Ethena partnered with Derive, the leading on-chain options protocol, to integrate USDe as yield-bearing collateral for options trading and launch new structured products. 

The S&P 500 gained 0.05%, reaching another record high as investors analyzed strong October job data. Focus now turns to upcoming labor market reports and Fed Chair Powell's speech on Wednesday. Coindesk Indices, an index measuring broader cryptocurrency market performance was down by 0.38%, with Bitcoin and Ether dropping by 0.002% and 0.05%, respectively in the past 24 hours.

Today's top performer is TRX, which surged 68.6% after TRON DAO was recognized for its Global Blockchain Innovation at the Wiki Finance EXPO 2024.

Tron DAO (TRX), launched in 2017, leverages established blockchain technologies like dApps and smart contracts to enhance user experience rather than innovating on network design. It gained notable attention after acquiring BitTorrent in 2018, emphasizing its focus on proven technologies to potentially reshape Web 3.0. At Wiki Finance EXPO Dubai 2024, TRON DAO was honored with the "

" for its exceptional contributions to advancing blockchain innovation worldwide.

Check Out the Latest Prices, Charts, and Data of 

, the leading on-chain options protocol, to integrate USDe as yield-bearing collateral for options trading and launch new structured products. As part of the partnership, Ethena provided a multi-million dollar grant, and sENA holders will receive 5% of Derive’s DRV token supply. Derive, with 75% market share in on-chain options, processes $250M weekly volume and supports advanced financial products. This collaboration strengthens Ethena’s ecosystem, promoting USDe adoption and enhancing DeFi innovation with Derive’s expertise and composable financial tools. Ethena invites builders to join its growing network.

Yesterday, the BTC Spot ETF saw a total outflow of $17.3 million, with GBTC showing no flow and Non-GBTC experiencing an outflow of $17.3 million.

 will be available for claim on December 6, 2024, at 10 AM UTC. A total of 750 million $F tokens (7.5% of the supply) are allocated for eligible participants. The airdrop will be fully unlocked immediately. Eligibility includes SynFutures v1 and v2 users, v3 Oyster Odyssey points holders, long-term active users, and winners of select community campaigns. For more details, visit the official claim site and the 

Beginner

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Ethena Partners with Derive to Boost USDe Adoption and Enhance DeFi Innovation

As Bybit celebrates its sixth anniversary, the exchange has solidified its position as a leading player in the cryptocurrency market.

As Bybit celebrates its sixth anniversary, the exchange has solidified its position as a leading player in the cryptocurrency market. With significant growth in both its user base and variety of trading products, Bybit is not only expanding its offerings, but also enhancing its market influence. This article highlights the attached report’s key messages, focusing on user growth, spot trading, perpetual futures and options trading.

Since its inception in 2018, Bybit’s user base has experienced explosive growth, surpassing 60 million users by Q3 2024. This remarkable increase — from 20 million users in late 2023 — underscores both the platform's appeal and the growing global interest in cryptocurrency trading.

Several factors have contributed to this user growth. First, Bybit's continual innovation and its introduction of new trading products have attracted a diverse range of traders. Additionally, the platform’s user-friendly interface and robust educational resources have made it accessible to newcomers in the crypto space.

Moreover, the rising popularity of cryptocurrency, as well as favorable market conditions — such as the anticipation surrounding Bitcoin Spot ETFs — have drawn more users to the platform. The report indicates that the influx of new users has led to increased activity, further driving demand for various trading pairs.

Spot trading on Bybit has seen significant expansion, with daily volumes exceeding $10 billion by 2024. This growth is particularly notable given the turbulent market conditions that have characterized the past few years. The report highlights that spot trading volumes grew steadily, especially during bullish market phases, driven by heightened interest in altcoins alongside Bitcoin.

The number of available spot trading pairs has more than doubled from 2022 to 2024, catering to the diverse preferences of traders. Increased spot pair availability has not only attracted more users, but has also contributed to a robust trading environment in which traders can capitalize on various market opportunities.

Tellingly, the report notes the relationship between Bitcoin's price movements and spot trading volumes. As Bitcoin rallies, there’s a substantial uptick in trading activity for both Bitcoin and altcoins, indicating a capital rotation effect that’s common in cryptocurrency markets.

Perpetual futures remain one of Bybit’s most popular trading instruments, consistently outpacing spot trading volumes. During the March 2024 rally, perpetual trading volume reached nearly $70 billion, highlighting traders' preference for leveraged trading options that these contracts provide.

