- Anchor Protocol partnering with Lido to launch bonded Ethereum (bETH)
- The objective is to let users tap various applications in the DeFi ecosystem without boundaries
- Lido’s staked Ethereum (stETH), the key to unlocking possibilities with bETH
JAIPUR (Coinchapter.com) – Anchor Protocol, and Lido Finance, have announced the launch of bonded Ethereum (bETH).
Bonded Ethereum (bETH) is a wrapped version of the staked Ethereum (stETH). Users stand to leverage bETH as collateral to borrow and earn borrowing rewards. Furthermore, it will allow Lido’s stETH holders to earn additional staking rewards (from Anchor) by converting to bETH.
Wrapping is a process in which a cryptocurrency is cloned for use on a blockchain/protocol different from the crypto asset’s native blockchain. Finally, staking is a passive income method widely popular across the blockchain space. Its popularity stems from high investment returns over traditional finance infrastructure (banks).
What Is Anchor Protocol?
Anchor Protocol essentially is Terra Money’s version of a fixed income platform. It lets users earn low-volatile yields on Terra stablecoin deposits. The reference interest rate is pegged to “a diversified stream of staking rewards from major proof-of-stake blockchains.” Creators of the protocol claim that users can expect much more stability in rates as compared to traditional money markets
The platform connects a “lender, looking to earn stable yields on their stablecoins” and a “borrower, looking to borrow stablecoins on stakeable assets.” Users can borrow stablecoins on Anchor by providing collateral of “bonded assets (bAssets).” Lenders can earn “stable-yield” staking rewards from the universal pool of collateral of such bonded assets.
What Is Lido Finance?
Lido is essentially an ETH 2.0 staking solution that lets users stake their ETH “without locking assets or maintaining infrastructure – while participating in on-chain activities, e.g., lending.”
Ether depositors receive stETH tokens (on a 1:1 peg basis). Thus, DeFi users get to earn ETH 2.0 staking rewards through stETH. Plus, it doubles up as an instrument to earn yields and lending rewards across myriad DeFi applications.
As per the current statistics, users have staked ETH worth $1.8 billion in Lido to avail ETH2.0 staking rewards and stETH holding benefits.
What About Ethereum And The Anchor-Lido Partnership?
As mentioned in the introduction, the partnership is an extension of stETH’s utility.
As a result, Lido’s staked version of ETH will now become the first non-Terra blockchain asset to find use as collateral on Anchor, which in turn will help boost the platform’s total value locked (TVL) numbers through the infusion of stETH liquidity. Initially, the launch of bETH as collateral on Anchor was just a proposal.
Anchor’s pool of assets stands to get diversified in the process of this partnership.
Plus, stETH holders get to earn Anchor liquidity mining rewards.
And that’s not all. According to the official announcement, converting stETH to bETH entitles the holders of the latter to earn staking rewards from Lido. Additionally, all staking rewards generated by bETH collateral deposits will go to holders of aUST stablecoins. aUST is the “Anchored version” of the TerraUSD (UST) stablecoin.
Rewards will be distributed in ANC (~31% APR as the time of writing) as incentives to borrowers. Additionally, the addition of bETH will serve to bolster UST demand, as stETH staking rewards will be converted to UST prior to distribution.said the anouncemen
Ethereum was trading just a few bucks north of $2,500 at the time of this writing.