Hello Lunatics! In this series of articles, I'll try to present all the protocols of the Terra blockchain and give you my point of view about them. First, the main building block : Anchor Protocol.
Anchor - https://app.anchorprotocol.com/Anchor is the first building block of the ecosystem (more on that in my introductory article, see link at the bottom). Anchor uses a combination of instruments to reach a target of 20% APY on deposits. More details on the origin of yield here :
Many protocols on Terra are built around Anchor. Those protocols will use the UST lent by user to deposit on anchor, and use the yield to create their product. Examples of this will be covered in future articles, but we could hint at HALO (anchor yield used to fund charities), LOTA & GLOW (yield used for no-loss lotteries), PYLON (yield used to fund startups and reward users with tokens allocations at IDO prices).
There are an infinite number of possibilities to build protocols around such a high yield. I personally don't use Anchor anymore, because I'm exposed to it through other protocols. But there is much sense to profit from it. You can also deposit at a lower rate but with an additional insurance.
Insurance options for Anchor & UST Peg.Borrowing to Earn - for power users :
Power users can also deposit their PoS assets as collateral to borrow UST at virtually no cost, and deposit them for the 20% yield. Currently LUNA & ETH are supported, with more to come. Not advised to standard user, as there is a liquidation risk if loan is not properly managed.
This was a follow up to my introductory article "Why LUNA over other blockchains ? " I hope you liked it. Check it out if you want to understand the complete logic of the Terra ecosystem.
