APY on savings that have never been possible before. The stability and reliability of the returns are ensured by the structure of the anchor.
Finally, as a result of its use of the Terra blockchain, it’s more scalable and costs less to use. In the long run, Anchor is well-positioned to be a long-term player in the Defi market.
Note: Cryptocurrency investment is risky, you may lose your investment.
