In my crypto ecosystem, each blockchain that I use has its own purpose. From this perspective, I mostly use the TERRA blockchain for savings on stablecoins through the ANCHOR protocol and for synthetics stocks through MIRROR. In order to interact with the TERRA blockchain, you need Terra Station (Terra Station for chrome), the official non-custodian wallet of the TERRA blockchain. I will present the MIRROR Protocol in another post, today, I want to quickly introduce the ANCHOR protocol and how to reach it from HIVE.
1 - Moving from HIVE to TERRA
The ANCHOR protocol uses UST, the official stablecoin of the TERRA blockchain. I will present UST and ANCHOR in the next section. For now, you just have to keep in mind that you ultimatly need to end up with UST on TERRA in order to use ANCHOR.
Important : you do not need LUNA on TERRA, since you can pay the TERRA transaction fees in UST.
1.1 - Through a Centralized exchange (CEX) that has both HIVE and LUNA listed
The only example that comes to mind is of course Binance. You can withdraw native HIVE to this CEX, trade it for LUNA and withdraw the LUNA on the TERRA blockchain. In the future, UST shall be listed in several exchanges (it already is on KuCoin and Coinbase), thus removing one trade from the process. Once you got LUNA on TERRA, you can head to Terraswap, connect Terra Station and swap your LUNA for UST.
1.2 - Through DEFI using the Binance Smart Chain (BSC)
As I said before, you do not need LUNA on TERRA. Since UST is available on different blockchains, you can directly send UST to TERRA using the Terra Bridge. The Terra Bridge actually works with Ethereum, BSC and Harmony. Due to high gas fees, I only use Ethereum when I have no other choices, and I have yet to discover Harmony. So, for this example I will use BSC.
As a Splinterlands player, when I need to reach the BSC, I swap HIVE for DEC and then I withdraw the DEC to the BSC using the in-game withdrawal options. It is a lazy but fast way to reach BSC. I did some reseaches, and found a trusted HIVE to BNB Bridge(@deathwing) for BSC.
Whether you use Splinterlands or this bridge is up to you. The next step is to swap what you got on the BSC (DEC or BNB) for UST on pancakeswap. Then, you can bridge the UST to TERRA for the price of a BSC transaction using the Terra Bridge.
2 - The ANCHOR Protocol and UST
2.1 - Overview
The ANCHOR Protocol acts like a farm for the stablecoin UST with stable yields. The APY, taking into account the compounding interest is always around 20%. I have been using the protocol since 6 months now, and it had always been between 18 and 21%. At the time of writing it is at 19.42%. This high interest comes from "staking returns from multiple Proof of Stake blockchains", more information here.
The UST stablecoin maintains its peg through the LUNA demand. So you may wonder, what is happening during a crash or a long bear market? It's a bit complicated, but to summarize, we can say that if LUNA demand decreases, LUNA get burned, thus allowing maintaining the peg.
UST/USD Market history. coingecko
You remember the ugly crash we had in May 2021, with 30% of total crypto market going out of crypto. For a few days, the UST didn't maintain its peg, and went down to $0.965. But it quickly recovered. It's up to you to assess the risk of going into UST, but personally, I see the May event has a proof of strength. A lot of stablecoins didn't maintain their peg during this event. Thus, except if the TERRA blockchain was to fully disapper during a crash, I don't see why the UST could not maintain his peg. But that's only my point of view!
2.2 - Using the protocol
The ANCHOR Protocol can be used in two ways, first you can simply use it as a saving account for your UST Stablecoin. You click on EARN, then Deposit and that's it. You can withdraw at any time, and the protocol gives you an estimate of how much you make per day/week/month and year.
You can also use ANCHOR as a lending and borrowing platform. In this case you have to bond LUNA to BLUNA using BOND, then MINT. Be aware that the unbounding process from BLUNA to LUNA takes 3 weeks. If you are in a hurry, you can still directly trade BLUNA, but BLUNA is traded below LUNA market price.
Once you got BLUNA, you have two possibilities. First, you can use it as a collateral, which will allow you to borrow UST, up to 60% of the value of your collateral. Participating in this market will give you rewards in ANC, the token of the ANCHOR Protocol (Distribution APR).
At the time of writing, distribution APR - Borrow APR = 10.32%. But there is a trick that is not really explained, ANCHOR takes a fixed fee in UST on each and every transaction. So if you are planning and refounding your borrowing APR with your ANC distribution APR, you have to put a substancial amount into the protocol, otherwise you will not make up for the borrowing APR.
The second solution is to just hold on to your BLUNA, without using them as collateral. In this case, you will generate rewards directly into UST. You can withdraw these rewards in BOND, then CLAIM.
3 - Overview of the fees on Anchor
In order to make your farm competitive, you need to be aware that each and every transaction on Anchor have a flat taxe of between 0.7 (claiming rewards and deposit UST) and up to 2 UST (withdraw savings). So if you plan on trying Anchor with a small amount of UST/BLUNA, you will have to set up your farms and interact with the protocol as little as possible.
You also have to know that using the Terra Bridge the other way around, from TERRA to BSC, costs around 3 UST.
That's it for now. Thank you for reading. Next time I will present the MIRROR protocol. You can see an overview of my crypto ecosystem HERE. Don't hesitate to follow me, I regularly post about DEFI, splinterlands, travel, etc.