How am I using Anchor Borrow to generate income?
Anchor protocol in the Terra ecosystem is a powerful tool that gives you a stable interest rate of 20% per annum. But usage of its borrow side is seldom talked about and less likely used properly. Let's deep dive into Anchor’s Borrowing side.
Topics covered in this article will be
- What is anchor protocol?
- How to use Anchor Borrow?
- How I am using Anchor protocol to generate income?
- It's other potential
- Conclusion.
Interested? Well, read on!…
What is Anchor Protocol?
I have already made an article covering Anchor extensively. You can read it using this link. But don't worry I will give you a brief about the Anchor protocol here.
Anchor is a savings bank. It aims to provide low volatile, and at the same time high yield to the asset deposited(UST). Meaning currently you will receive a 20% stable yield on your deposit at Anchor! Better than that money sitting on those banks isn’t it?
How does Anchor earn those high, but stable interest rates? Anchor provides this 20% APY combining two things. In Anchor protocol, you will be able to borrow UST by depositing bAssets($LUNA) as collateral. The borrower later needs to pay interest. Also as the withdrawal is overcollateralized, the deposited bAssets are staked in different Proof of Stake blockchains to earn additional…
