Anchor is an open-source and permissionless decentralized finance protocol that allows lending and earning yield reward offering on stable coins. The protocol’s revenue stream is obtained from staking rewards from major blockchain that allow proof of stake consensus mechanism.
Anchor is essentially a protocol that links parties of lenders willing to deposit their UST for yield rewards and borrowers willing to borrow the UST from lenders.
Once a lender deposits their assets, it is changed to Anchor Terra (aTerra), which accrues rewards. Meanwhile, they can freely withdraw their investment and rewards at any time.
To borrow assets on Anchor, the borrower locks up part of their assets as collateral to borrow UST.
The lender benefits by getting yield reward from the staking rewards of their borrower’s staked collaterals. The staking reward is converted to stablecoins and then rewarded to lenders.
Essentially, Anchor provides stable and high yield rewards to lenders from borrowers’ collateral assets. Then protects users from the liquidation of their loans when their collateral does not meet minimum requirements.
Apart from lenders, crypto traders or UST holders can also dedicate their tokens to the platform to earn yield rewards.
Staking UST on Anchor provides an opportunity to earn passively while contributing to the protocol. The protocol provides a solid 20% return on all stablecoin staking.
To stake UST on Anchor, first, you need to set up a Terra Station wallet and fund your Terra Station Wallet with UST coins. After funding your wallet, navigate to the Anchor Protocol website and connect it with your Terra Station wallet. Then go to the ‘Earn’ section and deposit UST for staking.
Here’s how to stake your UST tokens on Anchor Protocol
- Set up your Terra Station Wallet
- Buy UST on Kucoin (Or any other CEX)
- Transfer UST to Terra Station wallet
- Connect Terra Station wallet to Anchor
- Go to the ‘Earn’ tab and click on ‘Deposit’
- Fill in the amount of UST you want to stake and confirm the transaction
1. Set up your Terra Station Wallet
To get started with staking your UST coins on Anchor, you need to set up a Terra Station wallet to hold your UST coins.
To do this, go to the Chrome Extension store and search for the Terra Station wallet. Click Add To Chrome to download the wallet on your browser.
After adding to your browser, open the wallet from your Extension list.
On the home screen, click ‘NEW WALLET’. You can also import an existing wallet with your 24-word seed phrase.
To set up a new wallet, choose a wallet name and a strong password. Back up your 24-word mnemonic phrases since you will need them to verify the setup and restore your wallet in the future.
After verifying your mnemonic phrase, finish the setup by clicking CONNECT.
2. Buy UST on Kucoin (Or any other CEX)
UST is available on major Centralized Exchanges like Kucoin, Huobi, Bitfinex, FTX, and many more. It is also available on DEXes like TraderJoe, Uniswap, and Pancakeswap.
If you have UST in your Terra Station wallet, you can go ahead to the next step and stake your coins.
However, if you need to fund your wallet with UST, simply create an account with a CEX like Kucoin. If you have an existing account, you can simply log in and purchase UST.
To fund your wallet with UST from a Kucoin, go to Kucoin.com on your web browser. You can also log in to your account via the Kucoin mobile app.
On the homepage, click ‘BUY CRYPTO’ and choose a preferred payment method.
On the purchase page, choose UST as the token you’d like to buy. Specify the amount of UST you want to buy and tap ‘BUY UST’.
On the next page, input your payment details. Ensure the details are correct to avoid transaction failure.
Once you’re done, approve the transaction and complete 2FA verifications.
3. Transfer UST to Terra Station wallet
Log in to your Terra Station wallet with your wallet password.
Copy your wallet’s deposit address from the home screen. You can also retrieve your deposit QR code if you want to scan it for transfer.
Once you’ve copied the deposit address, go back to Kucoin to withdraw your UST funds to the Terra Station wallet.
To withdraw UST, log into your Kucoin account and click the ‘WALLET’ icon in the top right part of the navigation bar.
In your Spot Wallet, click ‘WITHDRAW’.
On the withdrawal page, search for UST. Select UST from the result and paste your Terra Station deposit address. Choose Terra as ‘Network.’
Finally, input the amount of UST you want to withdraw and click ‘WITHDRAW’ in the lower part of the withdrawal page.
Complete all necessary verifications to approve the transaction. Within a few minutes, the transfer will reflect in your Terra Station wallet.
4. Connect Terra Station wallet to Anchor Protocol
Before you can stake UST on anchor you need to connect the wallet that holds your UST with the Anchor platform. For that first visit https://www.anchorprotocol.com.
Tap ‘DASHBOARD’ on the top right corner of the homepage to go to Anchor’s DeFi app.
On the DeFi app, click ‘CONNECT WALLET’ from the top right corner of the home screen.
Choose Terra Station wallet from the options and sign the connection in your wallet to approve the connection. If your wallet is set up, it should connect automatically.
5. Go to the ‘Earn’ tab and click on ‘Deposit’
Once your wallet has been linked to Anchor, you need to go to the ‘EARN’ tab from the top menu. There, it’ll show you some information regarding staking UST including APY. Click on ‘DEPOSIT’ to proceed further. This will let you deposit the amount of UST that you want to stake.
6. Fill in the amount of UST you want to stake and confirm the transaction
Enter the amount of UST you want to stake and confirm the transaction in your Terra wallet. Note that the transaction incurs a meager transaction fee. That’s all. You can now start earning rewards from your staked UST on Anchor Protocol.