The Russian Roundup Presents: Make Sure Your Ship Has An $ANCHOR ⚓️
For some time now people have been running to find sustainable ways to earn an adequate yield on their stables and with a sense of rapid euphoria re-entering the markets, we take an article from the Members Library to take a look at the discourse and almost provide an opinion on Anchor Protocol’s famous $UST staking.
For some additional context, this article was followed up for the Members Library as an extension to our beginner series “STABLECOINS 101 FOR DUMMIES 👉 https://therussianroundup.medium.com/the-russian-roundup-presents-stablecoins-101-for-dummies-5-113163eadd5d”
New, But Old Realisations🧠
Something we all know but ignore.
I feel like that’s the epitome of learning in general but specifically crypto due to the speed at which things move it, we can get into a frame of mind where we do not systematically apply the lessons we learnt at Bootcamp level.
On many occasions, we like to get in, get our initial out to try and avoid getting caught up in the volatility but that’s when we are trading tokens or staking $TIME at the top. Stablecoin staking has been around for quite some time. I have always allowed the degen voice in my head to steer me away due
to the low % APY’s and not having enough capital for that small % to make a huge difference to my financial situation.
Then, therefore, having said mindset causes you to want to be exposed to more excessive risk than necessary because you aren’t looking for that consistent 20% rather the one-off 10000x that you MIGHT be lucky to catch.
When the market goes to absolute shit which is always the possibility everyone seems to make a fuss regarding sustainability which is an issue in bullish conditions. To solve this issue?
New, but old realisations!
We all know if it’s too good to be true it is. Yet we still get shilled by 40 million % APY in 5 days.
New, but old realisations!
We all know Ponzi projects are unsustainable due to reliances of sell pressure, yet we compound our $STRONG nodes at ATH.
New, but old realisations!
If you are not already familiar with TerraUSD, it is the famous stablecoin that is part of the popular Terra ecosystem (Luna).
There is a WHOLE conversation about stablecoin regulation and $USDT VS $USDC VS $UST VS $DAI but that isn’t the point of THIS exact article so I won’t go too deep into it but for some wider reading it’s an interesting and very important situation to understand or be aware of.
For context, we all know stablecoins don’t have the volatility of price due to the peg against a stable fiat currency.
UST goes one step further to ensure the security of the price peg by instead of having reserves to maintain the price peg, Terra uses an algorithm of stabilised assets which is through a smart contract that essentially burns $LUNA to mint new $UST and keep the price at $1.
What problem does this solve in the argument of passive income?
— > THE VOLATILITY SIDE OF THINGS IS SOLVED. PRICE HAS AN ALGORITHMIC METHOD OF SUSTAINABILITY WHICH MANY PASSIVE INCOME PLAYS DO NOT HAVE.
Does Your Ship Have An $Anchor? ⚓️
Now how do you turn a $1 stablecoin into passive income?
This is where Anchor Protocol comes in.
Quoting the Anchor Protocol whitepaper, Anchor is essentially touted as “Gold Standard for Passive Income on the Blockchain” which helps us put into perspective the protocol.
The problem they have identified in DeFi is the same issue that every dApp faces: trying to create a product that enhances mass adoption whilst maintaining simplicity and security. From my experience you cannot go down the DeFi rabbit hole without expecting some degree of high risk however, due to the nature of decentralisation, however, Anchor provides elimination of that risk through
“Stabilizing the deposit interest rate with block rewards accruing to assets that are used to borrow stablecoins.”
I won’t be going too in-depth about Anchor as a whole just yet but essentially the key things you need to know are:
- Website 👉 https://www.anchorprotocol.com/
- APY 👉 19.48%
- What Do I Stake 👉 $UST
- Is the APY stable? 👉The cap on adjustments is set at 1.5% meaning that the most it can increase or decrease are 1.5% each month based on yield reserves.
- Chains 👉 Terra, Avalanche
Why does it make some sense to me? 🙇♂️
Just like all of you reading this, my risk appetite can be quite high sometimes, and you can see 19.48% and think it’s not enough or substantial.
However, when you look at projects that propose to be passive income plays, the question of sustainability always persists leading to these projects creating a divide between early whales and new hands trying to capitalise off the yield. Often creating a Ponzi pyramid that always benefits those who can get in early enough.
I have always wanted a DeFi play that had all aspects of sustainability to last the test of time because I am quite patient when it comes to my investing strategy so as much as 19.48% can not fulfil that degen appetite, there is a conscious decision that has to be made for the sake of sustainability.
Always remember the basics of managing risk and not investing more than you can afford to lose at all times however when you look at risk/reward as a mathematical equation, $UST is $1 and the APY is 19.48%.
The passive income may not be significant for my proposed exposure but over some time alongside the benefits of the algorithmic pegging, you can earn yield that’s sustainable on your stablecoin savings.
Over the next few days/weeks I’ll be looking more into the terra ecosystem and the concept of stablecoin staking as a passive play before deciding to stake some $UST
Members Library 🔓
Many of you may have been reading The Russian Roundup publication for some time and may not be aware of the extended Members Library, a premium service that you can now have access to for 3 months for $19.99!
For more articles like this with high detailed analysis to aid an individualistic thought process while exploring the crypto-economy, join the Members Library now!
Contact @RussianDeFi for the membership form, beware of scammers ⚠️
As a reminder this is not a trading signal, it is an opinion and each trader/investor should know and understand the risks attached with trading. At no point should this be regarded as financial advice
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