Staking bETH in Anchor protocol
Every Anchor/Luna fan got excited about a recent news piece — “Anchor protocol hitting $4 billion TVL”. Anchor achieved this milestone around six months after its launch. This achievement crowns Anchor protocol as one of the most promising and robust protocols in Defi.
Apart from the best yields and trustworthiness that anchor provides, a flood of money poured into Anchor with users able to stake bETH in it. Let’s do a deep dive into what Anchor is, its features and how to provide bETH liquidity in Anchor.
- What is Anchor protocol?
- Why bETH s important
- Different ways to stake bETH in Anchor protocol.
- Conclusion
Interested? Well…read on!
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Anchor Protocol
I have already written an article covering Anchor extensively. You can read it using this link. But don’t worry, I will give you a brief about the Anchor protocol here.
Anchor acts like a savings bank. It aims to provide low volatility, and at the same time, high yield to the asset deposited(UST). Currently, you will receive an 18-20% stable yield on your deposit at Anchor! Better than that money sitting on those banks.
How does Anchor earn those high but stable interest rates? Anchor provides this 20% APY combining two things. In Anchor protocol, you will be able to borrow UST by depositing bAssets as collateral. The borrower later needs to pay interest for his borrowed amount. Also, as the withdrawal is over collateralised, the deposited bAssets are staked in other Proof of Stake blockchains to earn additional interest.
The combination of both earns more than enough to pay 20% to the depositor; the rest anchor keeps at reservation, for extreme periods where there are more borrowings and high deposit, another lucrative factor to use Anchor. Anchor rate, the rate at which Anchor yield tries to stabilise, is set to 20%. If the rate goes below it, Anchor will pull the deposit from the reserve, and the opposite happens if it goes above 20%.
