Anchor is a savings protocol offering low-volatile yields on Terra stablecoin deposits and this Anchor rate is powered by a diversified stream of staking rewards from major proof-of-stake blockchains. So, it can be expected to be much more stable than money market interest rates.

To be precise, Anchor protocol defines a money market between a lender looking to earn stable yields on their stablecoins and a borrower looking to borrow stablecoins on stakeable assets. To borrow stablecoins, the borrower locks up Bonded Assets(bAssets) as collateral and borrows stablecoins as per the protocol-defined LTV ratio.

Deposited stablecoins are represented as Anchor Terra (aTerra) tokens. These tokens are redeemable for the initial deposit along with accrued interest, allowing interest collection to be done just by holding on to them. Anchor is structured to provide depositors with following benefits:

• High stable deposit yields powered by rewards of bAsset collaterals
• Instant withdrawals through pooled lending of stablecoin deposits
• Principal protection via liquidation of loans in risk of undercollateralization

What are Bonded Assets (bAssets)?

bAssets are liquid, tokenized representations of staked (bonded) assets in a PoS blockchain. They allow stakers to gain liquidity over their staked assets, enabling the locked value in staked assets to be utilized in financial applications like Anchor.

An ideal bAsset to be used as a collateral should have the following properties:

• bAssets should be made fungible across all staking positions, regardless of their underlying validator and their properties. Having multiple bAsset types for a single blockchain leads to fragmented liquidity, drastically decreasing their attractiveness as a collateral.
• The price of bAssets determine whether a loan is liquidated or not, borrowers should be able to easily estimate the value of their bAsset collaterals. This is best done by introducing a one-to-one conversion peg between bAssets and their underlying assets, where bAssets mimick the price of their underlying assets.
• Redemption of bAssets should be fully executed within a predetermined time period and Any holder should be able to redeem their bAssets without significant loss.
• bAsset rewards should be given out without interruption, as subsidies must be constantly distributed

If we start comparing Collateral Deposits with Collateral borrows, the relationship appears to be more transparent with respect to the change in collateralization ratio. As per the recent trends, we could see approximately a 10:1 ratio between new Collateral deposits and new Collateral borrows.

The below graphical representation shows the Anchor collateral Ratio captured over the past 2 weeks

Total Value Locked (TVL) in general is a metric, which represents the dollar value of the tokens locked in Decentralized finance (DeFi) Smart Contracts.

Let us us see what happens when a new asset is onboarded on Anchor and its relevant impact on the already existing assets.

This graph gives the Total volume trend of transactions traded on Anchor protocol in UST, over the past 6 months.

Here is how Anchor Borrows and Repayments transactions pattern over the past 3 months in Terra ecosystem.

On an average, below is the daily Anchor price for transactions occurred in the past 6 months on Terra network.

Conclusion:

From all the above graphs and visuals, we can get clarity on the metrics like Liquidity, TVL, Borrows & Repayments, Collateral Ratio etc happening over the Anchor protocol in the past 6 months.