When two of crypto’s largest assets — Terra and TerraUSD — collapsed earlier this month, they took a healthy portion of the crypto market with them. Over a trillion dollars worth of market capitalization, of which over $100 billion worth was directly denominated in Terra and associated assets, was washed out.
Terra’s ascent, and demise, had almost everything to do with its power app: Anchor Protocol, which was the steroids that the chain was built on. It offered users the ability to generate a 19.5% APY on funds deposited in $UST. In other words, if somebody bought $100 worth of $UST and then deposited it into Anchor, they’d get roughly $19 in interest in their first year. It was described to the end-user as a “low-risk, high-interest bank account-esque product.”