Announced initially at the Unitize conference on July 6, the companies plans to launch it across their respective blockchains at the end of Q3 this year and scale across to other PoS blockchains in the future.
Anchor Protocol offers a principal-protected stablecoin defi savings product that accepts Terra deposits and pays a stable interest rate.
Excited to announce establishment of the Interchain Asset Association to support @anchor_protocol!@terra_money @cosmos and @Polkadot will be part of the governing body furthering research, development, and support!@zmanian @jackbplatts @NicholasPlatias @tarunchitra — Terra (@terra_money) July 6, 2020
Do Kwon, founder and CEO of Terra, explained:
“While DeFi staples such as Maker and Compound have been revolutionary in creating fully decentralized crypto money markets, the volatility of their interest rates makes them unsuitable to be used as a household savings product. DeFi mass adoption needs the creation of a fully decentralized savings account that offers dependable APR.”
The new savings product’s smart contracts receive stablecoin deposits and use a portion of them to acquire staking positions on compatible Proof of Stake blockchains. Users will also receive their passive income from these staking rewards.
The initial governance for this platform will come from the Interchain Asset Association (IAA), a newly formed organization that sees:
Zaki Manian of Cosmos Network.
Jack Platts of the Web3 Foundation.
Do Kwon of Terraform Labs.
Anchor Protocol solves the problem of high cyclical stablecoin interest rates by stabilizing the deposit interest rate using block rewards that accrue to collateral assets. The protocol defines the Anchor Rate, derived from the yield of the market’s highest-demand PoS assets, as the blockchain economy’s interest rate benchmark.