ANCBUSDPERP
Anoncoin / Binance USD Perpetual Futures
crypto

Anchor is a decentralized money market built on Terra that offers UST (Terra's USD-pegged stablecoin) depositors a stable 20% annual percentage yield (APY). Borrowers can collateralize UST loans using bonded LUNA (bLUNA), Terra's native token. Anchor plans to expand support to other Proof-of-Stake (PoS) layer-1s such as Solana's native token, SOL. The protocol earns a return for the depositors by staking borrowers' LUNA collateral. ANC is Anchor's inflationary protocol token, offering holders governance rights as well as a percentage of protocol earnings. Terra Ecosystem Anchor Protocol, Terra stablecoins (including UST), Terraswap (an AMM), and Mirror Protocol are key primitives of the Terra blockchain, which is an independent Proof-of-Stake (PoS) network based on Tendermint consensus and the Cosmos SDK. Anchor facilitates lending UST for a fixed 20% APY and collateralized borrowing of UST. Borrowing in other stablecoins and the native tokens of other PoS layer-1 chains will be possible in the future. Deposits Deposited stablecoins are represented by Anchor Terra (aTerra). The required APY sourced from the yields on staked assets and the reserve is converted to Terra's stablecoins and paid to depositors. ANC governance currently sets Anchor's target yield at 20%. If rewards are not enough to cover the target yield, reserves are used and ANC incentives increase to incentivize more borrowing. When other assets become eligible collateral, the target yield will be set as a weighted moving average yield of the available staked collateral. Anchor Protocol aims to achieve stability in its deposit rate by adjusting the amount of staking rewards paid to borrowers, along with the use of reserves. When the collateral's staking rewards are insufficient to cover the lending APY, reserves are drawn down, and vice versa. Depositors are protected by automated liquidations of loans at risk of under collateralization. Borrowing stablecoins Borrowing stablecoins on Anchor requires users to lock up Bonded Assets (bAssets) as collateral and borrow stablecoins below the protocol-defined loan-to-value (LTV) ratio. The staking yields from bAsset collateral, currently limited to bLUNA, accrue to the global pool of collateral. The all-in stablecoin borrowing cost is a function of the utilization ratio, representing the supply and demand for UST in the protocol, and the yield on the staked assets. If the yield on staked assets is higher than required to pay the lender target yield, borrowers may actually get paid to borrow, even before taking into account the allocation of any ANC rewards. bLUNA Anchor's first accepted collateral is bLUNA, the bonded version of Terra's native token. Locked bLUNA generates rewards for the delegator and validator it is bonded to. bLUNA cannot be freely traded and is locked in the ecosystem until it is fully unbonded, which takes 21 days. LUNA is also the support token for Terra's stablecoins. Minting Terra stablecoins such as UST requires burning LUNA. If the stablecoin falls below its peg, arbitrageurs can buy the stablecoin below its peg and redeem it for the pegged value of LUNA.