DeFi - Terra (LUNA & UST) & Anchor Protocol (20% Interest)

I have blogged about various networks/blockchains (e.g. Ethereum, BSC, Polygon, etc.) and Terra is another network and for simplicity, LUNA is the main/native token like how MATIC is for Polygon. Having said that, LUNA has another utility besides being the average Proof-of-Stake token. It can be burned to mint UST which is an algorithmic stablecoin (1 UST = US$1 although it is not backed by anything).

Anchor Protocol - A picture is worth a thousand words

I can continue to explain but The Babylonians has already written multiple articles in great detail and I do not believe I can do a better job. So if you are interested in finding out more, do check these out:

- What is Terra (LUNA)?

- What is Anchor Protocol (ANC)?

- The Babylonians Youtube Channel

I knew about Terra and Anchor Protocol but dismissed it because the Aave + Curve strategy on Polygon which I blogged about previously gave a much higher yield (30-40%) and I was not comfortable with the idea of UST being an algorithmic stablecoins. I started exploring other alternatives when the yield dropped drastically at Aave and Curve. At one point in time, I was planning to move my Curve deposit in Polygon to Fantom for higher yield but did not follow through (fortunately!) because there wasn't sufficient liquidity for me to bridge over.

When I came across the possibility of doing delta-neutral farming on Mirror Protocol, I looked more in-depth at Terra and UST and I was sold! Delta-neutral simply means you earn/profit regardless if the underlying asset increases/decreases in price by owning and shorting the asset at the same time. Anyway, it looks/sounds like it is risk-free on the surface, but I decided not to implement/farm due to a huge risk of liquidation. If you are interested in how it can be done, you can refer to these resources:

- Terra Bites Tutorial: Three 40+% APR Delta Neutral Mirror Protocol Plays—Win Whether Market Up or Down!

- Mirror, Mirror on the Wall, Who’s the Greediest of Them All

Anyway, after trying out DeFi across different networks for a few months, yield farming becomes repetitive/boring and there are a lot of clones/copycat/scam farms. At the start, it was exciting chasing those ridiculous high yields but based on most of my experiences, the price of the farming token always start off high and drops gradually, the yield will drop and people will start dumping it and this vicious cycle will result in huge capital loss. Despite the high yield, it is actually quite hard to recover from the capital loss. 

On the other hand, Terra is really unique in the sense that everything is built around its stablecoin (UST) and that means it will increase the demand for UST which will increase the price of LUNA in the long term. Being an algorithmic stablecoin, the biggest risk is the death spiral/losing peg similar to TITAN but because it has such a high utility and is even cross chains/networks, it will always be arbitrage to maintain its peg. One can even buy insurance and get compensated if UST loses peg. Anyway, you can read this for more information - Why UST Is A Superior Stablecoin.

Other insightful articles which I came across:

- A Visual Explanation of Algorithmic Stablecoins

- Stablecoins — Defining the Terra Algorithmic Design

- Twitter thread by terra_money

Our Terra Portfolio

Besides depositing UST to Anchor Protocol to earn ~20% interest, staking LUNA with the validators allow us to collect some fees/rewards but the most exciting part is the airdrops that will be given to LUNA stakers for both current and future projects.

In my opinion, buying and owning LUNA now is like buying and owning Ethereum back in 2016. Alright, maybe it is unlikely to become as big as Ethereum so how about buying and owning BNB back in 2019. 

With that, I will be moving most of my money in crypto into Terra (already did). I am planning to split the US$40k leverage into US$30k in UST earning 20% and US$10k in LUNA with monthly DCA and interest from the UST to purchase more LUNA.

The more I read and understand it, the more convinced I become. To the moon! 

Anyway, I have blogged about different ways to leverage crypto to build wealth for people with different risk appetites:

The safer approach using stablecoins

- Earning High Interest Using BlockFi and Celsius Network

- Earning High Interest Using BlockFi and Celsius Network Part 2

- Earning High Interest Using BlockFi and Celsius Network Finale

Risky approach but more hassle-free

- CakeDeFi - The Easy Way to DeFi

- CakeDeFi Freezer + Tracking in StocksCafe

- CakeDeFi - New Plan/Strategy

Highest risk and you are on your own

- DeFi apps on Binance Smart Chain (BSC) such as PancakeSwap and PancakeBunny

- DeFIRE with DeFi

- DeFi - Aave, QuickSwap and Adamant on Polygon (Matic Network)

- DeFi - Farming MATIC using Aave + Curve

- DeFi - Risks and Dangers (I Lost 97% Overnight)

- DeFi - Harmony ONE and Fantom

- DeFi - Terra (LUNA) & Anchor Protocol (20% Interest)

If you are interested in the platform I am using, do sign up using our referral links for some bonus :)
BlockFi: Deposits US$100 or more into your BlockFi Interest Account (BIA), you will earn US$10 in BTC and we will earn US$10 in BTC too.

Celsius Network: Earn US$40 in BTC with your first transfer of US$400 or more and we will earn US$40 in BTC too.

CakeDeFi - Deposits US$50 or more into your CakeDeFi account, you will earn US$30 in DFI and we will earn US$10 in DFI too.

Gemini: We will both receive US$10 of bitcoin after you buy or sell US$100.

On a side note, Futu's moomoo app has made their sign-up bonus even more attractive (one free Apple share + one free Nio share with 5 trades + other benefits) and it has been extended to 2nd August 2021! Take a look at the latest benefits here.

Do like any of the following for the latest update/post!
1. FB Page - KPO and CZM
2. Twitter - KPO and CZM
3. Click here to subscribe using email :)
4. Instagram - KPO_and_CZM (Did you see those delicious food photos to the right --> Unfortunately, you can't see it on mobile.)