Long-awaited floating interest rate Terra’s (LUNA) stablecoin staking platform in Anchor officially implemented. According to data provided by Wu Blockchain, the interest rate on the platform has dropped from 19.5% to 18%, with reserves hovering at $209 million.
Interest Rate Can Go Up or Down According to Reserve Amount
As it is known, lending/borrowing services cryptocurrency remains one of the most popular solutions on the market, and in particular DeFi industry is used for this purpose.
The main advantage of the floating interest rate, which will be implemented on Terra’s Anchor platform, will be that users will receive higher interest rates than the average as the reserves on the contract start to run out. However, as a disadvantage, the interest rate will decrease as the amount of reserves increases.
33 Million Dollars Lost From Reserves As Interest Rate Drops From 19.5 Percent To 18 Percent
In fact, we are already seeing the effects of the floating interest rate being applied on Anchor. With the implementation of the new model, the interest rate decreased from 19.5% to 18%. Due to the decrease in the interest rate, there was an outflow of 33 million dollars from the reserves and decreased to 206 million dollars.
In case of further outflows from reserves, the interest rate may rise again to attract more investors.
Terra lending platform Anchor officially launched floating interest rates yesterday, and the interest rate this week was 18%, down 1.5% from last week. Reserves now total $209 million, a net outflow of about $30 million from last week. pic.twitter.com/ElNvjeMqoa
— Wu Blockchain (@WuBlockchain) May 2, 2022
However, the total amount of locked value (TVL) on the Anchor platform stands at UST 20 billion. Of this amount, 5.6 billion dollars was recorded as collateral and 13 billion dollars as deposited amount.
Terra has had a large amount of money to keep the price of the UST pegged at $1 recently. bitcoin had made the purchase.
All these developments are expected to have a positive impact on the LUNA price. It does not go unnoticed that LUNA has made a 5% premium in the last 24 hours.
*Not investment advice.