The appeal of perpetual futures lies in their flexibility, allowing traders to take both long and short positions while utilizing 

 to amplify potential gains. This makes perpetual futures an attractive option for traders seeking to optimize their capital efficiency.

Despite the steady growth in spot trading, perpetual futures have maintained a dominant position in the market. The report indicates that while spot trading volumes have increased, they still lag behind those of perpetual futures, reflecting a strong preference among traders for these derivative products.

Bybit’s continual enhancement of its perpetual futures offerings, including a wider range of trading pairs, has further solidified its leadership in this segment. The growth trajectory of perpetual futures is expected to continue, particularly if market conditions remain favorable.

 market, although smaller than its perpetual futures segment, is experiencing noteworthy growth. Since its launch in 2022, the options market has expanded, reflecting an increasing number of traders willing to engage with more sophisticated trading instruments.

The report reveals that Bitcoin options dominate open interest within Bybit’s options market, with a growing preference for call options over puts. This trend indicates traders’ optimism about Bitcoin’s future price movements, particularly following the recent price rallies.

Solana options, introduced more recently, are also gaining traction, showcasing the evolving landscape of cryptocurrency derivatives. The report highlights a clear upward trajectory in open interest for Solana options, driven by increasing demand for exposure to emerging cryptocurrencies.

As traders become more familiar with options trading, the market is expected to mature, providing further opportunities for innovative trading strategies and 

Bybit’s sixth anniversary marks a significant milestone in its journey as a leading cryptocurrency exchange. With a rapidly growing user base, robust spot trading activity, dominant perpetual futures volumes and burgeoning options market, Bybit is well-positioned for continued success.

These developments not only reflect Bybit’s commitment to enhancing its offerings, but also highlight the broader trends within the cryptocurrency market. As traders seek diverse and sophisticated trading instruments, Bybit’s adaptability and innovation will likely play a crucial role in shaping its future.

Advanced

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Bybit’s 6th Anniversary: A Journey of Growth and Milestones Toward Becoming the No. 2 Crypto Exchange

Bybit Cloud Wallet offers a seamless way to manage cryptocurrencies without having to handle private keys. Learn more about how it works in this article.

Bybit Cloud Wallet makes crypto management seamless for everyone by offering a user-friendly platform for storing and managing cryptocurrencies without the hassle of handling 

 not only enhances security but also simplifies interactions with Bybit Web3 services. In this article, we'll explore how Bybit Cloud Wallet works and its benefits and risks, and provide a step-by-step guide to using the wallet. 

Bybit Cloud Wallet is a custodial digital wallet integrated with the Bybit platform, allowing users to store and manage cryptocurrencies without handling private keys directly. It offers enhanced security and accessibility for web3 interactions.

Bybit Cloud Wallet is a custodial wallet, meaning that Bybit manages the private keys on behalf of its users. This design simplifies the experience by removing the burden of securely storing seed phrases or private keys. It integrates with Bybit accounts to streamline cryptocurrency management and provide secure handling for private keys.

Users can access their wallet by logging into their account and completing the Cloud Wallet setup. A unique wallet address is generated, and the associated private keys are securely stored on Bybit's cloud servers. Once the wallet is configured, users can safely store, manage and transact a variety of digital assets. 

When initiating transactions — such as sending or receiving cryptocurrency — a request is created and securely transmitted to Bybit’s servers. The provider verifies the request using the stored private keys, ensuring it’s been authorized by the rightful owner.

Depositing funds into the Bybit Cloud Wallet is straightforward, and users can transfer cryptocurrencies from other wallets within the Bybit Web3 platform with ease. Withdrawals follow a similarly simple process, whereby users specify the amount and destination address while selecting their preferred gas fees.

The wallet uses standard security protocols to protect user accounts and funds from unauthorized access. While the custodial nature of the wallet makes it user-friendly, it also necessitates trust in Bybit's security practices.

Bybit Cloud Wallet integrates with various Bybit Web3 services, enabling users to trade, 

 (DApps) directly through the wallet’s interface.

Bybit Cloud Wallet offers a range of benefits for users seeking an efficient and secure way to manage their cryptocurrency assets.

While Bybit Cloud Wallet offers numerous advantages, users should also be aware of several inherent risks associated with its use.

: Navigate to the Bybit homepage and log in to your Bybit account. Then, click on the 

tab on the top left corner of the page. 

. This will generate a unique wallet address associated with your account.

