Anchor Protocol to shift towards dynamic earn rate starting at 18% APY

Anchor Protocol, which launched DeFi's cross-chain savings product on Terra with 20% APY, is now moving towards a more flexible and dynamic earn rate.

Anchor Protocol to shift towards dynamic earn rate starting at 18% APY

Anchor Protocol, which launched DeFi's cross-chain savings product on Terra with 20% APY, is now moving towards a more flexible and dynamic earn rate.

The Anchor Earn rate adjusts dynamically by up to 1.5% each month depending on whether the yield reserve appreciated or depreciated. If the yield reserve is growing, the earn rate could increase; if the yield reserve is falling, the rate could decrease. The Earn rate would update approximately every 388068 blocks, or once every month.

There are two parameters that can be changed by governance:

  • Frequency of changes
  • Cap on rate adjustments

Currently, the earn rate frequency changes is 1 month, and the cap on rate adjustments is set at 1.5%. Furthermore, the floor for Earn rates is 15% APY & the ceiling is 20% APY.

The addition of a semi-dynamic Earn rate will contribute to the long-term sustainability of Anchor & will benefit users of the protocol by enabling yield reserve growth while continuing to provide an attractive yield on UST.