The Anchor Problem, and the Neptune Solution
Terra’s Anchor Protocol can be seen as an essential Dapp and backbone of the Terra ecosystem. Its 20% stable interest rate on deposited UST stablecoins has inspired a collection of Dapps and CeDeFi apps to be created on its front end to offer this impressive rate to the masses. The 20% rate is obtained from Anchor users in the backend who provide bAsset staking derivatives as collateral to take out a UST loan. The value collected from the bAssets is fed to the deposited UST up to its 20% target and the excess is collected into a reserve fund which is utilised when there is not enough value from bAssets to provide the target 20%.
Currently, the Anchor Protocol is in short supply of deposited bAsset staking derivatives value and is relying on the reserve fund to prop up the target 20% yield target on UST Earn. While Anchor’s mechanics are working as intended, without an increase in bAsset value or volume soon, the protocol could suffer a drop from the Earn target as the reserve fund is bled dry. The mid-May crypto market crash has left a lot of Anchor backend users shell-shocked after being subject to a flurry of liquidations. Even with the ANC token distribution APR for taking out a loan on bAssets being temptingly high, users are reluctant to do so in fear of further liquidation losses. This is causing a serious shortage of value in Anchor’s backend.
This is where Neptune Finance comes in.
Neptune Finance — Bringing Value To User And Anchor All In One
Neptune Finance is an on-chain, collateralised loan-based, algorithmically balanced, automated yield farmer, which utilises the backend of the Anchor protocol to leverage provided bAsset collateral and use the UST loan in a variety of yield farming strategies. Neptune’s automation regularly checks bAsset prices and triggers its smart contracts to keep LTV close to its target while also claiming yield farming token rewards, swapping tokens into the originally provided collateral, and compounding it back to the depositors.
For the User: Neptune offers vaults for bAssets that return APYs higher than the current native staking yield. It is a safer way to get more out of your collateral without risking and managing debt positions yourself.
For the Anchor Protocol: Neptune captures and supplies the bAsset value that Anchor needs to survive. With higher returns and lower risk, it is more likely that Luna and other PoS token holders would place their bAssets with Neptune rather than risk them in the self-managed leverage markets. With included auto-balancing of Neptune’s vault, bAssets in Neptune would not be subject to liquidation and would help keep Anchor’s bAsset value more “stable” in times of volatile market movement.
The Origin Vault
Neptune’s first vault launching on the Terra Blockchain will utilise both the frontend and backend of Anchor. Automated balancing will keep the UST loan value high and avoid liquidation, all while regularly collecting ANC tokens and swapping them into the originally deposited bAsset.
Neptunes Advanced Vaults
As the Terra ecosystem expands, so will Neptune’s vault strategies. Neptune will continue development after the launch of the Origin Vault to integrate with other Terra Dapps like Mirror Protocol, Spar protocol, Loop Markets, Mars Protocol, and other up-and-coming projects that can be used to create unique yield farming strategies. New vault adoption will be incentivized with the Neptune token.
Supporting Anchor, Supporting Terra
Neptune Finance strives to support Anchor and give value back to the users for doing so. Help our team spread the word to the LUNAtics of Terra and follow us @neptune_finance on Twitter for the latest updates.