There are a couple of significant changes to the #1 protocol on Terra blockchain. These changes will hopefully catapult the protocol to the next level.
wasAVAX Collateral
For almost a year Anchor has two assets for collateral. bLuna and bETH. Yet it is still the most popular protocol in use on the blockchain. It may have to do more with the UST paying a 19.5% APY yield but two days ago a new collateral was added to the platform. Specifically Benqi's wasAVAX. The token is staked AVAX that yields AVAX. Yet users who stake the token on Anchor will not collect the yield but install have the ability to borrow UST with wasAVAX as collateral.
Although wasAVAX will only be allowed to be back by up to 60% LTV. This is similar to bETH but not as good as bLuna which is at 80% LTV. (In simple terms if wasAVAX is worth $100 a token it can be used as collateral for UST up to $60.)
Semi-Dynamic Yield
The vote to have UST yield in EARN be adjusted has past. The following is directly from Anchor's official twitter account indicating on how this will run % yield in UST.
The whole premise of adjusting the yield is to allow Anchor to be sustainable. At current rates the protocol is drawing down yield at a rate of around $3 million a day. This will only last for another four months or so before the yield reserves goes to zero.
The adjustment may look harsh at first but moving just 1.5% it is not as bad as it seems. Also big moves up or down in yield reserves beyond 1.5% in assets won't shift the EARN yield by more than 1.5% a month. Limiting the movement to 1.5% would still keep rates somewhat fixed for a period of time and hence called Semi-Dynamic.
Conclusions
Anchor now has over $17 billion locked up. Do Kwon has brought up many times he wants Anchor to continue to grow in usage in order to take more of the market share. In turn that way the EARN side can offer larger yields if more collateral is placed onto the protocol. More users are adopting its use and with the recent updates in AVAX and Semi-Dynamic yield on EARN it seems Anchor is heading in the right direction to sustainability.
None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!
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