Anchor Protocol

Anchor Protocol was a decentralized finance (DeFi) application developed by Terraform Labs and launched in March 2021 on the Terra blockchain. Its primary mission was to offer a stable, high-yield savings solution for cryptocurrency holders. The protocol accepted deposits of the TerraUSD (UST) stablecoin, offering a benchmark interest rate of around 20% APY. This yield was generated by lending out the deposited UST to borrowers who provided bonded crypto assets (like LUNA) as collateral. Anchor became extremely popular, attracting over $17 billion in deposits at its peak. However, the entire system catastrophically failed in May 2022 when the UST stablecoin de-pegged from the US dollar, leading to a "death spiral" that erased nearly all value from the protocol and the wider Terra ecosystem.