Anchor Protocol is changing its earn rate. This is the Terra-based decentralized finance (defi money market) and lending application. Anchor Protocol will adjust its payout rates dynamically according to the governance vote.
The earn rate can change from 1.5% to 1.5% depending on how much the yield reserves increase or decrease. Anchor governance voting results showed that 14.98% voted for the proposal and 2.4% voted against it.
Anchor’s official Twitter account also tweeted about Thursday’s passing of the proposal. The team explained that Anchor would now be able to implement a sustainable semi-dynamic earning rate after Prop 20 was passed. Anchor’s team also added:
This proposal, in its simplest form involves two parameters on Earn. We will break each one down: 1. Frequency – The frequency at which the rate can change. [and] Limit on Rate Adjustments – How big rate changes can be.
The thread states that the protocol’s payout rates will adjust once per month. This adjustment will be based upon yield reserve performance for the month. Anchor’s thread on Twitter explains that the rate cap is 1.5%. This means that it cannot increase or decrease in any month. “The rate adjustments will depend on whether the yield reserve has appreciated or decreased that month.
Anchor Adds Interchain Support with Avalanche to Anchor’s Locked Valuation in Just 30 Days
Anchor continued to announce the project, adding that any changes less than 1.5% would result in an equal adjustment to the earn rate. This announcement comes after Anchor’s one year anniversary and protocol’s interchain direction. Ryan Park , Anchor executive, announced that Anchor now supports Avalanche via Xanchor. (Cross Anchor), this is an ‘extension of Anchor Protocol.
Park stated that Anchor took its first step towards the interchain in line with the 1st anniversary of [Anchor Protocol]’s founding. Xanchor, powered by Wormhole brings Anchor’s functionality to non-Terra Blockchains. Avalanche was the first to use Xanchor. Xanchor’s seamless cross-chain UX is unique. It focuses on the fact that users care about which chain they are on and not what app it is on. Metamask is all that’s required to interact directly with Anchor contracts on Terra. Anchor executive said that Terra wallet extensions are not required.
Anchor Protocol is one of the reasons why Terra holds the second-largest total decentralized finance (defi), and Terra currently commands the largest TVL. Anchor, which captures $14.4 Billion of the total, is 53.39% of Terra’s TVL, which is $26.97B. Anchor Protocol’s TVL increased by 44.59% in the last 30 days. Anchor recently overtook Aave as the largest defi lending application in the ecosystem.
Anchor’s announcement follows the Luna Foundation’s bitcoin (BTC), purchases. The Luna Foundation leverages the BTC in order to support the Terra stablecoin UST. Anchor’s team believes that rearranging the earn rate will enable the project to continue its long-term sustainability.
Anchor Protocol’s announcement concluded that a semi-dynamic Earn Rate will be added to Anchor’s long-term sustainability. It will also benefit users by enabling yield reserve growth and continuing to offer an attractive yield on UST.