Earn 19.4% On Anchor by DefiDad

Before we get started, reminder that this is not a recommendation or endorsement to buy any tokens related to Anchor, Terra, or other protocols mentioned in this tutorial.

Among the many blockchains competing to grow their DeFi community is Terra. Terra is a newer blockchain relative to Ethereum that promises to provide a secure, decentralized smart contract platform where DeFi applications can be built. I won’t go into the details of what differentiates Terra but the TLDR for users is: you can transact cheaply and quickly.

One of the most successful protocols to launch on Terra is Anchor, a permissionless savings, offering low-volatile yields on Terra stablecoin deposits. The Anchor rate is powered by a diversified stream of staking rewards from major proof-of-stake blockchains, and is billed by its builders and community as likely “to be much more stable than money market interest rates.” The grand mission behind Anchor is to become the reference interest rate in crypto, similar in concept to the Federal interest rate of the Federal Reserve in the United States.

What drives the success of this protocol are a few familiar DeFi mechanisms:

• A money market between a lender, looking to earn stable yields on their stablecoins, and a borrower, looking to borrow stablecoins on stakeable assets. 
• Borrowers lock up Bonded Assets (bAssets) as collateral, and borrows stablecoins below the protocol-defined LTV ratio. 
• The diversified stream of staking rewards accruing to the global pool of collateral then gets converted to stablecoin, and then conferred to the lender in the form of a stable yield. 
• As a result, Anchor provides for a fully decentralized fixed income mechanism.

Achor currently boasts about $1.58B TVL. In a way, Anchor is reminiscent of