Is Anchor Protocol’s 20% interest actually sustainable? I find out in this video.
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0:00 – Intro
0:52 – What is Anchor Protocol
Anchor Protocol is a savings and lending platform in the DEFI space. It is currently ranked 7th in DefiLlama with a total value of $11.5B total value locked.
1:56 – How does it afford to pay 20% interest
Anchor earns from charging interest to borrowers. It also earns on interest on collaterals.
4:31 – The problem with 20% interest
Right now, there’s too much deposit and too few borrowers. As a result, Anchor is losing money and may end up drying up their yield reserves.
6:07 – How will Anchor fix the problem
On February 17, Anchor topped up another $450M, however this is just a temporary solution. Their long term solution is to implement the Anchor v2 Borrow Model. With it, they can accept new collaterals like mSol and LunaX. This will incentivize more people to use Anchor.
7:53 – The risk
The usual risk of using Anchor still applies: rugpull, platform hacks, stablecoin collapse. So, only use Anchor if you are ok with losing your money.
*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Some of the links and other products that appear on this video are from companies which Kelvin Learns Investing will earn an affiliate commission or referral bonus.*
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