Anchor’s 20% Savings Rate Isn’t All That Meets the Eye

Anchor Protocol promises high, stable savings rates by carefully balancing staking fees, borrowing demand, and risk exposure. Its mechanisms include dynamic fee splits, reserves for downturns, and adjustments to collateralization requirements. While the system has held up even through market crashes, competition from protocols like Liquity, fluctuating borrower demand, and the risks of staking derivatives raise important caveats about sustainability.