Step-by-Step Guide: LP Staking on Anchor Protocol

Anchor Protocol is a credit and lending platform built on the Terra Blockchain Protocol. ANC is the native token of Anchor Protocol and LUNA is the native staking token of the Terra Blockchain Protocol.

This post will show you how to stake ANC-UST Liquidity Pool (LP) Token on Anchor Protocol to earn a three-digit annualized staking returns, as well as, take the advantage of the three digit distribution APR (as on 20th of March, 2021). Let us begin then:

Step 1: Buy LUNA (Terra Protocol Token) on your favorite exchange.
I usually use Binance for buying cryptocurrency (it is possible to buy luna on other exchanges as well see Tera Exchanges for a complete list). Search for “luna” in the spot markets and select the pair you want to use. On Binance, there are two trading pairs available: LUNA/BNB and LUNA/BUSD. For this post I will be using BNB in my wallet for buying LUNA. Incase, you do not have BNB or BUSD in your wallet, you can buy them using your fiat currency in the wallet .

Step 2: Create a Terra Station Wallet (Skip this if you already have one)
The easiest way to get a Terra Station Wallet is downloading the Terra Station Extension for your Chrome browser and add it to your browser.

Once the installation is complete, start the Terra Station Wallet Add-on and select “new wallet option” and create a password for the wallet. Make sure to save the wallet seed at a safe location.

Step 3: Deposit LUNA to you Terra Station Wallet
In your Binance Wallet, click on the “Withdraw” to take you to the withdraw page.

Enter the your Terra Station Wallet address in the “Recipient’s LUNA Address” and the amount of LUNA tokens you wants to transfer and the press “Submit”. Note: Binance will take 0,02 LUNA token as the withdrawal fees. In the Security verification window, enter the codes and press “Submit”. In the “Withdrawal Request Submitted” window click on “View Withdrawal History” to see the status of the transfer. The LUNA tokens should arrive in your Terra Station Wallet in a couple of minutes. You should get a notification to your registered email address from Binance when the transfer is completed.

Step 4 Use TerraSwap to buy some UST with your LUNA
Before we bond our LUNA tokens to bLuna you would need some UST to pay for the transaction fees. You can use Terra Swap to buy some UST tokens with your LUNA Tokens in your Terra Station Wallet.

Step 5 Mint your bLUNA from LUNA using Anchor Protocol
Once you have enough UST for the transactions, it is time to bond our Luna Token to BLuna token. For doing this go to the “Bond” tab and then to the “Mint” sub-tab in Anchor Protocol web app and enter the amount of Luna to be bonded. For every Luna token you get one bLuna token. Next select the validator of your choice from the drop-down list and press the “Mint” button. To confirm the transaction enter the your password in the Terra Station Wallet app and press “Submit”. Press “OK” in the completion confirmation window.

Step 6: Loan UST using your bLUNA as Collateral.
Now move to the borrow-tab on the Anchor protocol app. If you go to the bottom of the page, you see the “Collateral List”, click on the “Provide” button to collateralize your bLuna to loan UST.

Select the amount of bLuna you want to provide as collateral and the press “Proceed” button. You will have to confirm the contract by entering the password in the Terra Station Wallet and press “Submit” and after successful transaction you would be take back to the “Complete!” success page on Anchor Protocol.

You now have the possibility to loan unto 50% of the collateralized bAsset but to safeguard against the liquidation of your bAsset, I would highly recommend that you to take 35% or less of the collateral asset (bLUNA) as loan to be on the safe side (or 75% of maximum possible to loan).

Select the amount you want to loan and then click on “Proceed” and confirm the transaction in your Terra Station Wallet. The loaned UST is added to your Terra Station Wallet after completion.

Step 7: Swapping UST to ANC
Take half of the USTs you have borrowed to buy the ANC on Terra Swap. If this is the first time you are using Terra Swap, you would have to connect your Terra Station Wallet by clicking on the “Connect” button

Step 8: Create the ANC-UST LP token

Go to ”Govern” tab on Anchor Protocol and then ”Pool” sub-tab & in the ”Provide” enter the amount of ANC and UST you want to add to the LP Token Pair and click on ”Add Liquidity” button to create the ANC-UST LP Token.

You will have to confirm the transaction contract by entering your Terra Station Wallet password and then submitting it. After this you should be redirected to the transaction completion window back in Anchor Protocol. Press OK button to proceed.

Step 9: Staking ANC-UST LP tokens
After you have created your ANC-UST LP token, it is time to “Stake” them for earning the staking returns. Click on ”Stake” sub-tab in the governance tab and then select the amount of LP tokens you want to stake and press then ”Stake” button.

That is it ! Now you can enjoy looking at the rewards at the bottom of the “Governace“-tab while sipping your coffee :

Disclosure: I have a position in ANC, UST & LUNA tokens and may or may not increase my position within the coming days, weeks and months or sell off all my holdings without any notice. See my complete cryptocurrency portfolio here. Please read the disclaimer before acting on the information provided on the website. Some of the links in the post may be affiliate links.

References:
1. Anchor Protocol Homepage: https://anchorprotocol.com/#
2. Anchor Protocol Whitepaper: https://anchorprotocol.com/docs/anchor-v1.1.pdf
3. Terra Blockchain Protocol Whitepaper: https://terra.money/Terra_White_paper.pdf
4. https://docs.terra.money/ecosystem.html