148 [Terra] Anchor Dominance
What is Anchor?
Anchor bills itself as "Stripe for Savings" — a bold claim to make. Let's take a look at how important Anchor is and what it offers.
Anchor is one of the dApps built by Terraform-Labs and offers a principal-protected stablecoin savings product that accepts UST and pays a stable interest rate of around 20% APY to depositors. Anchor creates the yield by leveraging liquid staking collateral positions. Users can provide these positions and borrow against them. Therefore, Anchor captures the staking rewards as well as an additional interest on the borrow.
It’s designed to provide the benchmark interest rate for DeFi, the first decentralized challenger to the Federal Funds Rate (FFR). Here are the key features of Anchor Protocol
Key features of Anchor Protocol
Here are few key features of the Anchor Protocol (sourced from our Terra teacher danku_r)
The protocol has four farming opportunities: EARN, BORROW, BOND & GOVERNANCE.
EARN
The most straightforward and also safest farming opportunity in the whole DeFi world is EARN. On EARN, we can capture between 19.5 and 20.5% yield fixed on $UST, depending on how much value the protocol captures. To this date, this is the highest yield opportunity on stablecoins.
EARN offers a fantastic opportunity to “park” your free capital resources. There is no restriction to deposit or withdraw funds at any time. The only caveat is transactions fees for depositing $UST. While depositing, Anchor mints $aUST, which is the token that captures the interest generated by the protocol. Thus, $aUST appreciates against $UST at a steady rate.
BOND and BORROW
The tabs BOND and BORROW facilitate the money market. The borrower bonds $LUNA or $ETH to the protocol to borrow against it. Due to the current need to attain more liquidity, the user receives Anchor tokens ($ANC) while borrowing. Currently, the token rewards offset the interest rate. As a borrower, you can borrow up to a ratio of 45% of your collateral. If the ratio crosses 60%, called loan-to-value ratio (LTV), you become liquidated to pay your borrow.
GOVERNANCE
Anchor enables governance staking and runs its liquidity pool. The governance staking APR is highly dependent on the value captured by the protocol. Currently, the rate is at 7%.
These 4 strategies can be visualized in the image below:
Methodology
In this analysis, we're looking at how much of the wallet balance has been deposited into Anchor.
To calculate the wallet balance we're looking at
- the tokens in the wallet including staked LUNA.
- Any other CW20 tokens in the wallet
- Prices for a lot of mAssets, aUST, bETH and LOTA were not available in the table so these were manually input based on the prices on Feb 15, 2022.
- To calculate Anchor deposits, I used the deposits in Anchor Earn, collateral provided and ANC staked in governance. I did not include ANC-UST LP as that is mostly done outside of Anchor on Terraswap or Astroport.
- Net worth of the wallet includes all deposits into Anchor calculated above + any tokens in the wallet.
- For the definition of the "active wallets", I wanted to see what would be a good metric so in some of the analysis I've calculated it for active wallets with at least 1 transaction over 90, 60, 30 and 14 days. Based on the analysis, I discovered that there wasn't much change between 90 and 60 while 14 was too short of a time. Therefore, in rest of the charts I used 90 and 30d as the timeframe for active wallets.
Analysis #1: Anchor Earn
Let's start with Anchor Earn. We observe:
- 45% of the active wallets over the last 14 days have deposited in Anchor Earn.
- This number of active wallets in Anchor Earn decreases as the number of days increases to 90 but even at 90 days, it's 1 out of every 4 wallets depositing in Anchor Earn.
- Looking at the amount deposited we see a smaller variance. At 14 days, we're at $3.5 Billion UST deposited while at 90 days we're at about $4.5 Billion UST.
- The difference between 30, 60 and 90 days is only about $100 Million UST.
Analysis #2: Providing Collateral
Now we turn our attention to active wallets who provide collateral. Here we see:
- Providing collateral is a lot less common amongst these wallets compared to Anchor Earn for obvious reasons i.e. not everyone uses the borrow strategy.
- For the 30 day active cohort, we're at almost 20% of active wallets compared to 40% for Anchor Earn.
- For the 90 day active cohort, we're at almost 15% of active wallets compared to 36% for Anchor Earn.
- The difference between the 30 and 90 days cohort in this analysis is also not very large. It's a different of only 10M ANC tokens which equates to about $20 Million UST at today's ANC price.
Now for the main event
Now is the time everyone's been waiting for! It's the amount of "Anchor Dominance" of the active wallets. But a couple of words before we go there:
- These numbers below represent the upper bound on the "Anchor Dominance" because we didn't calculate the TVL of a wallet in all the Terra protocols (Terraswap LPs, Astroport LPs, Mirror pools, Spectrum, Apollo etc.).
- Once there is an easy way to see the daily_balance of a wallet (Apeboard style), we will have an accurate estimate on the "Anchor Dominance"
The numbers
Regardless, there doesn't seem to be much difference between the 30 and 90 day cohort. For both of these groups, "Anchor Dominance" seems to be around 56-57%.