Excess LUNA sitting around? Why not compound them.
Recently, I tweeted out on some strategies for idle LUNA coins. Some of you guys might not be interested in using your LUNA to borrow on Anchor Protocol to go on degen mode or sticking your LUNA into LUNA-UST LP pools as you might face impermanent loss.
Let’s dive into the two possible strategies that are currently available.
1. Stader Labs
Stader Labs provides staking-as-a-service. What does that mean? Basically, Stader Labs allows you to stake your LUNA to different pools of validators. Each pool of validators qualify a set number of criteria that Stader set forth.
By staking with Stader on Plain Staking, you’re earning between 8–9% APR on your LUNA. This yield is slightly higher than staking with a validator since the default mode will auto-compound all stablecoins into LUNA. Bear in mind that if you decide to unstake your position, the unstaking process will take up to 21 days to get full access to your LUNA.
2. Anchor Protocol
Anchor Protocol is the largest DeFi protocol within Terra. It is home to most of the UST depositors amassing over $5.8bil in UST deposits & over $3.8bil bLUNA & bETH collaterals making it close to $10bil Total Value Locked (TVL).
Most people do not know that just by holding on to bonded LUNA or bLUNA entitles you to the staking rewards in UST. When you decide to bond your LUNA into bLUNA, what happens in the backend is that LUNA is staked with a validator that provides rewards in both stablecoins & LUNA. Anchor Protocol will then switch all non-UST stablecoins and LUNA into UST rewards.
By holding on to your bLUNA, these UST rewards accumulate in the bond tab of Anchor Protocol. Since this yield is obtained from validators, you can expect a yield similar to Stader if it’s not on the auto-compound mode at about 7–8% APR.
3. Nexus Protocol
(Updated 26th Feb) Deep Dive: Mechanics of Nexus Protocol Vaults
Nexus Protocol is a yield optimiser protocol in Terra. In its core function, Nexus Protocol borrows UST on your bLUNA or bETH as collateral on Anchor Protocol on behalf. This UST will then be placed into Anchor Earn to generate the sweet 19.5% APR. Since you borrow UST from Anchor, there will be emissions of ANC tokens as part of Anchor’s initiative to promote borrowing.
Intermittently, Nexus will then collect the ANC tokens & the interest gained from Anchor Earn to be converted into PSI tokens (Nexus’ own token) and paid out to Nexus Vault users. The APR can vary since it depend greatly on the Net APR of borrowing of Anchor Protocol (Net APR = Borrowing % - Distribution %). The APR for Nexus Vaults range between 7–9% APR.
Announced in Nexus’ updated 2022 roadmap, both Anchor Protocol (Point 2) above & this will be merged. What does that actually mean? Should the yield APR of borrowing falls below the yield APR of just holding on to the bAssets, Nexus will then switch to the strategy with the highest yield. Therefore, by depositing into Nexus, you can be sure that you’re getting the highest yield possible between these two strategies.
The above strategies are what is currently available. There are some interesting plays that are coming up but until the protocols are released, we can’t be certain on how high these yields can be. Some upcoming strategies that are yet to be launched are:
- LUNA Nexus Deposit in Nexus’ LP Money Market
- LUNA Anchor Deposit in v2 Anchor Borrow
- LUNA Arb Vault in Whitewhale Protocol
- Single-side LUNA staking in Thorswap
When these protocols & features launched, be sure to check it out here as I’ll be updating this article. Till then.
