Popular blockchain projects, Cosmos, Terra, and Polkadot have joined forces to develop a Decentralized Finance or DeFi savings protocol. The planned DeFi project will reportedly engage in Proof-of-Staking (PoS) works across many platforms, through which it will return stable and substantial interest yields for users.
Stablecoin interest-earning with DeFi savings protocol
Following the official announcement on Monday, the DeFi savings protocol is known as Anchor. It is being developed by decentralized network Cosmos, price-stable digital currency Terra, and blockchain network for Web 3.0 Polkadot. The partners noted that Anchor would enable users to earn rewards while still saving their stablecoins.
The interest paid to the depositors is sustained by rewards gained from staking, according to the report. The DeFi savings protocol will engage in PoS works across multiple platforms using some of the cryptocurrency deposits. The block rewards gained will be disbursed to the depositors accordingly, as interest for their stablecoins.
The announcement further mentioned that Anchor is different from the other interest-earning platforms, including the likes of Compound, which reportedly operate on a volatile APR or annual percentage rate. Besides having a substantial interest rate, the companies claimed that it is also dependable.
Stablecoin staking investment
The CEO at Terra, Do Kwon stated:
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.
For a start, a committee was established to manage the development of the DeFi savings protocol, including its operations at the early stage. However, decision making for Anchor will later be decentralized to the participants as it advances.
Anchor debuts by Q3 this year on the creators’ blockchain. More PoS ecosystems will be supported on the protocol as time advances.