Anchor Protocol Alternatives

Best alternative platforms for anchor protocol mining

With the collapse of Terra-Luna’s so-called stablecoins on the Anchor Protocol (ANC) platform in May 2022, it is due time to dig further into the world of crypto, analyzing the anchor protocol’s process, features, and the deficits that played havoc with Terra Blockchain.

Moreover, from the laid out corpse of the network, we have examined what to do to prevent such crashes from happening again in cryptos investment, offering 3 of the best alternative platforms for terra’s anchor protocol mining that would provide secured profitable passive income for many users around the world.

What is anchor protocol and what happened to it?

The Stable coins of Luna and Terra on the anchor protocol platform were not such doomed coins from the beginning. It was in December last year that they were even hyped up as a golden investment since 1 Luna had a value of more than $116.

With the lending platform of Anchor Protocol guaranteeing about 20% of annual percentage yields (APY), the algorithmic stablecoin of Terra was truly on the road to fame and fortune.

But as Anchor appeared to be more important than any other Terra project, the harder it fell, crashing the platform itself coupled with Terra, LUNA, and UST.

As a Defi protocol, Anchor Protocol provided users with the opportunity to capitalize on a stable coin-based borrowing and lending platform.

Simply stated, much similar to the bank’s saving accounts, in return for staking stablecoins on the platform of Anchor, users earn substantial profits of approximately 20%. After that, by pooling the deposited stablecoins, the platform lends them to those who want to borrow them.

More specifically, the users might prefer to stake their UST in the Anchor pool rather than selling their stable coins or trading them with Luna so as to make a 20% gain from their UST that would be employed in offering collateralized loans.

On the other hand, the borrowers must lock their cryptocurrencies as collateral if they are to take out the loan. Following that, they received it and accomplished their desired operations; they must pay it off along with the confirmed interest, while the borrower themselves would be benefited from some dividends by borrowing the platform’s Terra coins.

With such a high-interest rate of anchor protocol, a considerable demand for Terra was generated. Not only did approximately 72 % of all Terra owners stake their coins in Anchor, but many other investors swarmed to buy this coin, depositing it to make good returns.

Yet, there were not many users eager to borrow Terra coin, to the point that for every four lenders in the anchor protocol platform, just one borrower was available, sending the supply side of the coin to be a lot more than the demand.

This prompted the founder of Terra to put up funds as collateral in reserve to recover the demand and supply balance.

Virtually, he was buying as many coins that were possible for him so as to sustain the platform’s investors’ rates of interest. Be that as it may, not one iota of the borrowers’ rate changed.

Afterward, the founder proposed that the rate of anchor protocol yield is set to waver from 20%, and as soon as the news of cutting the rate was spread, a raft of investors rushed to pull out the anchor protocol coin of Terra, preferring to trade it with Luna.

Likewise, as people went on to exchange Terra for Luna, the supply of Luna exceeded its demand, and its price went down as well, ending up in the crash of both Terra and Luna.

As per Coinmarketcap, on May 11, the anchor protocol price of the Terra coin slumped terribly to 0.225, and the so-called stablecoin lost about 80% of its worth just in several days, as the investment of $1,000 would have a value of only $99.

But aside from taking their stakes out of the pools, the investors went on to sell their ANC tokens, and the asset suffered a 99.22% decline.

Furthermore, even one of the Crypto lending platforms, Celsius, which had deposited a minimum of half a billion dollars in reserves in Anchor Protocol, desperately took out all of them just within 24 hours.

How to prevent the occurrence of such crashes in Crypto platforms?

As was mentioned earlier, Terra’s USD is an algorithmically designed stable coin that is programmatically supported by another cryptocurrency called LUNA but not by dollars.

This means that in contrast to other stable coins like Tether and USDC, Terra has not been immediately financed by reserves and, as an “algorithmic stablecoin,” just endeavors to remain at the amount of $1 via the procedure of arbitrage with Luna, which is Terra’s sister token.

Such algorithmic stablecoins are doomed to failure, owing to the fact that they are too dependent on intractable elements like the valid price data as well as the demand of investors whose performance would stabilize the arbitrage process.

Particularly, when it comes to Terra, it appeared that an unprecedented huge departure from the platform could smash its balance because it is a so-called stable coin that is supported by unstable assets.

Nonetheless, the most thriving current stable coins like Tether (USDT) are not designed based on a totally “decentralized” model. Actually, the stablecoins of Tether (USDT) are backed up with non-decentralized, extremely liquid, stable investments.

Such investing reserves like negotiable instruments and T-Bills should have to be consistently examined by private businesses to ascertain that USDT is necessarily supported and exchangeable. Therefore, in contrast to USDT, the reserve that “backed” UST was neither stable nor as liquid as dollars, and when many UST holders decided to save their possessions together, the worth of LUNA plummeted considerably following that business was overrun by surplus supply.

This event would be most probably deterred in case UST was supported by a reserve that was more marketable and less unstable when it comes to this.

Best Crypto Platforms

As more and more people are avidly seeking to find a passive source of income in the era of technology where actual banks are not assumed to be that much a popular resort anymore, it seems that just buying cryptocurrencies and having your finger crossed to see them rise up in price is not the only option on the table.

Nowadays, many crypto platforms reap you secured profits regardless of the price fluctuation in the light of their staking as well as lending and borrowing systems.

One of the most popular ways of crypto investment is staking, which is exclusive to POS systems, is the process when investors lock their cryptos up for a predetermined period of time in order to help the Blockchain network perform better by boosting its transactions and security, for the sake of making a regular profit.

