Anchor is a savings protocol that aims to produce a simple and convenient savings product with broad appeal to everyday users. The protocol accepts Terra deposits, allows instant withdrawals and pays depositors a low-volatility interest rate. To generate yield, Anchor lends out deposits to borrowers who put down liquid-staked Proof-of-Stake assets from major blockchains as collateral (bAssets).
Anchor stabilizes the deposit interest rate by passing on a variable fraction of the bAsset yield to the depositor. It guarantees the principal of depositors by liquidating borrowers’ collateral via liquidation contracts and third-party arbitrageurs.
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