What is Anchor Protocol?
Anchor is a protocol on the Terra blockchain that allows for depositing and redeeming Terra stablecoins, minting bAsset tokens, borrowing Terra stablecoins with bAssets as collateral, and participating in Anchor governance.
As a protocol capitalising on staking rewards across a universe of blockchains via bAssets (bonded assets), Anchor’s upcoming move to bring bETH as a collateral option on Anchor not only grants stETH holders increased opportunities via access to collateralised lending and Anchor liquidity mining rewards - increasing Anchor TVL via the flow of stETH liquidity - but also significantly diversifies Anchor’s asset bucket, bolstering Anchor’s sustainability in the long term.
What is bETH?
bETH is a token that represents stETH tokens on the Terra blockchain. Unlike stETH which rebalances daily, the balance of bETH remains constant, similar to a wrapper (wstETH, for example). bETH staking rewards can be claimed in the form of UST, Terra’s native stablecoin.
bETH staking rewards can be claimed in the form of UST, Terra’s native stablecoin, if your bETH is not deposited to Anchor (i.e. held in your wallet). While stETH is wrapped to bETH all staking rewards from Lido would be converted to UST and can be claimed by bETH owner.
If bETH is deposited as collateral to Anchor, rewards from staking accrued by Anchor Protocol are earned by the Anchor Protocol. Rewards will be distributed in ANC (~31% APR at the time of writing) as incentives to borrowers.
How to get bETH
1. Convert ETH or stETH to bETH
Head over to https://anchor.lido.fi/ and you should find a screen similar to the one below.
1.1 Connect your Ethereum Wallet and confirm
1.2 Choose the asset & the amount you want to convert.
In this example we will use stETH but you can also swap directly from ETH.
1.3 If you're using stETH, we'll need to unlock the token by clicking 'Unlock' and sending the unlocking tx first along with paying the corresponding gas fee as shown below.
1.4 Click confirm and wait for the TX to confirm.
1.5 Once the unlock TX has confirmed, enter your Terra address to receive the bETH and click the 'convert' button.
1.6. Confirm the transaction paying the associated gas fee.
There will be a slight delay as seen in the screenshot below as the transaction is completed.
⚠️ VERY IMPORTANT ⚠️
The wormhole transaction ID link is extremely important to redeeming on the Terra side so copy and paste it and don't close the page!
If you do lose it, you can still redeem but with a few extra hoops to jump through.
Just keep it safe.
You can find the guide to redeem here.
1.7. When you receive the 'Success' message, the bETH can be redeemed on the Terra network using Wormhole and that ‘receive bETH button’ in the previous point.
Note: The process can take a few minutes so don’t worry if nothing happens straight away.
Upon completion, you’ll see the following ‘Success’ message.
2. Redeem assets on Terra
Now, we want to head over to Wormhole which will redeem the assets on the Terra network.
2.1 Click the Receive bETH button or follow the wormhole link you've copied in step 1.6.
You will have to connect your Ethereum wallet first.
Type = Token
Source Chain = Ethereum
Once you've pasted in the transaction ID, click ' Recover'.
2.2 Now we can claim the assets on the Terra side.
Connect your Terra wallet clicking 'Connect'.
Once connected, we can click 'Redeem' and confirm the transaction.
2.3 Confirm the tx with your Terra wallet to redeem the bETH on the Terra side
Click 'Post' to make the redeem happen and confirm the transaction.
2.4 If all goes well, you'll receive the following 'Success' message with a call to action allowing you to swap more assets if necessary.
3. Use bETH on Anchor Protocol
Wormhole will transfer wormhole-bridged bETH `webETH` tokens to your Terra account.
Now that we have our webETH transferred, it needs to be converted into bETH in order to deposit as collateral.
3.1 Head to app.anchorprotocol.com/ and click on the bASSET tab.
3.2 The bETH/webETH card displays your webETH balance & allows you to swap it to bETH 1-1.
Hover over the card with your cursor and click ‘Convert’.
3.3 Select how much you want to swap from webETH to bETH and click ‘Convert’ and confirm the transaction on your Terra wallet.
On successful completion, you’ll see a ‘Complete’ message as shown below.
3.4 We can now provide our bETH as collateral and borrow from this.
3.5 Click provide on the bETH and select how much you want to use as collateral.
3.6 Confirm the Transaction and wait for confirmation
3.7 Head over to the ‘Borrow’ tab and you can now use your collateral to borrow if you desire.
3.8 Select the amount you wish to borrow and click ‘Proceed’.
Confirm the transaction from your wallet.
3.9 The Borrow dashboard will now update to reflect the new changes.
4. Go back through the Wormhole - Withdraw assets and Transfer back to Ethereum.
To swap assets back to Ethereum, we’re essentially going to reverse the previous operations. Let’s see how that’s done.
If you’re using your bETH to provide collateral or borrowing, you’ll want to repay the loan first.
4.1 Withdraw the bETH from the collateral pool and confirm the transaction.
4.2 Head back to the bASSET tab in the menu and you should see your bETH balance updated.
4.3 Hover your cursor over the card and click ‘Convert’. Select the amount to convert, click ‘Convert’ once more and pay the gas fee.
4.4 Head back over to Wormhole and select the ‘Tokens tab’ if not already selected.
Source = Terra
Target = Ethereum
Note: You will have to add the webETH contract address manually when selecting the token on Wormhole. Paste the following token contract address into the input box to do so.
4.5 Select the token (in this case bETH) and the amount you want to send back and click ‘Next’.
4.6 Confirm the transaction and pay the gas fee.
4.7 Make sure your Eth wallet is connected.
Once the tokens have been transferred, you can then redeem them on the Ethereum network by clicking ‘Redeem’ and paying the gas fee.
On successful swap, you will see the confirmation below.
4.8 You can swap the bETH back to stETH using https://anchor.lido.fi/unwrap
With the launch of bETH on Anchor, ETH stakers can now collateralise their stETH (in the form of bETH) on the Terra blockchain - in effect, allowing stakers from one blockchain to participate in another blockchain in an efficient manner. We hope to see more integrations like these in the future with stETH/bETH.