“Terra for Dummies,” or All the Ways You Can Go Full DeFi Using the Terra Ecosystem Today

The Terra platform exists as a one-stop shop for complete exposure to decentralized finance on one blockchain.

Image courtesy lunaloot.com

Earn

At best, your US-based savings account currently provides you with a 0.5% yield. What if you could 40x that? That’s where Anchor Protocol, one of Terra’s flagship finance products, comes in.

Anchor Protocol’s Earn page

Invest

This is where Terra’s smart contacts capability shines. There are several ways to create and customize your personal investments using Mirror Finance, Anchor Protocol, or directly using LUNA staking on Terra Station.

Mirror Finance’s liquidity pooling and staking APY list
  • Airdrops for upcoming/future projects

Borrow

At the time of this writing, borrowing from Anchor Protocol provides a net gain of 40%. Yes, that’s right — if you borrow UST using Anchor, you actually receive more in rewards as an incentive.

Anchor Protocol’s Borrow screen
  • Safely borrow $125 against that collateral at a safe LTV (loan-to-value) ratio of 25%, but with an interest rate of 38% (not the best interest rate, but see my next bullet).
  • Earn incentivized rewards in the form of the ANC token at a rate of 83%. Even better — place those borrowed funds into a liquidity pool or deposit it into Anchor savings to capitalize on an additional 20% return.

Govern:

A sampling of polls from Mirror’s governance page

Challenges and Risks:

The biggest risk, honestly, is the same risk that accompanies all cryptocurrency investments — it’s still new and not yet fully insured, but from what I understand, an in-house insurance protocol called Ozone is in the works.

  • An Automated Market Maker (AMM) like Uniswap or PancakeSwap, which assumes you are already holding cryptocurrency in another form (i.e. ETH or BNB), and then bridge those assets to Terra Station.

Takeaways and Conclusion:

Terra Ecosystem Graphic. Image courtesy Smart Stake

Resources:

The Terra Bites Podcast these folks are simply the best and work hard to bring you content each week in the form of tutorials, the Terra Bites Academy, live streams on YouTube, and weekly happy hour chats on Telegram. It was this video that got me hooked on Anchor.

Navigating the new world of DeFi and crypto to find the best platforms, products and methods to generate income and leave the old world of finance behind.