Now that you’ve created your Bybit Cloud Wallet, here’s how you can deposit tokens and start interacting with DApps. There are two ways in which you can deposit tokens into your Bybit Cloud Wallet — by transferring from your Bybit Funding Account, and by transferring from your external wallet.

: Please ensure that you already have funds in your Bybit Funding Account before you proceed with the steps below. 

: Hover your cursor over your profile icon in the upper right corner of the Bybit homepage, and click on 

 (Web3) and your Bybit Wallet (Web3) address will automatically be filled. Select your preferred 

and enter the amount you wish to withdraw to your Bybit Wallet (Web3).

: After you’ve checked and verified all details, click on 

Congratulations! You’ve successfully transferred assets from your Bybit account to your Bybit Cloud Wallet!

Let’s use MetaMask and the BNB chain as an example. 

: Navigate to your MetaMask wallet. Then, click on the 

. Click on the copy icon to copy your Bybit Wallet address.

and paste your Bybit Cloud Wallet address into the input box. 

: Please make sure you choose BSC. Otherwise, your USDT and BNB may not be transferred successfully.

Congratulations! You’ve successfully transferred assets from your external wallet to your Bybit Cloud Wallet.

 next to the token you would like to withdraw, and transfer your funds to your Bybit Funding Account.

, enter the amount you would like to withdraw, choose your gas fees and click on 

: Confirm the details, request the verification code and submit your withdrawal request.

 next to the token you would like to withdraw, and transfer your funds to your external wallet.

: Enter the receiving wallet address and the amount, and choose your gas fees. Click on 

: Review the details, submit the verification code and confirm your withdrawal.

: To view your transfer history, hover your cursor over the 

tab in the top-right corner of the Bybit Web3 page, and click on 

: You can check your deposit and withdrawal history under either the 

Who Is Best Suited to Use the Bybit Cloud Wallet?

Bybit Cloud Wallet combines ease of use with robust security measures, making it a suitable option for users who prefer not to manage their own private keys, while still being able to conduct cryptocurrency transactions.

Individuals who are new to cryptocurrencies will find Bybit Cloud Wallet appealing due to its user-friendly interface and custodial nature, which eliminates the need for managing private keys. This accessibility allows users to engage with digital assets without needing extensive technical knowledge.

 services will also appreciate the wallet's integration with various DApps and platforms, allowing for easy interaction within the blockchain ecosystem.

Deciding whether to use the Bybit Cloud Wallet depends upon your specific needs and preferences. If you value security, convenience and the ability to manage multiple cryptocurrencies within a single platform, Bybit Cloud Wallet is a strong choice. However, if you prefer having full control over your private keys and assets, a 

 might be a better option. Consider your priorities and the level of control you desire over your digital assets when making your decision.

Bybit Cloud Wallet offers a secure and convenient way to manage cryptocurrency assets without the complexity of handling private keys. Its seamless integration with Bybit Web3 services makes it ideal for beginners and experienced users alike, enabling easy interactions with DApps and DeFi platforms. While Bybit Cloud Wallet offers strong security and user-friendliness, the risks of using a custodial wallet remain a consideration for those seeking full control over their assets.

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Bybit Cloud Wallet: Seamless Crypto Management for Everyone

USUAL introduces USD0, a stablecoin backed by U.S. Treasury Bills, offering transparency, security, and revenue sharing through its governance token, USUAL.

More than a decade ago, in mid-2014, the first 

 arrived on the stage of the crypto market. These cryptocurrencies were designed to provide stability in the typically volatile world of crypto, and to serve as a bridge between the traditional finance (TradFi) and 

 (DeFi) ecosystems. At the core of their functionality is a mechanism that maintains a close peg to some traditionally valued asset, be it the U.S. dollar, euro or 

Stablecoins have proved to be tremendously popular, with the leading asset in this niche, 

 (USDT), routinely attracting higher trading volumes than any other cryptocurrency — including the mighty Bitcoin. The second most popular stablecoin in the market, 

 (USDC), also enjoys multibillion-dollar daily trading volumes, and ranks among the top 10 cryptocurrencies by market cap.

Despite their popularity, many leading stablecoins — including the dominant USDT and USDC pair — have opaque collateral management mechanisms, are lacking in transparency, don't distribute revenues to the wider user community and are highly centralized in terms of control.

