Blockchain firms Cosmos, Polkadot, and Terra are teaming up to launch Anchor – a new decentralized finance (DeFi) product that promises to generate passive income by offering reliable interest rates on stablecoin deposits.
In a new blog post, the company reveals that Anchor is being developed to address the pressing need for an easy-to-use savings product that attracts users outside of the cryptoverse.
The DeFi savings protocol – which will be available before the end of September this year – can be accessed through the blockchains of Terra, Cosmos, and Polkadot. Terra explains that Anchor depositors earn interest by getting a piece of block rewards.
“To generate yield, Anchor lends out deposits to borrowers who put down liquid-staked PoS assets from major blockchains as collateral. Anchor’s yield is thus powered by block rewards of major Proof-of-Stake blockchains.”
According to Terra, the DeFi platform offers instant withdrawal of deposits and provides principal protection to depositors through a protocol that liquidates the borrower’s collateral when a loan is at risk.
Terra founder and CEO Do Kwon says the stable interest rate that Anchor offers sets it apart from other money market protocols like Maker and Compound, whose volatile interest rates make them less ideal as a savings product, according to CoinTelegraph.
“DeFi mass adoption needs the creation of a fully decentralized savings account that offers dependable APR.”
