What Is Anchor-Protocol (ANC)?

Anchor is a savings protocol developed on the Terrablockchain that accepts Terra deposits, allows instant withdrawals, and pays depositors a low-volatility yield.

The introduction of the Anchor protocol was made when it was observed that a wide range of financial applications covered a broad range of use cases, including collateralized lending (Compound), decentralized exchanges, and prediction markets (Augur) that were launched. But DeFi had yet to produce a simple and convenient savings product with broad appeal outside the world of crypto natives.

Anchor-protocol believed that the path to mass adoption for decentralization is the saving products. Anchor lends out deposits to borrowers who put down liquid-stakedPoS assets from major blockchains as collateral (bAssets) to generate yield. The deposit interest rate is stabilized by passing on a variable fraction of the bAsset yield to the depositor. Bonded asset (bAsset) is a token that shows ownership of a staked PoS asset. bAsset pays the holder block rewards and is both transferable and fungible.

Stabilizing the yield to depositors is an essential feature. Therefore, Anchor overcomes one of the key limitations of Compound and Maker as savings products: the highly cyclical nature of deposit yields.

Anchor also offers the main street trader a single, reliable rate of return across all blockchains. Anchor aggregates block rewards from all major PoS blockchains to set the blockchain economy's benchmark yield. The return that depositors can expect with Anchor is a function of borrowers’ on-chain income. Along with the saving products, Anchor supports more financial applications than the authors can envision:-

• Saving products- Anchor offers a solution with Terra stablecoin markets. Users who deposit Terra stable coins get stablecoins to avoid the high volatility of crypto-assets. Also, Anchor’s deposit yields’ stabilization offers protection from volatility by providing stable returns.

• Price and staking yield leverage- Users can put their assets as collateral to borrow stablecoins and buy more of the same asset, thus can leverage their positions. Also, users can take advantage of low-rate periods by purchasing bAssets whose yield exceeds their borrowing cost.

• Liquidation contracts- Anchor liquidation pool is a higher-risk, higher-return product that provides liquidation financing for Anchor debt positions.

History of Anchor-protocol (ANC)

The whitepaper of the Anchor protocol was released on June 2020.