The long-awaited floating interest is now available on Terra through the Anchor platform. According to WuBlockchain, the current interest rate is 18%, with reserves totaling $209 million.
Lending and borrowing services were the most popular options in the cryptocurrency market, and particularly in the DeFi industry, because they are ideal for gaining short-term exposure to a specific asset or moving funds without the need to cash out via exchanges.
While cryptocurrency traders and investors (borrowers) gain immediate access to desired assets, lenders might earn a consistent profit by giving their capital. Profits are determined by interest, which can be both fixed and floating.
The fundamental benefit of floating interest is that lenders can lock in their funds at an above-average rate whenever the contract is emptied. The main disadvantage of high saturation is dwindling interest.
The entire value locked on the Anchor platform, which provides the new solution, is currently about $20 billion UST, with a total deposit of $13 billion and a total collateral of $5.6 billion. The current APY on UST deposits is around 18 percent.