You can receive a floating interest rate on Terra-powered Anchor lending and borrowing platform
The long-awaited floating interest is now officially available on Terra through the Anchor platform. According to WuBlockchaincurrent interest stands at 18% with reserves reaching $209 million.
Lending and borrowing services were the most popular solutions in the cryptocurrency market, and the DeFi industry specifically, as they are the perfect tools for receiving short-term exposure to a certain asset or moving funds with no need to cash out via exchanges.
While cryptocurrency traders and investors (borrowers) get quick exposure to the assets they want, lenders are eligible to receive stable profit by donating their funds. Profits are determined by interest, which can be both stable and floating.
The primary advantage of floating interest is the ability of lenders to lock their funds with an above average rate whenever the contract gets drained. The major drawback is decreasing interest with high saturation.
With the newly implemented solution, we have already seen the effect of floating interest as it fell from 19.5% to 18% after the contract reserves reached $209 million. The drop in the rate caused cash outflows of $30 million. If a fund’s reserves are to be depleted, the rate will most likely rise to attract more liquidity.
The total value locked on Achor platform, which offers the newly arrived solution, is now at almost $20 billion UST, with the total deposit at $13 billion and the total collateral at $5.6 billion. The APY on UST deposits currently sits at almost 18%.
