Terra (LUNA) has launched its long-awaited floating interest application through the Anchor platform.
Lending and loan services are among the most popular solutions in the DeFi industry. These loans are highly functional for short-term investment in a particular asset or for transferring funds without the need to withdraw cash through exchanges.
Cryptocurrency traders and investors can quickly invest in the assets they want with this method, while lenders can earn stable profits by providing funds. Profits are determined by the application of interest, which can be both stable and variable.
The first advantage of floating interest is that lenders can lock in their funds at an above-average rate when the contract expires. The biggest disadvantage is high saturation and decreased interest.
With the new solution, contract reserves reached $209 million and the effect of floating interest was clearly visible. The interest rate decreased from 19.5% to 18%. The decrease in interest caused an outflow of 30 million dollars.
In the Anchor platform, which offers the current solution, the total amount of TVL is 20 billion USD, the total deposit is 13 billion dollars and the total collateral is 5.6 billion dollars. The APY rate on UST deposits is now almost 18%.
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