Glossary
Anchor Protocol
The Terra-based savings protocol that paid ~20% APY on UST stablecoin deposits — concentrated retail risk that turned the May 2022 UST depeg into a billion-dollar wipeout.
Anchor Protocol launched on Terra in 2021 as the headline consumer-facing yield product of the broader Terra/Luna ecosystem. Depositing UST into Anchor earned a stable ~20% APY, paid out of borrower interest plus borrower-side rewards plus periodic treasury injections from the Luna Foundation Guard.
The yield was structurally subsidized — interest paid out exceeded interest taken in for most of Anchor's existence. When UST broke its dollar peg in May 2022, the protocol drained rapidly along with the rest of the Terra ecosystem. Anchor is the canonical example of unsustainable-yield risk in DeFi.