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Cosmos, Polkadot Join Terra In New DeFi Savings Project

Cosmos, Polkadot Join Terra In New DeFi Savings Project 101
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Guided by a belief that decentralized finance (DeFi) is still missing “a simple and convenient savings product,” South Korea-based stablecoin issuer Terra (LUNA) has revealed Anchor, a new DeFi project.

The new platform will be governed by a newly formed organization the Interchain Asset Association, consisting of individuals associated with Terra, as well as blockchain platforms Cosmos Network (ATOM) and Polkadot (DOT).

Speaking in a livestream for the Unitize online conference yesterday, Terra CEO Do Kwon revealed the new blockchain platform, which promises to pay savers what is described as a “dependable APR” (annual percentage yield) on their stablecoin deposits.

Terra said it believes that “the path to mass adoption for decentralized finance is the savings product” and called Anchor “the gold standard for passive income on the blockchain.”

According to the company, the system works by users depositing stablecoin onto Anchor’s smart contract, which then uses those funds to establish staking positions in various compatible proof-of-stake (PoS) stablecoins.

“To generate yield, Anchor lends out deposits to borrowers who put down liquid-staked PoS assets from major blockchains as collateral,” the announcement said, adding that this ensures that the platform’s yield is “powered by block rewards of major Proof-of-Stake blockchains.”

Also, the project promises to allow users to borrow against future expected staking rewards, as opposed to just the assets a user already holds. The new platform also offers a guarantee on the principal stablecoin amount deposited.

In addition to the principal protection and the more stable interest rate compared to other DeFi savings products, Terra also mentioned “instant withdrawals” with no required lockup time as another key feature of the platform.

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Learn more: Giant Backed Terra's Strategy Works, Says Stablecoin Co-Founder

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