On Wednesday, centralized cryptocurrency exchange Binance launched its new TeraUSD (UST) staking program. Although Binance did not name the underlying decentralized finance protocol that is responsible for the staking rewards, Do Kwon – the co-founder of Terra Luna (LUNA) – attributed the high yield origination to Terra’s flagship Anchor protocol. .
Anchor Rate Now Available for 30M+ Binance Users
web3’s anchor yield is living up to its name.
https://t.co/awubGdRJgP
— do kwon (@stablekwon) 6 April 2022
Terra Luna’s ecosystem includes its algorithmic stablecoin UST and governance/balancing token Luna. Anchor Protocol alleges that it operates as a “crypto savings account”, allowing users to deposit their UST and earn up to 20% APY. The savings rate is funded through a combination of borrowers paying interest on UST loans and betting the proceeds from their collateral.
At the time of publication, there is a continuing imbalance between borrowers and lenders, with 12.4 billion UST deposits relying only on income generated from UST 3.47 billion loans. When this happens the anchor will have to tap into their reserves to pay their promised APY. Anker has less than 340 million UST remaining in its reserves, compared to about 450 million UST last month, according to data from an unofficial tracking resource called terra.engineer. The Terra development team is using initiatives such as injecting more reserve capital and launching more income-generating methods to keep the protocol afloat, despite the drop in reserve numbers.
Earlier in the day, data from the Luna Foundation Guard (LFG) official bitcoin (BTC) address showed that the entity bought another 5,040 BTC ($222 million), bringing its total stack to 35,768 BTC ($1.577 billion). Gone. LFG was launched in January to grow the Terra ecosystem and improve the stability of its stablecoins. Earlier, Do Kwon stated that it intends to create a decentralized forex repository for USTs using both LUNA and BTC. LFG plans to increase its BTC reserves to $10 billion, followed by additional purchases of how much UST is mined.
