Binance, the world’s largest cryptocurrency exchange, now allows staking Terra’s UST stablecoin. It is possible to earn up to 19.63% annual percentage yield (APY).
The cryptocurrency exchange has announced its plan to launch DeFi staking in August 2020. Initially, it gives room for the users to stake Dai, the native stablecoin of the MakerDAO platform.
Staking makes it possible for users to earn passive income by locking up their digital assets in a smart contract.
As reported by U.Today, LUNA, the native cryptocurrency of the Terra network, managed to reach a new all-time high of $119.18.
Terra’s UST is the biggest decentralized stablecoin with a market cap of $16.6 billion. Unlike Tether’s USDT and Circle’s USDC, it is now controlled by any centralized party.
Anchor Protocol offers a much higher APY than competitors such as Dai and USDC (let alone traditional banking rates). Terra founder Do Kwon has commented that this rate is now available to over 30 million Binance users in a recent tweet.
However, it is not clear whether it will be sustainable in the long run as many remain skeptical about whether the project will have staying power.
As reported by U.Today, the Luna Foundation Guard, an entity created by Terraform Labs, started accumulating Bitcoin to help support the UST peg during periods of extreme market volatility. However, things could go south if the Bitcoin price sees a sharp drop.
UST briefly lost its peg in December 2020, dropping to $0.86. It also dipped way below the $1 mark last May.