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Anchor Protocol launches floating interest rates: Rates down by 1.5% this week

02 May 2022 : 08:14
2 min read
  • Anchor Protocol has officially launched floating interest rates for users
  • The interest rate this week was down by 1.5% as compared to the previous week
  • Reserves now total $209 million, a net outflow of about $30 million from last week

Anchor Protocol, a borrowing and lending platform built on the Terra blockchain, has officially launched floating interest rates after a number of days of speculation and discussion. The Defi protocol, which gave 20% yields to all the users, had introduced floating interest rates in order to produce sustainable yields for its users. 

Anchor Protocol interest rates are down by 1.5%

As compared to the last week, the interest rate this week was 18%, down 1.5%. Reserves now total $209 million, a net outflow of about $30 million from last week, as noted by Colin Wu, a well-known crypto reporter. Anchor Protocol had recently put the decision to the introduction of a floating interest rate system to a vote, as reported by Cryptonary. 

“As discussed in this last week’s semi-dynamic Earn rate AMA, the Earn rate will update today, May 1st, to exactly 18% APY @ 12pm EST,” said Anchor Protocol’s official Twitter post. “As sustainability is added, staking rewards in the future could be redeployed to create the lowest borrowing rate in Defi,” noted another Twitter user with the username @ryanology045.

Benefits?

The Anchor Protocol yield rate will adjust dynamically by up to 1.5% each month based on if the yield reserve is appreciated or depreciated. The floor is 15% APY & the ceiling is 20% APY, as Cryptonary previously recorded.

“The rate will update roughly every 388068 blocks or every month, but it may differ slightly MoM given that block times can change. Any MoM change over .25% in the yield reserve will trigger a rate change,” revealed Anchor Protocol via a Twitter thread. 

The new changes to the yields are aimed at producing sustainable yields for users. However, as Cryptonary members noted, these Defi protocols use yields as an introductory marketing strategy. The truth is that none of the yields are sustainable as they are partially paid via reserves from those projects.


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