• Anchor Protocol’s Earn Rate Adjusts for the First Time, Dropping from 19.4 to 18% APY

  • Following the governance vote to create a semi-dynamic earn rate for the Anchor Protocol, the earn rate of the decentralized finance (defi) platform was modified lower for the first time this month. Anchor Protocol’s annual percentage yield (APY) has remained stable at 19.4 percent since the project’s inception, although it is now at 18 percent APY for the month of May.

    The Earn Rate of the Defi Lending Protocol Anchor is Reduced

    Anchor Protocol, a lending platform, is currently the third-largest defi protocol, with a total value of $16.5 billion locked in (TVL). According to statistics, Anchor’s TVL has climbed 9.25 percent in the previous 30 days compared to last month.

    Around 45 days ago, the lending protocol team revealed that a proposal had been approved and that the decentralized money market will have a changing earn rate. Prior to the proposal, Anchor users who deposited terrausd (UST) would earn a consistent 19.4 percent APY on their UST deposits every month.

    Since the governance decision, the first semi-dynamic adjustment occurred at the beginning of May, and depositors are now earning around 18 percent APY. Since the modification, the earn rate has been able to increase or fall by 1.5 percent per period, based on the increase and decline of yield reserves.

    With the current 18 percent APY, the shift means that depositors will get less this month than they did previously. Furthermore, depending on the protocol’s yield reserves, the earn rate could alter again in June.

    Anchor Protocol now supports two blockchains, thanks to the recent addition of Avalanche support. While Terra-based tokens account for $16.27 billion of Anchor’s TVL, Avalanche-based tokens account for $202.48 million. Currently, $2.9 billion in defi loans have been borrowed from the Anchor Protocol.

    The Luna Foundation Guard’s recent defi currency reserve purchases have caused the Anchor earn rate to fluctuate (LFG). The Singapore-based non-profit company uses the reserves to support terrausd (UST), and LFG owns 80,394 BTC worth $2.89 billion and $100 million in AVAX.

    With Anchor Protocol switching to a semi-dynamic earn rate, it will be fascinating to observe how this affects the platform’s TVL, which has been steadily increasing month after month. Anchor’s TVL has fallen 2.89 percent in the last 24 hours, and it has fallen 0.66 percent in the last seven days.

    What's your reaction?