Anchor’s bank — beating DeFi savings account

According to Coindesk, Anchor, the new cryptocurrency savings account, is about to go live if the countdown clock on its website is correct. Terraform Labs are behind the new app.

Anchor will allow its users to “hold Terraform’s UST stablecoin, pegged to the U.S. dollar, and earn returns that consistently outpace the annual percentage yield (APY) of savings accounts at U.S. banks,” Coindesk says.

One reason that there is significant interest in Anchor’s launch is that it is a decentralized finance application independent of Ethereum, which is by far the most popular blockchain for DeFi applications. For savers, the interest is probably more focused on the fact that the account is more competitive than traditional banks.

Terraform Labs uses the Tendermint consensus mechanism and UST now has a market cap of ust under $1 billion, making it the fifth-largest stablecoin. Furthermore, the token has spread from its native blockchain to Ethereum and Solana.

Coinlist describes the savings protocol as being for “crypto natives, fintech companies, and regular investors,” and will allow them to enjoy “a stable, high-yield interest rate for DeFi.” Do Kown, Co-Founder and CEO of Terra, who explained how Terra differentiates itself from other major smart contracts blockchains.

Kpwn said, “First, Terra’s network is based on an elastic supply model, where its native token, LUNA, is used to collateralize a cadre of stablecoins that form the basis of Terra’s suite of applications like Chai (payments), Mirror (investing/trading), and Anchor (savings).”

He went on to say, “The primary ethos of Terra is mass adoption. However, this doesn’t necessarily mean that users need to be aware that they’re using a blockchain network to still reap the benefits. Abstracting away the underlying complexity of crypto and infusing it with the benefits (e.g., DeFi) while the user interacts with a friendly UX has always been the primary hurdle of crypto adoption.”

Kown defined the ultimate aim as: “With Terra, we wanted to nail down two primary aspects from a perspective of making things simpler:

  1. User adoption with applications that are intuitive and attractive.
  2. Robust incentive alignment for network stakeholders.