On February 18th, founder Do Kwon of Terraform Labs, the development organization behind the platform blockchain Terra (LUNA) and stablecoins Terra USD (UST), announced the completion of the addition of 450 million UST (equivalent to 450 million USD) into Anchor Protocol's reserve fund (FACILITATE).
Funded. pic.twitter.com/NLvnSa0bBu— Do Kwon (@stablekwon) February 18, 2022
Earlier, the Terra community voted to approve the proposal to spend the above money on Anchor. This move is in response to the fact that Anchor's reserve fund has continuously decreased in recent times, sometimes reaching just over 6 million USD, because the number of deposits of Terra ecosystem users is too large, but and no one borrows.
Anchor Protocol is a protocol DeFi acts as a bank in the Terra ecosystem, allowing users to deposit UST and receive interest up to 20%/year. Because of this attractive interest rate, many people have massively deposited UST into the project in the hope of generating passive income, while the number of borrowers from Anchor is very low. At the time of writing this article, the total value of deposits to Anchor is at up to 6.5 billion USD, while the amount of money that the project lends out is only 1.5 billion USD and is currently available. downward direction.
This is the reason why Anchor's reserve fund is exhausted, when the project has to spend a huge amount of money to pay interest to investors.
Anchor's development team acknowledges that Anchor's operating model will not be sustainable for long if the current situation continues. Therefore, the project is planning to attract more borrowers by allowing continued profit from the collateral.
Terraform Labs is involved in the Mirror Protocol case
In another development also on February 18, Terraform Labs and founder Do Kwon were ordered by a US court to provide information to the US Securities and Exchange Commission.SEC) for the investigation of Mirror Protocol – this company's project to tokenize US securities. Terraform Labs and Mr. Do Kwon previously refused to comply with the request of SEC Because they think that their project does not violate the US securities laws, as well as Mr. Do Kwon is not a US citizen to be able to be prosecuted. SEC subpoenaed, and even sued the SEC for saying that this agency violated information security regulations.