Why Terra and Anchor are Best For DeFi Newbies

There’s no getting around the fact that DeFi can be an intimidating place for beginners. The learning curve is incredibly steep and it can hard to properly assess risk and keep track of the myriad of tokens and platforms that scatter the DeFi landscape. And that’s not to mention the inherant volatility of crypto in general.

This is why the Terra network (also known as Terra-Luna) stands out. Terra is centred on stablecoins in a way that no other DeFi ecosystem is. In most other networks stablecoins were added as an afterthought, but in Terra tokens like UST (the Terra version of the US dollar) are at the core of how the network operates. Terra also offers a small number of high-quality platforms, as opposed to the likes of Binance Smart Chain which offers hundreds of platforms, but with plenty of chaff and not enough wheat. In Terra it’s quality over quantity, and with an emphasis on stability and usability.

The main interface of the Terra Station wallet

Terra’s killer app is undoubtedly Anchor. For risk-averse investors just finding their feet in DeFi, Anchor protocol is arguably as good as it gets. Unlike the vast majority of DeFi platforms, the primary service Anchor provides can be summed up in one simple sentence — “earn fixed 19.5% interest on US dollars”. It’s the simplicity of this proposition that makes it so appealing to mainstream investors with no crypto background and no knowledge of complicated concepts like LP tokens and impermanent loss (see this article for more on those).

The interface of Anchor is also simple and intuitive, and although it does offer more complicated features like borrowing and yield farming, these are optional and don’t get in the way of the primary Earn function. It’s very satisfying for a DeFi newcomer to see exactly how much interest you will earn in a day, a week, a month, and a year — especially when the yield is so high and so predictable.

The main downside to Terra is that it’s currently quite difficult to bridge to and very few exchanges support Terra network withdrawals. Anchor does offer direct fiat purchase of UST via Transak, but the fees are pretty high. Hopefully in future this is an area that can be improved, because if it was simple to deposit into Anchor it would surely attract a lot of mainstream savers.

The ways of getting UST are limited, and tend to be either complicated or expensive

Next time we’ll provide a full guide on how to get started in the Terra network and how exactly to take advantage of the excellent yield on Anchor!