Usual (USUAL) is a DeFi solution launched on the 

 (ETH) blockchain that aims to tackle these deficiencies of traditional stablecoins by offering a 

 (RWA)–backed stablecoin and redistributing protocol revenues among its users. The platform's primary stablecoin — USD0 — is backed by collateral invested mainly in short-term U.S. Treasury Bills; maintains a tight peg to the greenback via these secure investments; has a fully transparent reserve verification system; and opens up additional yield opportunities across a variety of external DeFi protocols via a 

 (USUAL) is an Ethereum-based DeFi platform that offers an RWA-backed, USD-pegged transparent stablecoin, USD0, and distributes protocol revenues among its user community. 

USD0 is backed by collateral invested in RWAs, primarily in short-term U.S. Treasury Bills. The short-term, highly liquid and secure nature of these government-issued assets ensures that USD0's peg to the U.S. dollar isn't likely to be compromised.

Usual has partnered with Hashnote, a Florida-based regulated provider of digital and tokenized fund products, to facilitate secure investment in U.S. Treasury Bills and associated products.

Usual's USD0 is a unique stablecoin product, distinct from the dominant assets in this niche, 

 and USDC. While these cryptocurrencies also maintain fiat reserves to back their value, they’re controlled by centralized corporate entities, and their USD reserves are exposed to the traditional banking system, with poorly known levels of risk associated with them.

, whose values aren’t backed by fiat assets, and which are highly dependent upon underlying protocols’ activity to maintain their pegs. In many cases, these algorithmic coins lose their pegs and stability when the underlying lending or borrowing activities on their protocols are manipulated by 

 or become subject to panic-driven runs. The most notorious example was the 2022 

Usual’s platform also offers a liquid staking version of USD0, USD0++, which can be used throughout the DeFi ecosystem for additional yields. It has partnered with several Ethereum DeFi protocols to expand the universe of platforms where USD0++ can be utilized, including 

Usual also has another distinct feature: the protocol aims to distribute future revenue among its users, specifically among holders of its upcoming USUAL 

The platform was developed by the France-based Usual Labs, a blockchain development outfit co-founded by Adli Takkal Bataille, Hugo Sallé de Chou and former French parliament member Pierre Person. Usual launched the USD0 stablecoin in mid-2024. In late November 2024, the platform introduced the USUAL governance token, set to be launched sometime in mid-December 2024.

The introduction of the USD0 stablecoin is a potentially paradigm-changing event for the crypto market. This innovative asset adopts many of the advantages of fiat-backed stablecoins, but also resolves many associated issues. Usual Labs has targeted several goals with the advent of USD0 and its unique working mechanism.

One key aim is to change the way that profits from decentralized stablecoin operations are shared. Usual's revenue is to be shared with the user community — namely, the holders of the USUAL token. All the revenue generated from the platform's operations flows to its treasury. USUAL holders are in charge of this revenue, making them eligible to decide on the actual distribution. In essence, owning USUAL entitles you to a share of potentially 100% of revenue generated by the platform.

This starkly contrasts with the way that other fiat-backed stablecoins, notably USDT and USDC, operate. All the revenues generated from these stablecoins are appropriated by their respective founding companies — Tether Limited for USDT, and Circle Internet Financial Limited for USDC. While the risks from the operations of these assets are externalized and shared with holders of the stablecoins, the revenues are internalized and scooped up by Tether and Circle.

Another aim of the Usual project is to bring transparency to the management of collateral that backs the USD0 stablecoin. As a decentralized protocol, Usual provides the transparency of collateral funds' allocation. Again, this contrasts with the opaque nature of the way that USD collateral for some stablecoins is managed. Tether's USDT has particularly 

 in the crypto investor community, as the company has never conducted a full-scale audit for its vast claimed dollar reserves.

Another aim of Usual is to provide a stablecoin that’s completely secure from exposure to the traditional, fractional reserve-based banking system. Some crypto investors have derided the fractional reserve system, whereby only a small proportion of client liabilities are actually held at any given time by banks. Projects like USDT and USDC rely heavily on the traditional banking system, which backs their U.S. dollar reserves. These banks naturally rely on fractional reserves that, at least in the opinion of the most risk-averse investors, exposes them to 

In contrast, USD0 is backed by short-term U.S. Treasury Bills, an asset class that’s fully backed by the U.S. government's pledge. These are considered among the safest assets in the world of finance, as the U.S. government has never yet defaulted on its payment obligations. Unlike USD deposits in banks, USD0's Treasury Bill–based collateral isn't exposed to the risks of the fractional reserve system. As such, the coin's collateral is based on a government-backed asset, providing a level of security that most fiat-based stablecoins in the market are unlikely to match.

