Terra has surpassed Binance Smart Chain in terms of total key value, becoming the second largest DeFi network after Ethereum.

Terracedeo DeFi on Terra flake.

This network has through Binance Smart Chain about the general value in the DeFi protocol to the end of the week, when LUNA grows up up a high to all the new time.

Show at, Terra has over $18 billion worth of assets on DeFi protocol 13. The combination of bullish work and compute accounts from the new protocol has brought the total value locked on the network to number two. position behind Ethereum.

Since breaking through to an all-time high in late November, LUNA has picked up steam, recovering quickly as the rest of the market fell in price.

Today, LUNA surged to a new all-time high of $92.29.

The dwindling supply of LUNA tokens in the market pushed the price of LUNA higher, the Terra community voted to delist about 10% of the roughly $4 Billion worth of supply in October.

In addition, the growing demand for UST also affects the price of LUNA. UST can be created by LUNA to change, reducing the supply of LUNA as more stablecoins are produced.

The launch of new protocols also attracts more accounts. Astroport, a newly launched decentralized exchange on Terra, has brought more money into the ecosystem.

Users of their locked accounts in the protocol will receive an ASTRO airdrop depending on how long they locked their assets. To date, more than $1.1 billion in assets have been pledged, with more than half in LUNA coins, further reducing the supply accounts in the market.

While the composite key value on Terra has increased significantly, the other Layer1 ones have lagged behind.

Binance Smart Chain could not surpass the previous all-time high total value of $31.6 billion reached in May. While other tier 1s like Avalanche and Solana had steady growth but they could not be in the Terra in the month.

As the Terra blockchain expands and the demand for UST continues to rise, so does the price of Luna. It’s such an exciting time to be an active user of Terra and many of the amazing protocols that are now available (Including LOOP of course) and whilst price is moving in the right direction those investments look strong and the Hopium for a $1000 Luna one day continues.

Although the long term outlook for Luna and its eco system is exciting, I am a firm believer that if you have invested money into Crypto or any other asset, you must take some profits along the way. This does not mean you need to sell your entire portfolio and neither does it mean you should be quick to just sell all of your airdrops when you get them.  

I often find with airdrops that many people lose sight of the fact that when receiving airdrops, you are gaining free tokens for new and innovative products that are just being taken to market. Some of these products such as ANC, MINE, LOOP are absolute gems and the value of those airdrops in the long term could be significant. Keep hold of those gems and stake them when possible.

A lion that is still sleeping and that I am sure will wake up soon is CUB, the token of Cubfinance, the DeFi platform built by the @leofinance team and which is maturing very quietly, step by step, waiting for its moment of glory.

Cubfinance is a platform that is reaping the positive aspects of the DeFi of the crypto world and allowing its investors to obtain a double reward in CUB and BNB. In all these months the team is also building the IDO (Initial Dex Offering) project, a launch platform for new startups who aim to raise funds for the start of their projects.

DeFi is something very big and it will encompass more and more slices of the market out there so it will be necessary to offer maximum security and efficiency to gain the trust of new investors.

IDO 1, Cakepop, was a stepping stone, a test that helped the team understand what to refine and improve for the protection of users participating in IDOs. The IDO 2 that will be launched shortly has definitely revolutionized the participation mechanisms and especially the post-IDO ones, to guarantee investors.

I am very curious to see the IDO live which promises to burn $ 1 million in CUB, drastically decreasing the circulating supply and pushing CUB to another level. In this period of transactions, I have personally increased my CUB positions, I own 2000, waiting for the upcoming POLYCUB airdrop 🚀.

Currently, the price of CUB has settled at $ 0.60, a stable value that promises very interesting shocks. There are excellent opportunities for growth in the short term and I personally believe it is possible to reach a value range between $ 3 and $ 5. The value will tend to grow over time with the launch of the 3, 4, 5, etc. IDOs. The more IDOs, the more CUBs burned and the more price growth. All clear?

Well if you have understood the mechanism, then you are aware of the great potential. This is not financial advice but it is my personal thought. In love with CUB

Interest rates, which is how much the banks are paying you for borrowing your money, have fallen down a whopping 99% since 1985. The inflation rate, which tracks how more expensive everything is getting, is only going higher.

This means that the value of your money floats away when you leave it in the bank.

The Anchor Protocol, a savings account powered by crypto, fixes this.

What does Anchor do for your savings?

Anchor is a savings protocol for your dollars powered by the Terra blockchain. Currently, it promises a near 20% interest for its depositors.

How does it work? Think of it as a hybrid between banks and pawnshops.

Savers store their dollars into the app, which then lends the same to borrowers who surrender their property to secure the debt. Borrowers then pay the protocol interest over time until the debt is paid back. When the debt is paid back, their property is returned to them.

But because it’s built on the blockchain, several differences make it more profitable for everyone involved. The differences are as follows:

• The deposits in anchor are “stable coins”

• Collateral put up is a “productive asset”

• Incentives for borrowers

• Different risks

I hope to illustrate how Anchor can afford to pay depositors such a great interest rate by going through these differences.

Stable coins and programable banking activities

Stable coins are cryptocurrencies whose values are tied to real-world currencies like the US dollar.

What is deposited in Anchor is the stable coin Terra-USD (UST) which maintains its value to the dollar through an algorithm and well-thought-out economic incentives. You can learn more about that in this video.

One UST should always equal one US dollar. So while you are exchanging your dollars for a cryptocurrency, you do so with much less price volatility compared to other assets in the space.

Using UST is advantageous to savers in the protocol because it allows the borrowing and lending to be done by the program instead of real people. In addition, Terra’s blockchain allows for banking to be automated, reducing operation costs.

