As the Terra network gains popularity, projects operating within the ecosystem continue to flourish. Responsible investors are always looking for profitable ways to lock in gains. Stablecoins rank among the top placeholders for crypto enthusiasts.
Enter Anchor Protocol, bringing low volatility yields to Terra-native stablecoins.
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Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool.
⚓ Anchor Lends Stability in Unpredictable Crypto Climate
Deposits on Anchor recently surpassed $10 billion, probably resulting from LUNA’s most recent all-time high coupled with the integration of UST, Terra’s flagship stablecoin, into Abracadabra.
Terra has seen significant growth throughout this year. Addresses using Terra grew by 22%.
Anchor strikes a symbiotic balance between lenders and borrows resulting in an impressive climate for reaping exceptional rewards. Lenders provide assets in return for earning yields, while borrowers benefit from low interest rates on loans.
Lenders use Anchor to earn yields on stablecoin deposits. These are less volatile than riskier options and provide a relatively steady, and somewhat predictable, profit generation on otherwise stagnant dry powder.
✅ TIP: Dry Powder is a term used by investors for liquidity sitting on the sidelines, ready to invest when a significant opportunity presents itself in the market.
Borrowers are those users who are willing to stake certain assets in return for borrowing stablecoins on Anchor Protocol.
They do this by locking up bonded assets as collateral, then are allowed to borrow stablecoins below the protocol-defined loan-to-value (LTV) ratio.
✅ TIP: An over-collateralized loan is a financial tool which requires the provision of collateral that exceeds the value of potential losses in the case of default.
Conventionally, loans are disbursed by centralized financial institutions, like banks. These companies charge fees in the form of interest rates, earning the institution itself profit. Anchor Protocol replaces the centralized financial entity with other users, instead generating profit for people willing to provide the funds to be borrowed.
Gather some Luna. This can be done on exchanges like FTX, or Gemini if inside the U.S.
Connect your wallet to Anchor. Terra Station is the network’s native wallet.
Bond. The bonding process locks up LUNA and mints bonded LUNA (bLUNA). bLUNA or bETH are the required assets for borrowing.
Borrow. Collateral, or the amount of held bonded assets, is calculated, and used to determine how much can be borrowed. The net APR is the fee associated with the loan. A negative net APR means rewards are lesser than interest paid.
Lend. Deposited UST entitles the provider to a portion of the fees paid by borrowers. This APY has consistently remained close to 20% and is one of the highest yield rates for stablecoins on the market.
✅ TIP: Participating in Anchor Protocol also makes users eligible to receive airdrops periodically, documented here.
While the market progresses, always keep your exit strategy in mind. Knowing how to passively earn eases the FOMO when decreasing exposure of certain assets.
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💎 Drop The Ball
The owner of New York's Times Square is recreating the NYE party but where is it taking place?
🐞 At Least All The Money is Not Poly-GONE
Polygon has recently fixed some bugs in their network that could have been disastrous. This vulnerability put up to $24 billion of MATIC at risk! Let’s take a closer look at how exactly they caught the bugs and whether or not there were rewards involved!
The critical vulnerability within the network’s Genesis contract was highlighted by two whitehat hackers on December 3 and December 4. The bug was resolved via an “Emergency Bor Upgrade” on December 5.
The malicious hacker managed to steal 801,601 MATIC ($2.04 million) before resolving the problem.
The vulnerability put more than 9.27 billion MATIC at risk - values at roughly $23.6 billion.
The hackers were well rewarded! The first one to report the vulnerability received $2.2 million worth of stablecoins as a reward and the second to report will receive 500,000 MATIC ($1.27 million) from Polygon.
You may be asking why we are now just hearing about an event that occurred at the beginning of the month. The reason for this is because of the “silent patches” policy introduced by the Go Ethereum (Geth). This policy makes it so that developers don’t have to report until 4-8 weeks after the time of patching so that they are not exploited during that time.
Communities are often aided by hackers who notify teams and networks of possible vulnerabilities. It was great to see the Polygon network spring into action as this could have been disastrous!
Jamestown the owners of Times Square and the hosts of the Famous NYE Ball Drop are recreating the famous tower in Decentraland. Not only that but they are creating a whole version of the ball drop to be hosted inside Decentraland itself.
The celebration dubbed “MetaFest 2022” doesn't just include the celebration itself but also VIP rooftop lounges, music performances, and even NFT art galleries.
This comes off the background of COVID-19 restrictions and cases soaring in NYC and leading the NYE ball drop to be fully socially distanced and containing people to 15,000.
🌎🧘♂️✍️ Stories in this newsletter were written by Misael Calleja, Nick T., Max P., Kimia K., Ellen B. and Koroush AK. Graphics were produced by Gerasimos P.
Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
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