Thread by @BisonTrails

1/ $LUNA holders! Do you understand what $ANC rewards mean for you? 👇🧵💸

2/ @anchor_protocol, a money market + savings protocol on @terra_money, functions as the ecosystem’s native lending protocol. $ANC serves as Anchor’s governance token and is designed to capture some of the yield that the Anchor lending protocol generates.

3/ @terra_money stablecoins like $UST can be deposited in liquidity pools in @mirror_protocol or @anchor_protocol to earn yields. Plus, the movement of Terra stablecoins to Mirror and Anchor helps to improve the stability of Luna stables and dampens dilution for $LUNA holders.

4/ $LUNA inflation was high for the first two years of Terra’s existence due to seigniorage. This excess supply can be largely attributed to the limited utility that Terra stablecoins had before the launches of @mirror_protocol and @anchor_protocol; this is no longer the case.

5/ @anchor_protocol introduces a 20% APR incentive for $UST depositors, reversing the dynamic described above + ultimately making $LUNA deflationary.

6/ Plus, $LUNA stakers on the Terra protocol receive 3 incentives for participating in consensus: $LUNA along with $MIR and $ANC rewards.

7/ With this in mind, the potential gross reward rate for staking $LUNA is a blended ~15% annually, with 5.6% due to $LUNA staking rewards, and 5.63% and 3.58% to the $ANC and $MIR airdrops, respectively.

8/ Want more details? Learn about Terra's economics and the Terra ecosystem, including Anchor and Mirror, in our guide: bisontrails.co/terra-guide/