- Anchor, a DeFi savings product that promises reliable interest rates, is scheduled to launch in Q3 this year
- The capital for interest rates will derive from staking rewards
- The project will be launched on Cosmos, Polkadot and Terra blockchains first, but could scale to other PoS blockchains in the future
Three big blockchain companies, Cosmos, Polkadot, and Terra have teamed up to develop a DeFi savings product that aims to offer reliable interest rates on stablecoin deposits. The product, which will be called ‘Anchor’, was announced at the still ongoing Unitize conference on July 6th.
Anchor Launch Scheduled for Q3 This Year
According to the announcement, Cosmos, Polkadot, and Terra plan to launch Anchor across their respective blockchains already by the end of Q3 this year. Furthermore, the DeFi savings account will not be limited to these three blockchains only but will scale across other Proof-of-Stake blockchains in the future.
The joint operation’s Anchor aims to contest projects like Maker and Compound by offering a far more reliable interest rate. Do Kwon, founder and CEO of Terra, explained:
“While DeFi staples such as Maker and Compound have been revolutionary in creating fully decentralized crypto money markets, the volatility of their interest rates makes them unsuitable to be used as a household savings product. DeFi mass adoption needs the creation of a fully decentralized savings account that offers dependable APR.”
Interest is Derived from Staking Rewards
But how will Anchor be able to ensure a relatively steady interest rate, you may question. After the platform’s smart contracts receive stablecoin deposits, a portion of them will be used to acquire staking positions on compatible Proof-of-Stake blockchains. Most of the users’ passive income thereby comes from these staking rewards.
The development and operation of the joint venture will be overseen by a newly formed Interchain Asset Association (IAA), that consists of Do Kwon of Terraform Labs, Zaki Manian of Cosmos, and Jack Platts of the Web3 Foundation.
The partnered Proof-of-Stake blockchains have been otherwise very active lately. In late June, Polkadot announced a partnership with Gitcoin project, which will help in finding community support and funding. Meanwhile, the Cosmos (ATOM) network has recently seen the launch of Kava decentralized finance (DeFi) protocol on their blockchain.