Usual uses a three-token model to power its operations and services. There's the fiat-backed USD0 stablecoin, which is protected by Treasury Bill collateral. The second asset is the USD0++ LST, a derivative of USD0 issued upon staking the latter. And there’s the USUAL governance token that grants holders the right to participate in decision-making on the protocol's rules and future direction.

The Usual protocol provides two ways to mint the USD0 stablecoin:

:This is normally done by investing in the USYC fund and using it as collateral, then depositing it into the mint engine to mint USD0. USYC is an on-chain representation of the Short Duration Yield Fund (SDYF) provided by Hashnote, a regulated provider of tokenized fund products. USYC/SDYF is based mainly on U.S. Treasury Bills with short-term maturity.

:You can also mint USD0 indirectly on a 1:1 basis by supplying the USDC stablecoin as collateral.

Redeeming the stablecoin is also possible in two ways — directly through the protocol, or via the secondary market. When using direct redeeming, you simply withdraw your RWA collateral using the protocol's interface. Alternatively, you can sell USD0 for USDC or USDT via a secondary market platform, such as 

 (CRV), a popular DeFi protocol that specializes in stablecoin assets.

USD0++ is an LST representation of USD0. When you stake USD0 on the platform, you’re issued USD0++, which is fully composable and can be used on various Ethereum-linked protocols to earn additional yield. You can lock USD0 to get issued USD0++ for four years. However, you’re also free to unstake at any time.

Staking rewards from locking USD0 to get USD0++ are paid in USUAL tokens. Usual's model rewards long-term staking commitments, as users are encouraged to stake for at least six months — this is the minimum period of staking required to qualify for what the protocol calls the 

 (BIG). BIG essentially refers to a guaranteed yield from native staking of the underlying RWAs on the Usual protocol. When the period concludes, the staker can choose to collect the yield in either USUAL or USD0.

Yields start accumulating from day one of staking. Although users are free to unstake at any time, those who do so before the six-month minimum period will forfeit accumulated rewards.

USUAL is the Usual protocol's governance crypto token. It was unveiled on Nov 19, 2024, and is currently in pre-market mode only. It's expected that USUAL's public launch will occur in the near future. As USUAL is a community-first token, 90% of the tokens are distributed to the community with only 10% allocated to insiders (team and investors).

Usual feeds its revenues into its protocol's treasury, which is controlled by the USUAL holder community. As such, USUAL holders own 100% of the platform, a significant departure from the system used by many other stablecoin issuers, whereby a corporate entity earns all or the majority of the profits. 

Additionally, Usual is designed such that its protocol will incentivize early adopters and long-term holders. As the TVL of USD0 increases, Usual will generate more revenue. The emission rate of USUAL is also disinflationary, gradually reducing as the TVL of USD0 rises and enhancing the scarcity of the token, which will subsequently lead to a boost in its value.

At the initial stages of the platform's market presence, Usual Labs is largely responsible for governance decision-making. However, this function will be taken over by USUAL holders, likely in the form of a 

Although called a governance token, USUAL has additional functionalities beyond supporting the protocol's governance processes. It’s also used to distribute yields from staking ( as discussed in the section above on USD0++). Rewards from the protocol's loyalty point campaigns are also airdropped in USUAL. 

In addition, USUAL can be staked for additional governance rights and rewards. USUAL stakers will receive 

, from which they can earn a portion of USUAL emissions and 50% of the fees generated from people unstaking their Usual assets (USUAL or USD0++).

USUAL's maximum and total token supply are specified at 4 billion. The initial circulating supply during the early days of the token's pre-market trading is close to 500 million as of Dec 2, 2024.

The Usual protocol ran a points-based reward program from July through the last week of November 2024. Called the 

, it let early users accumulate points by acting as liquidity providers before the protocol's full public launch phase. The accumulated Pills points will determine users' eligibility for a USUAL airdrop, slated for mid-December.

The airdrop will allocate 8.5% of the token's supply to eligible users — the more Pills points you've earned, the more USUAL tokens you’ll receive.

During the token's pre-market trading stage, Bybit is one of the rare platforms that’s allowing you to access it. As of Dec 2, 2024, 

 on Bybit's Pre-Market Perpetuals Trading platform as a 

 lets you invest in a variety of upcoming cryptocurrencies via USDT-based perpetual futures contracts before these assets are listed on the main spot or derivatives markets. Using this platform, you can access a range of promising new crypto assets before they become publicly available. There are two main limits enforced by Perpetual Pre-Market — the position size cannot exceed $250,000, and leverage is permitted up to 5x.

