Anchor Protocol Update - Dynamic Earn Rate

Apr 7, 2022 • 8 Min Read

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Anchor Introduces Update to Earn Rate Calculation

Two issues ago, I wrote about Anchor Protocol, a dynamic savings platform that leverages money market demand and diversified staking rewards to pay out attractive stablecoin yields.
Much has developed since - as they say, one week in the depths of DeFi feels like one year in real life.

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Acknowledging how the macro environment has affected its micro mechanics, Anchor Protocol garnered enough support on March 24th to pass Poll #20, in which a Terra protocol researcher suggested the following changes to the Anchor Earn Rate:

% Earn Rate Change = min (abs (1.5%, ((YR % Change)), where

  • YR = Yield Reserve

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Effectively, this change allows Anchor to adjust the monthly yield payout to UST depositors in proportion to the monthly rate of increase or decrease of the Yield Reserve balance.

The Anchor Earn Rate can be adjusted by a maximum of +1.5% in either direction. For example, if the Yield Reserve increases by 10%,  the Anchor Earn Rate increases by 1.5%. If the Yield Reserve decreases by 0.5%, the Anchor Earn Rate can be adjusted by a maximum of -1.5% and -0.5%. Here, Anchor Earn Rate reduces by 0.5%.

Updat...

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