Updates With Anchor Protocol (Terra Network)

Those who follow me or are into the Terra blockchain is aware that its main protocol, Anchor, has been in the works to cope with the drop in its current yield reserve. Down under $15 million to date there are few hopeful signs that Anchor will be able to manage the draw down and come through this stronger.

Behind the Scene Reserves?

Anchor is a protocol from Do Kwan, one of the founders of Terra network. The Terra Lab has a deeper amount of Luna for use if needed to built up the yield reserve.

There was a boost in the yield reserve to $70 million about half a year ago and since the draw down has mostly depleted the reserves. However there is a vote happening to decide if Terra Lab should increase the yield reserves to $450 million to keep the 20% APR. If it passes the yield reserve can handle a the same draw down rate for a little over a year. Of course this is not a reliable way to support Anchor as there are limited supply of assets Terra Lab and throw into the protocol. So Anchor actually has a few things already in the works or has already begun.

bLuna LTV up to 80%

Anchor currently supports only two assets to allow borrowing. They are bETH and bLuna, bonded crypto. In regards to bLuna the Loan to Value (LTV) has been raised from 60% to 80%. This makes users who borrow on the platform an opportunity to borrow even more. The key here is Anchor is trying to increasing it's earning in borrowing revenue and need more borrowing. Raising the LTV gives it a little bit more revenue for per-existing users can now borrow more.

Anchor Version 2 (V2)

Coming in the near future is an update on the type of collateral Anchor will accept for borrowing against. This will include LUNAx and sAVAX which both are representation of staked tokens of their respective chains. Look at LUNAx specifically the token is staking LUNA on Stader and in return holder has LUNAx. LUNAx will appreciate over time because the staked LUNA is earning rewards which is increasing the value of LUNAx. What makes this a very good addition to Anchor is that currently there is around 67 million LUNA staked to Lido, one of the biggest validators on Terra network. Just imagine how much unlocked potential there is in LUNA staked that can now be used as collateral on Anchor.

This goes with Avalanche's staked native token AVAX in sAVAX. The collaboration between the two chains will allow even more liquidity to be flowing and increasing potential earnings on Anchor.

Conclusions

The yield reserve draw down is a real issue but Anchor has put in effort to try to stem the draw down. In addition more activities are being performed that will have the potential to not only extend the protocol's life but may even again return it to profitability.

None of what I write is financial advice. It is for entertainment purposes only. Thanks for reading!