Stablecoins are one of the oldest asset types in the crypto industry, while RWAs are a much newer trend that’s growing increasingly popular among investors. The Usual project has decided to marry these two areas, providing an RWA-backed, USD-pegged stablecoin — USD0. The concept of using an RWA for stablecoin collateral may not be totally unique. However, using a highly secure asset such as U.S. Treasury Bills with short-term maturity is something that truly distinguishes the Usual protocol.

Distributing revenue among the governance token holder community is also a refreshing innovation in a niche dominated by providers who largely internalize protocol incomes. Currently, the stablecoin market is heavily dominated by USDT and USDC, with 

 (FDUSD) also recently posting impressive, multibillion-dollar daily trading volumes. All three of these stablecoin issuers lack a mechanism to share revenue with their users. A major stablecoin provider that utilizes a democratized way of sharing protocol revenues with the user community is a deserted area, one that the Usual platform is keen to claim.

With all these merits of the Usual protocol, the upcoming USUAL token is a promising and potentially rewarding asset. Investors interested in stablecoins grounded in highly secure TradFi collateral might want to take a closer look at these new arrivals on the block — the USD0 stablecoin and the USUAL governance token.

Intermediate

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Usual (USUAL): A New Model of Collateralized Stablecoin Ownership

Investing

Staking

Want close to 20% yield for staking stablecoins? Read on as we cover everything you need to know about Anchor Protocol and ANC tokens.

As with any type of investment portfolio, diversification is essential if you want your crypto portfolio to be balanced. By making sure that your portfolio is properly balanced and diversified, you’ll be able to protect against any unforeseen losses. If your current crypto portfolio is focused almost entirely on risky investments, one sharp decline in a single investment could lead to widespread losses if your other investments have yet to pan out.

On the other hand, having safe and steady investments in your crypto portfolio allows you to accrue consistent income that can mitigate any losses on riskier investments. With a diverse portfolio, it will also be easier for you to make gains in both bull and bear markets.

Even when the market is in a downturn and performing poorly, a diverse portfolio will provide you with at least small gains while you wait for the market to improve. This article takes a look at Anchor Protocol, Anchor crypto and why it’s the ideal staking protocol if you want to obtain safe yields.

Anchor Protocol is a popular savings protocol that’s based around the Terra blockchain. The Anchor Protocol coin (ANC) provides users with low-volatility yields of just under 20% when taking the Anchor Rate into account.

 and initially launched in March 2021. It was created in part to boost the overall demand for UST. Keep in mind that UST is the USD-pegged stablecoin from Terra. When the Anchor Protocol coin was first introduced, deposits could only be made in UST. However,

 was soon launched with the assistance of 

Users are now able to deposit various stablecoins based on Ethereum, which include BUSD, USDC, Dai and USDT. Yields for UST typically range from 19.5–20.5%, and revolve around the Anchor Rate, which is maintained by the platform. If you deposit other stablecoins, your yields would be around 16.5%. Even though these yields are high, they’re consistent, which makes this a great investment if you need to diversify your crypto portfolio. Once you place your money into Anchor Protocol, you’ll be able to borrow and lend your assets while earning interest on any of the currency you’ve deposited. This ultimately opens up possibilities for even higher yield as you explore various liquidity pool options. Curious about exploring this staking opportunity? Read on as we cover the fundamentals of how Anchor Protocol works.

Anchor Protocol runs on three primary mechanisms, which include loan liquidation, bonded asset (bAsset), and money market. A bAsset is a tokenized stake that’s situated on a 

 (PoS) blockchain. If you have a bAsset token, it effectively displays ownership of a PoS asset. Just like the underlying asset that you’ve staked, holding a bAsset will give you access to block rewards.

The main difference between a bAsset and a staked asset is that the bonded asset is fungible and transportable. What this means is that transactions can be completed with the bAsset in the same way that you would use the underlying asset to perform transactions.

Keep in mind that it’s possible for bAssets to be made on any PoS blockchain that’s equipped to handle smart contracts. In the time that Anchor Protocol has existed, bAssets have proven to be a key component of the platform because of how they are able to deliver consistent interest rates to any Terra deposits.

The money market that exists within Terra is a 

 smart contract that’s present on the Terra blockchain. This market facilitates borrowing and depositing of Terra stablecoins. As mentioned previously, the Terra stablecoin is UST. It’s important to understand that the money market acts as the foundation for the Anchor Protocol. Terra deposits are brought together to form a pool, which generates interest from any loans.

If you want to borrow from this pool, you’ll be tasked with using some of your digital assets as a form of collateral. The interest rate that’s generated from the pool of Terra deposits is calculated based on the current demand and supply from borrowers. You can determine what this rate is by looking at the current utilization ratio for the pool.

It’s possible for someone to take out a loan via the Terra money market by securing the right amount of collateral that can be provided in return for the loan. The interest rates for the depositor and borrower are based on an algorithm that’s maintained by Anchor Protocol. With this algorithm, interest rates for a loan are generated based on the current availability and borrowing demand.

Anchor Protocol has an interest rate objective that’s known as the Anchor Rate. In order for the desired Anchor Rate objective to be reached, the smart contract will intuitively divide the block rewards from the bAssets that are serving as collateral. These rewards are divided between the depositor and the borrower.

Rewards are liquidated into UST, which provides depositors with the ability to obtain deposit yields that reach as high as 20%. Keep in mind that the two bAssets that are currently recognized by Anchor Protocol include bETH and bLUNA. These assets are liquid, and can be used to borrow UST.

Is Anchor Protocol Sustainable at Such High Yields?

With a yield that’s as high as 20%, many potential users wonder about the sustainability of Anchor Protocol. While these yields are high and practically unheard of even with stablecoins, the yields are possible because of how Anchor Terra is structured. The Anchor Protocol coin is feasible because of its ability to accept bAssets as a form of collateral.

Since users who hold bAssets will obtain a constant yield via staking, the protocol itself receives a nearly constant stream of income, which incentivizes the use of this protocol. Along with the staking return that’s generated from any deposited bAssets, Anchor also obtains income from all of the interest that a user will be tasked with paying when they take out a loan. Since Anchor is able to bring in two income streams at the same time, the protocol can maintain its 20% yields, which are paid to UST depositors.

In the long run, however, there is a potential downfall to Anchor Protocol. Whenever the money market is deficient and is unable to make enough payouts during the year, Terra must take money from its own yield reserve. At current Anchor rates, Anchor Protocol is expected to have a deficiency of just under $9 million per year.

While the yield reserve grew temporarily in November 2021 because of an increase in staking earnings, it isn’t expected to grow for long. Since November, the deposits have continued to exceed earnings, which means that the yield reserve is being pulled from on a near-continual basis. The Terra yield reserve is currently at around $35 million, which has been cut in half since early December.

Keep this issue in mind before you invest in Anchor crypto. Even though there are steps that Terra could take to resolve this problem, it’s possible that your yield would decrease. Even though a small decrease in yield can be navigated in most situations, this drop could be the difference between making gains for the year or reporting losses.

While Anchor Protocol provides consistent yields of 20% that you can depend on because of the Anchor Rate, it begs the question – is Anchor Protocol safe? Overall, there are still some risks for you to be aware of even if you’ve been involved with the Terra ecosystem for a long time. These risks include everything from UST de-pegging to a potential crash in yields. While some of the following risks are unlikely to occur, it’s important to take into account their possibility so you’re aware of the risk you’re undertaking as an Anchor Protocol investor.

Because the value of UST is determined based on an algorithm — and is backed solely by the value of LUNA — it’s possible for the conversion ratio to differ from 1:1 in particularly volatile markets, which may make your Anchor crypto investment less stable than it should be. In order for UST to return to $1, LUNA will need to be burned for UST, which means that fewer LUNA will be available for selling.

Even though UST has remained relatively stable, it’s only been around since late 2020, which means that it hasn’t been tested extensively during volatile market conditions. During its brief existence within the Terra ecosystem, UST has encountered two notable drops in value, the worst of which occurred in December 2020 when it lost around 15% of its value before it recovered.

Even though the Terra ecosystem currently seems strong, there’s always a possibility that UST could drop in value and never recover. Another USD-pegged coin known as IRON saw its value drop to zero in 2021, even though it was officially backed by USDC. Although UST could potentially crash, the value of IRON dropped because the only use for this coin was yield farming. In comparison, UST is spread throughout the entire Terra ecosystem and is part of 

The main risk with decentralized finance involves human error, which could lead to successful attempts at hacking the platform. If Anchor Terra were hacked, the protocol and users could be at risk. Anchor Terra strives to mitigate this risk by performing regular security audits and by putting out an effective Bug Bounty Program.

