Anchor Protocol, created based on stablecoin project Terra Money, is a new deposit Protocol designed to balance interest rates by coordinating block rewards from multiple different PoS consensus blockchains, ultimately achieving a stable rate of deposit interest rate. This Protocol is one of the three DeFi protocols launched by Terraform Labs, along with stable asset Protocol Terra and Synthetic asset Protocol Mirror Protocol.

Stripe, which hopes to become a reference rate or savings version of the entire blockchain market, hopes to provide stable interest rate returns for cryptocurrency holders to advance mainstream adoption of DeFi.

At present, the interest rate of most DeFi loan agreements in the market is calculated according to the algorithm of supply and demand to determine the loan interest rate. Specifically, the interest rates paid or earned by the lender and borrower in the loan agreement are functions of the "utilization of funds", which can cause interest rates to vary widely and are sensitive to market cycles. The immediate consequence is that it discourages people who have never been involved in centralized finance in the past and discourages the large-scale adoption of DeFi.

Anchor Protocol proposed a new deposit interest calculation model, which can provide stable lending interest rate. In this model, the calculation method of interest rate is no longer based on "capital utilization rate", but is highly correlated with the price trend of ETH. The model assumes that once ETH prices rise, demand for long positions will increase and stablecoin borrowing will increase. If ETH prices fall, there is less demand for leverage in the market and ETH debt positions are liquidated, stablecoin borrowing will decrease.

The core mechanism of Anchor is to adopt the money market structure to connect depositors and borrowers. However, in contrast to most of the current cryptocurrency money markets, such as Aave and Compound, Anchor's architecture is designed specifically for savers to offer more stable rates. To achieve this goal, An Anchor consists of several different components. Customer: From the perspective of customer, the Anchor experience is very simple. Anchor platform provides stablecoin depositors on Terra platform with a fixed interest rate called Anchor rate, which is initially set at 20% and can be adjusted based on governance in the future. The appeal of this product for savers is obvious and Anchor will be one of the main platforms for predictable passive returns, as opposed to the volatility that is prevalent in cryptocurrencies today. Borrower: One of the most important design decisions regarding Anchor Money Market is that the agreement only supports blockchain pledged asset derivatives to mainstream PoS consensus as collateral assets. The reason is that, as assets that naturally generate income, the rewards generated by these blockchains are more stable and powerful, which can ensure that the Anchor interest rate of depositors is maintained at a certain level.

ANC token is mainly used for two purposes in the Anchor ecosystem: 1. Governance. The ANC pledgee can use token vote to change relevant parameters in the system (including Anchor interest rate) and control the community capital pool. 2. Obtain the buyback proceeds. Part of the proceeds generated by Anchor platform pledge will be used to purchase ANC tokens on Terraswap and then distributed to ANC pledgers. 4. ANC/UST Liquidity Award

Anchor distributes the agreement fee to ANC currency holders on a pro rata basis, who will also benefit as Anchor's adoption rate increases.

Terra has built a rich ecosystem of applications, including Chai, Mirror and Anchor. Chai, a South Korean payments app with more than 2 million users, did more than $2 billion in transactions last year and recently raised $60 million in Series B funding. Mirror is a thriving synthetic asset protocol on Terra that provides versions of real assets such as stocks, commodities, indices, crypto assets, etc. Since its launch, Mirror's total value lock in (TVL) has topped $1 billion in just twelve weeks. And Mirror is a community-managed protocol that offers a censors resistant and user-friendly alternative to the likes of Robinhood. Anchor is Terra's savings protocol that shapes DeFi's composability and presents it to the end user in a simple way to achieve stable, high-yield savings with just a few indirect moves. Among them, Anchor standardizes derivative returns of other proof of Equity (PoS) blockchains, releasing liquidity of major stakeholders in its network and converting cash flows into their term margin positions to depositors.

1. Too much reliance on Terra's ecological development makes it difficult to promote the market. 2, because the borrower USES is mortgage lending, although an excess of mortgage rate according to the volatility of mortgage assets themselves, have to calculate a reasonable mortgage rates, but when markets plunged sharply, mortgage supplies will still face a liquidation risk, especially when the lack of liquidity of mortgage assets, there will be bAsset unable to liquidation, Or the final liquidation price cannot pay back the principal of the depositors, at this time, the Anchor community needs to vote to decide whether to sell the platform code ANC to pay. Of course, this is the risk that ANC token holders need to bear, and of course the mortgage borrowers also face excessive losses.

Currently, there are more than $6.5 billion worth of USDC, DAI and USDT deposits on the Aave and Compound platforms, ranging from 4 to 14% annualized. In contrast, after the ANC Coin launch, UST savings on the platform annualized at 20%, which is very competitive. Given that UST has a market cap of about $1 billion, even a low share of the current cryptocurrency savings market could yield a sizeable seigniorage benefit for UST. Since all UST seigniorage generated is used to buy back LUNA from the market and destroy it, growth in UST seigniorage revenue will be highly valuable to LUNA. Part of the reward of the deposited asset asset collateral is used to purchase ANC coins and the rest is used to replenish the income reserve. If the stock of income reserves is increased to a sufficient level, the rate of bAsset rewards for ANC purchases can be adjusted by governance. AnchorProtocol is a new deposit protocol created based on the stablecoin project TerraMoney. The ANC currency, as its flat Taiwan dollar, has the right to govern and is also used as a pledge. The acquisition of its value lies in the capture of transaction costs. The development of the platform depends on the development of Terra's ecology.