So far, by scrolling through the early sections, you might have utterly understood how cryptos lending and borrowing systems work, but when it comes to the difference between lending and staking, it suffices to mention that staking is when users gain profit by putting their cryptos in networks, while in lending they simply lend it to others who are eligible and willing to borrow them.

By now, you might have got the hint about how critical it is to find a proper staking and lending crypto platform, one that yields the highest and the most secure profits, especially when after the collapse of Terra platforms, some concerns have been raised over the security of crypto investment.

Therefore, after getting to the bottom of anchor protocol Terra’s crash, having in mind the elements that would prohibit the occurrence of such crippling damages, some other Crypto platforms have been under our scrutiny in order to find the most reliable projects in the world of Crypto.

In what follows, you will find the best staking and lending crypto platforms in the world, along with a variety of their advantages and disadvantages so as to let you find out which one would suit you best.

Nexo

As a widely known crypto lending and staking platform, Nexo not only provides a raft of different tokens but also offers very lucrative APYs. Especially when by staking its own local tokens, its offered rate of interest would increase.

One of the most favorable features of Nexo is that there is not any lock-up period for lending the assets. This means that investors could pull out their tokens whenever they desire so, adding flexibility to the system.

While it provides an APY that is often very high, being paid out to investors every day, it seems that Nexo would not be an ideal platform for borrowers.

Besides, while Nexo backs up a number of fiat currencies, supporting over 20 currencies in 200 jurisdictions, there are even some affordable small loans available on the platform for any investors across the globe.

The most outstanding merit of Nexo is the platform’s security. That is to say because its assets are kept in cold storage, they are offline, not being susceptible to hackers’ attacks.

Moreover, all the users are protected by Nexo’s $375 million insurance, yet it is applicable for the funds that are merely retained in the cold wallets of Ledger Vault, while the platform is not supported by 24/7 tech support.

Advantages

· It is highly secure.

· It supports many tokens.

· Its APR is paid out daily.

· It has low fees.

Disadvantages

· It has a high-interest rate, much to the detriment of borrowers.

· It is binding to hold just NEXO tokens to be benefited from the best rate of interest and the most lucrative investment.

· Its insurance just safeguards those who use specific wallets.

Binance

The world’s biggest platform for exchanging cryptos, Binance also has a borrowing and lending system that backs up a variety of cryptocurrencies, including some uncommon altcoins.

Despite backing almost all sorts of cryptos, Binance is a bit restricted since fiat currencies are not supported on this platform.

In the borrowing section, users’ assets are used as collateral, and there is a withdrawal limit on this platform, while there are not any such penalties on many other cryptosystems.

Although it is a well-regarded crypto platform, Binance does not offer a high profit in comparison to others.

Loans can be repaid up to 6 months, yet it is possible to pay them earlier without being charged with any penalties.

As Binance does not need any verification, it can offer instant loans, and just in case of having an account, one could begin lending and borrowing right away.

In spite of the fact that it is highly usable, being available almost on Windows, Mac, iOS, and Android, it is not necessarily very user-friendly in as much as even those who have expertise in the field might be perplexed by the variety of options on the site.

Finally, there are some regulatory and legal problems with using this platform in numerous countries, compelling those investors to use alternative platforms.

Advantages

· It supports many tokens, cryptocurrencies and small altcoins.

· Its interest rate is paid out daily.

· It has variable APY.

· It has not any staking fees.

Disadvantages

· It has substantial withdrawal fees.

· Its exchange section was once under the attack of hackers.

· The site is not available in some countries due to regulatory problems.

· It has a complex design and is not very user-friendly.

Cryptal.Global

Cryptal.global is one of the most secure staking platforms that can let you enjoy earning passive income without worrying about the probable risks of the Crypto world.

With the platform’s best crypto staking pools, investors would be assured of making up to 20% APY that immediately comes from mining precious metals and other valuable industrial raw materials.

By locking up their USDT, USDC, or DAI currencies in the platform’s pools for at least five months, every 30 days, investors would be paid out a secure and stable high profit with the amount being variable according to the selected pools.

Since Cryptal.global is more of a staking system rather than a lending and borrowing one, such a high-interest rate would be lucrative for almost all the investors, yet if they decide to withdraw their assets from the locked pools earlier than five-month, they are required to pay the penalty.

What specifically sets Cryptal.global apart from its alternatives is the fact that it is highly reliable not only because it supports monitorable capitalization in a number of precious industrial assets but also because it has a high level of security in the light of smart contract functions as well as Google’s two-factor authentication.

Not to mention that the platform uses cold storage for holding the assets and profits so as to thwart hackers’ attempts, whereas there is also a 48 hours withdrawal delay to keep the platform utterly secured.

Although the platform does not have its own built-in digital wallets, after making an account, users would be able to easily connect their accounts to MetaMask, Argent, and Rainbow wallets, while enjoying a convenient UI design applicable both on web and application formats.

Advantages

· It has up to 20% APY that is paid out every 30 days.

· It has no staking fee.

· It has a highly secure platform backed up with stable assets.

· It is extremely safe due to the accomplishment of multiple security measures.

· It is very user-friendly, being available both on web and application setups.

· It supports MetaMask, Argent and Rainbow wallets.

Disadvantages

· It has a withdrawal penalty for pulling out the assets for less than a specific period.

· It has a 2% activation fee.

· The platform does not possess its own specific built-in digital wallet as yet.

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