Since it is automated, there is no need to pay for rent for a building or wages for a large staff. This allows a large chunk of the program's revenue to return value to lenders.

Currently, borrowers are charged a 15% yearly interest rate on their loans. And because its code controls the borrowing and lending in the application, the program can automatically rebalance the cost of loans based on demand and supply.

When there are more borrowers than deposits, the program increases the interest rate to make borrowing more expensive. Conversely, when more borrowers would be more profitable, the program can decrease its interest rate to make borrowing more affordable.

But how secure are the loans? And how can the program pay depositors near 20% despite charging borrowers only 15%?

Over-collateralized loans and productive digital assets

Loans granted by Anchor must be over-collateralized by the borrower. Currently, all loans from the protocol must be backed by at least two times their value. This means that every dollar lent out must be backed by at least two dollars worth of assets.

What assets are used to secure the loan? Borrowers have to surrender cryptocurrencies that can be staked in return for rewards.

In a blockchain that utilizes Proof-of-Stake(PoS), coins are delegated to validators in a network and accrue rewards whenever a new block is created. Examples of these are types of currencies are ETH, SOL, and LUNA.

You can think of these assets like land and transaction fees on a network like rent.

Whenever an application is built on top of the network, people who use it pay transaction fees to the network’s validators. The validators need to be delegated your coins to receive these fees, and delegators get a share of those fees for doing so.

Hence, coins on a chain secured by PoS are productive assets that earn yield.

Borrowers provide these productive assets to secure their loans. The program then stakes these assets to receive its rewards. These rewards are then exchanged for UST and paid out to depositors.

As a parallel example, it’s sort of like giving possession of your land to a creditor in order to secure a debt. The creditor can lease it out and collect rent while waiting for you to pay back your loan.

Currently, LUNA is the only available digital asset that can be used as collateral in Anchor. Its current yield from staking is around 10%.

The protocol requires the borrower at least double the amount LUNA equivalent to every dollar borrowed. This allows the protocol to earn about 20% on every dollar borrowed by putting surrendered collateral to good use.

The interest paid isn’t magic. It’s math.

But it does seem like borrowers are getting the short-end of the stick whenever they take loans. They also run the risk of liquidation, which is when the protocol automatically sells their collateral if it falls below the required loan-to-value ratio of 50%.

So why would anyone want to take a loan?

Incentives and risks for borrowers

The way I see it, there are currently two kinds of borrowers: the speculator and the farmer.

To illustrate the incentives of a speculator, suppose Clarissa holds LUNA.

She thinks that the value of LUNA will be worth way more in the future, so she refuses to sell the asset. Unfortunately, she’s short on cash for this month’s bills since her check won’t come in till the end of the week.

To pay her bills without having to sell her coins, Clarissa can use her LUNA as collateral for a loan in the meantime. Then, when she gets paid a few days later, she can settle her outstanding debt and get back her LUNA. Because she speculates that LUNA will increase in value, she is incentivized to borrow against her coins in times where she requires more cash.

Farmers, on the other hand, borrow money from the protocol in order to receive rewards in doing so. Anchor rewards borrowers a variable but generous average percentage yield (APY) for borrowing. This means that borrowers are paid in Anchor’s own governance token, ANC, for participating in the protocol.

At times, the APY for borrowing is so large that borrowers effectively get paid to borrow. While this won’t last forever, since ANC has a finite supply, clever individuals are incentivized to borrow in order to farm ANC.

Risks for depositors

It would be irresponsible to say that this protocol does not have any risk for its depositors. Like all financial vehicles, there are several that you should be aware of. Here are two of what I consider the biggest risks with using Anchor.

#1 Smart contract risk

Smart contract risks are bugs in the code that may cause hacks or exploits in the future. While hundreds of hours have been spent by Anchor’s developers to ensure the protocol is free from bugs, there’s always the possibility of a major problem that is not yet known. These problems are the unknown risks that a user takes on in every smart contract.

I can’t say what those problems might be because problems that are not yet known are “unknown risks” by definition. Fortunately, smart contract risk can be insured against through products offered by Nexus Mutual.

#2 Risk of UST losing its peg against the dollar

UST is an algorithmic stable coin not backed by real dollars. While I personally believe that the incentives around its design will allow it to maintain its peg, there have been instances where it has been valued above and below the dollar.

UST loss 5% against the dollar during the recent May crash but regained its peg a few days later. Insurance providers like Unslashed Finance can insure against this risk.

How to get started

Saving your savings can be done directly on Anchor or through the use of third-party applications that integrates the Anchor protocol.

#1 Directly using Anchor

You can purchase LUNA from centralized exchanges like Binance, Crypto.com, and KuCoin. You can then transfer this to a Terra wallet created through the network’s browser extension or desktop application.

LUNA can then be swapped for UST. If you prefer it, UST can also be purchased directly via KuCoin. These will be used to fund your deposit.

You can access the website and its application through this link.

Once there, press the “connect wallet” button on the top right, and the rest is fairly straightforward. If this is your first time interacting with a decentralized application, please note that every action on the protocol will be charged a small transaction fee.

#2 Third-party applications

Anchor’s attractive yields can easily be integrated into third-party applications. If you aren’t comfortable jumping into decentralized finance yourself, services like Yotta might be more suitable for you.

Just download the application, fill up its KYC, and you’re good to go with them. Please note that the yield they offer is only 8%, which is significantly higher than the average savings account but is also quite less than the yield offered directly by Anchor.

More third-party applications like Yotta are coming in the future. Here are some to look out for: