The founder of Terra ($LUNA), Do Kwon, has recently said that the Terra Protocol’s leading decentralized stablecoin $UST is going to be the first internet-native currency implementing a Bitcoin standard as part of its monetary policy.
Do Kwon’s words came as he spoke to Bloomberg about the Terra protocol’s monetary policy and the growth of the UST stablecoin, partly driven by the Anchor Protocol’s nearly 20% interest rate on deposits in the cryptocurrency-
In its article, Bloomberg detailed that a near-20% interest rate isn’t achievable in regular banks nowadays, while Do Kwon argued that the high interest rate is a reflection of the level of returns decentralized finance (DeFi) can currently offer investors. Do Kwon was quoted saying:
It’s actually not unnatural for currencies of growing economies to offer higher interest rates than those of mature, stable economies. I think that’s going to set the thesis for what the Terra ecosystem is going to look like and its monetary policy.
While some DeFi projects have at times offered higher rates, such hasn’t occurred at the scale of Anchor and UST’s $15 billion market capitalization. Other products offer rates up to 5%, with blue-chip DeFi money market Compound offering nearly 3% on DAI deposits.
Anchor’s high rates, Bloomberg adds, play a vital role in creating demand for UST, meaning a sudden drop could test the cryptocurrency’s peg to the value of the…