The Bug Bounty program provides hackers who act in good faith with the ability to test Anchor Protocol for the purpose of detecting bugs. The broader Terra ecosystem offers anywhere from $500–$150,000 whenever a bug is discovered and reported, which incentivizes hackers to continue acting in good faith.

As for the security audits that occur with Anchor crypto, Terra has hired two audit companies to make sure that the protocol remains safe for all users. These companies perform audits on a regular basis to detect any security issues that might exist.

While Anchor crypto and the Terra ecosystem as a whole are strong platforms that make for sound investments, you can’t completely eliminate the possibility of a crash in yields. When an imbalance in borrowers and lenders occurs, the yields can fluctuate and put the entire system at risk.

In the event that the crypto market drops substantially in a short period of time, the individuals who have borrowed money from Anchor Terra are possibly at risk of losing all of their collateral. When the loans are liquidated, borrowers won’t be paying interest to the depositors, which places a considerable amount of pressure on the interest rate.

As mentioned previously, there’s always the possibility that the yield reserve could be depleted, which means that the 20% Anchor Rate couldn’t be paid to those who’ve deposited their assets. If this reserve ever runs out and isn’t subsidized by the Terra ecosystem, problems would likely occur immediately. Because yield reserves could be depleted, it’s important that you always keep an eye on the Anchor Protocol coin and its value.

Before you start worrying too much about your Anchor crypto investment, it’s important to understand that there are several things Terra can do to fix this issue. For one, Terra could inject money into the yield reserve, which they already did once in 2021. While this injection would eventually run out, it would allow depositors to continue receiving the 20% interest rate that they’re owed from investing in Anchor Terra. However, UST is currently worth well over $10 billion, which means that it’s unlikely that another injection by Terra will occur anytime soon.

Another solution that’s much more likely to occur is for Anchor Terra to reduce the yields that depositors receive from staking their assets on the platform. Even though the yield reserve has dropped quickly over the past few months, reducing the yield rate to 15–16% would likely allow expenses and income to break even. Since the average yield for a stablecoin is between 10–12%, a 15–16% yield with Anchor crypto would still be higher than most alternatives.

Now that you know about the risks that exist with Anchor crypto, it’s important to understand that you can mitigate these risks by purchasing Anchor Terra insurance plans. Crypto insurance has become increasingly sought after in these volatile times. Thus, Anchor Terra has partnered with third-party insurance providers who offer plans for the purpose of reducing the risks of de-pegging and smart contracts. Insurance can be purchased by effectively lowering your annual yields.

Even though the premium price for an insurance plan differs with each insurer, the average price is around 7.3% per year. Keep in mind that the insurer determines how much they pay out in the event that you file a claim, which means that there’s a risk the payout could be lower than you’d like. However, these insurance plans are a great way to lessen the amount of risk you take on when you invest in Anchor crypto, diminishing risks of fears of depegging and DeFi hacking.

If you’ve decided that you would like to invest in Anchor Protocol, there are some basic guidelines to be aware of. First, you’ll need to purchase LUNA currency, which can be done on Bybit by seeking out the 

. Once you’ve purchased the amount of LUNA that you would like to invest in the Anchor Protocol coin, you’ll then need to withdraw LUNA and send it to your Terra Station wallet, which is fairly straightforward.

From here, you’ll want to connect your wallet to the Anchor Protocol app, after which you’ll have the opportunity to deposit your LUNA assets to start earning yield. Because Anchor Protocol provides you with a safe yield, you won’t need to manage your investment once it’s been made. If you have yet to diversify your investment portfolio, the Anchor Protocol coin should help you provide your portfolio with a solid foundation that allows you to make crypto gains even when other investments aren’t performing as well.

Investing in Anchor Protocol coin is currently a great way to diversify your portfolio if you’re part of the Terra ecosystem. Because the Anchor Rate for this protocol is high, you can be confident that you’ll be provided with consistent returns. However, there are also some risks that you’ll need to take into account before investing in Anchor crypto. With the potential crash in yields, as well as the ever-present DeFi hacking risk, any investment you make in the Anchor protocol coin must be well-researched and monitored accordingly.

Is Anchor Protocol the Best Defi Staking Protocol for Safe Yields?

Grab Up to 5,000 USDT in Rewards

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