How to Get UST on Terra and Earn 19.5% APY in Anchor
As we covered in the previous article, both the Terra ecosystem and Anchor protocol are particularly suitable for beginners finding their feet in DeFi due to the focus on stablecoins and predictable yields. If 19.5% fixed APY on US dollars sounds like your kind of thing, here is a quick guide for how to get started in Terra!
Downloading Terra Station
The first thing you need to know is that because the Terra network is not based on Ethereum, it’s not possible to use the MetaMask wallet. Instead, you need to use the official Terra Station wallet, and this is currently the only wallet available for the Terra ecosystem. The good thing is that the Terra Station wallet is very attractive and user-friendly — arguably more user-friendly than MetaMask (see this article for an in-depth look at the pros and cons of MetaMask).
Terra Station exists in 3 different forms: a browser extension version, a mobile version, and the main desktop client. You can only create a new wallet in the desktop client, so downloading it is essential, but after that you can manage your wallet https://station.terra.money if you prefer.
When interacting with smart contracts (i.e. when using Anchor), you’ll need either the browser extension or mobile version, so you’ll need to get those too. If you use Chrome, you can get the browser extension from the Chrome store, and the mobile app is available on Google Play and the App Store.
To create a wallet though, you’ll need to install the desktop software. Simply go to this page and select the relevant version (Windows, Mac, or Linux).
Creating a Wallet
Once you’ve installed the software, go to “Connect” and choose “New wallet”.
Now it’s time to name your wallet and create a password. The wallet name won’t be public so it can be anything you like. As with any custodial crypto wallet, recording the seed phrase securely is essential. Pasting it into a text file probably isn’t secure enough, and neither is a screenshot. There are lots of creative ways you can record this information securely, including splitting it in two and storing the two halves separately, or use creating clues to some of the words that only you would understand.
To check you really did record the seed phrase, Terra Station will then ask you to confirm some of the words. Once you’ve entered these, you can create the wallet.
Getting some Luna or UST onto Terra
An empty wallet is no good to anyone, so we need to add some crypto to it. To use Anchor we’ll need UST, but getting this is easier said than done. The majority of users who want UST will actually get some of the Luna token first from an exchange, and then convert that to UST. Below we’ll quickly summarise the easiest ways to get crypto onto the Terra network.
Method 1: Sending Luna from Binance
We’ve explained how to set up a Binance account, purchase crypto, and withdraw it in previous articles, so we won’t reiterate that here. Assuming you have a Binance account, you need to go to the Classic or Advanced section of the Trade tab to purchase some Luna. The interface looks intimidating, but if you stick to a Market order you’ll be fine. Type Luna into the search bar in the top right and choose the market you want.
Once you have some Luna, you can then then go to Fiat and Spot and select Withdraw. The Terra network is the only one you can withdraw to so you can’t get it wrong. Paste in the address from Terra Station, and note that it’s not necessary to include a memo, despite what Binance says.
Once you receive the Luna in Terra Station, simply go to the Swap tab and exchange it for UST.
Method 2: Sending Luna or UST from Kucoin
This method is basically identical to the Binance method above, so if you aren’t able to use Binance for whatever reason, you can use Kucoin instead. Setting up an account should be similar, and the trading interface is almost identical. The advantage of Kucoin is that it supports UST in addition to Luna, so that can save you an additional conversion.
Method 3: Get UST on PancakeSwap and then Bridge to Terra
If you like to use Binance Smart Chain, a good way to get UST is to get it at PancakeSwap. You’ll have to add UST manually, but you can copy up the contract address on bscscan to make sure you get the right one. See this guide on how to get started with Binance Smart Chain.
Note that there will be a fee for the swap, and the exchange rate sometimes isn’t ideal either. In the example below, you’d lose around $8 in a $1000 trade.
Once you have some UST, go the official Terra Bridge and send your tokens to your Terra address. You can then deposit them straight to Anchor.
Method 4: Purchasing Directly Inside Anchor
By far the easiest way to get UST is to purchase directly with fiat inside Anchor. In the Earn tab you can click Buy UST and then select the Transak option. Note that you’ll have to complete identity verification and the fees can be pretty high.
Staking UST on Anchor
Once you have UST, you can finally open up Anchor protocol. The first thing you’ll need to do is connect your wallet in the top right. Select either the browser extension or the mobile version. The browser extension is generally more convenient, but the mobile version is arguably more secure.
Once connected, Anchor could hardly be any easier to use — simply go to the Earn tab and click Deposit.
There will be a small transaction fee, which is paid in UST.
And that’s it! You can now sit back and let your interest accumulate. The interest compounds automatically, so over time your savings should just grow and grow.
The unique thing about Anchor is how stable the interest rate is. It rarely deviates far from 19.5%, and there is a yield reserve which is used to top it up and keep it from declining suddenly. This differs from almost every other yield in DeFi, which tends to fluctuate heavily and can’t be relied on long term. With Anchor you can make plans and know exactly what you’re going to have after a year, which is very powerful.
To Good to be True?
When made aware of the high interest rates on Anchor, the reaction of most non-DeFi people is “it’s surely too good to be true”. For a generation of people starved of decent interest rates, this is perhaps understandable, but it’s important not to be too dismissive of this kind of sentiment.
The biggest risk for Anchor and Terra generally is the potential for the UST stablecoin to lose its peg to the US dollar. This actually already happened briefly back in May, dropping as low as $0.94 at one point, but it later recovered to $1 and has remained there ever since. Lessons have been learned from that experience, and the ecosystem is now arguably more mature and resilient. However, a black-swan event or extreme crash can’t be ruled out completely, so it’s important to keep this in mind. Anchor should not be seen as risk-free, and each person needs to weigh-up risk and reward for their individual situation.
It’s also possible that the interest rate will gradually decline over time, although there hasn’t been any sign of this yet. For the whole of 2021 the rate has remained around 19.5%, and any decline is likely to be small and gentle.
Happy Saving!
If you’ve been convinced on the merits of Terra and Anchor, make sure to download the Terra Station client and start enjoying stable and predictable DeFi yields!
And remember to follow us on Twitter and Telegram for daily DeFi yield updates. We never post risky liquidity pairs or “degen” strategies, just solid attractive yields.
