Table of ContentsToggle
- What is Anchor Protocol?
- Who are the founders of Anchor Protocol?
- How does the Anchor Protocol work?
- Key Attributes of Anchor Protocol
- How to buy Anchor Protocol coin in India
Anchor protocol is basically a decentralized money market created on the Terra blockchain offering Terra USD (UST) to depositors at a stable 20% annual percentage yield (APY). Borrowers can even collateralize those loans with the help of bonded LUNA (bLUNA). This protocol earns returns from its depositors by staking borrowers’ collateralized LUNA. ANC, the inflationary protocol token of Anchor, offers governance rights to the users along with a percentage of protocol earnings.
So let us now get into the depth and technicalities of what is Anchor, how Anchor works, the key properties of ANC, and how to buy your first Anchor Protocol coin in India.
What is Anchor Protocol?
Hosted on the Terra blockchain, Anchor Protocol is a lending and borrowing protocol. The architecture uses an over-collateralized architecture allowing users to borrow, lend as well as earn profits with the help of their digital assets.
This savings protocol on the Terra blockchain helps in fast withdrawals as well as pays the depositors with very low volatile interest rates. You would find it astonishing that the low volatile interest rates are amongst the highest for stablecoins which is at 19.5%. Those borrowers who pledge liquid-staked PoS assets such as bETH or bLUNA as security can avail the deposits from Anchor.
Additional Read: Terra (LUNA) Vs Avalanche (AVAX): A Comparative analysis
How does the Anchor protocol work?
The Anchor Protocol (ANC) runs on three main mechanisms. Bonded assets, money market, and liquidation of loans.
bAsset: The bAsset also called bonded asset is one of the key primitives of Anchor and is also a tokenized stake on PoS blockchain. This bAsset is symbolic of the ownership of a staked proof-of-stake asset. This bAsset provides block rewards to the holders and is fungible as well as transportable. Thus, in a nutshell, this bAsset lets the owners collect block rewards all the while retaining the fungibility and liquidity that staked assets generally lack.
Money Market and loan liquidation: Terra money market is a web assembly smart contract deployed on the Terra blockchain enabling borrowing and depositing of TerraUSD (UST). The money market is defined from the pool of Terra deposits generating interest loans. Borrowers have to put down digital assets as collateral to borrow from the pool. An algorithm is used to calculate the interest rates on the basis of the supply and demand represented by the pool’s utilization ratio. In Anchor protocol, the interest rate objective is called Anchor rate and it is a key component for the entire protocol. The anchor smart contract dynamically divides those block rewards between the depositor and the borrower from the collateralized bAssets.
Additional Read: Top Crypto News, Feb 23, 2022
Key Features of Anchor Protocol
Money-saving product: Crypto assets have considerable volatility and the users with low-risk passive income might not consider these assets as the best fit for themselves. Anchor provides a solution for the same with the Terra stablecoin money market. The depositors of Terra coin receive stable coins in return that significantly reduces the volatility of the crypto assets.
Liquidation contracts: The anchor liquidation pool is available for those consumers who do not wish to borrow or deposit. It is a higher-reward and higher-risk product offering liquidation for the debt holdings of Anchor. The liquidation contract authors receive money from both passive premiums as well as from the liquidation fees paid during contract execution.
Safety Measures: The principal of the depositors is protected using the liquidation process in Anchor.
How to Buy Anchor Protocol Coin
Use these three-step processes to buy your first Anchor Protocol coin at the CoinDCX crypto investment app in India
1. Sign Up for the CoinDCX account
Enter a valid email address and a user name on the sign-up page. Once the Email Id has been verified, set a strong password to secure your account.
2. Verify the account
You need to complete your KYC, to buy ANC on the CoinDCX platform. All you need to do is upload the documents and your account will be set up in 15 minutes.
3. Buy Anchor Protocol Coin
After the account has been verified, you can deposit any amount of fiat currency you are comfortable with and start your crypto journey!
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