How to Stake UST Stablecoin to Earn 20% Interest
A step-by-step guide with screenshots.
Staking is a new term to me and I wanted to learn more about it. I first heard of staking in the context of Ethereum on Coinbase, to make about 7% interest. Recently, I’ve read I few articles about staking stablecoins. I then read Max Petrusenko’s Medium article Anchor Protocol: Insane 20% APY on a Stablecoin and Why It Is Safe about Staking UST. I decided to give it a try.
The first step is you need to acquire UST crypto stablecoin. I did this using a credit card on the Kado Ramp crypto exchange.
Secondly, you must send, or connect, your UST stablecoin to a Terra Station wallet. To do this I had to open a Terra Station account and create a crypto wallet on their platform.
Lastly, now that I had my UST in my Terra Wallet I needed to put my UST into an “Earn” status using the Anchor protocol.
This is the “what” that needed to be done. The “why” for me was to learn more about crypto and staking — and to make 20% on my money.
The “how” requires a more in-depth look.
These are the steps, with screenshots and comments, to buy UST stablecoin and stake it to earn interest.
Buying UST
To buy UST you must visit a crypto exchange (of your choice, there are options) and execute the purchase. You will need a wallet in which to place your purchase. Once in your digital wallet, you assign it to Earn rather than simply store the crypto.
Create a Terra-Station Account
Go to the Terra Station documentation website. Once there you can download their desktop App and proceed. You can also visit their Dashboard website.
Download the App.
Add the App to your Applications Folder.
Open the Desktop App, displaying the Dashboard of the Terra Station Account.
To use the Terra Station site and purchase stablecoin you need a wallet.
Create a Wallet
Creating a Wallet on Terra Station initiates the process to buy the stablecoin. From the Dashboard select “Wallet.” If you already had a Wallet you would “Connect” it to the Dashboard. In my case, I had to create a new wallet.
When I selected “Connect,” it gave me the option to create a New Wallet.
Selecting “New wallet” generated a pop-up to name and password protect my wallet. Key is the unique Mnemonic that is auto-generated. Keep a hard copy, keep a backup. If you lose it you effectively lose all access to your crypto-coin, with no recourse.
My new wallet is generated.
Now simply select “Connect” and my wallet is “Connected”, but it is still empty as I have not bought crypto yet.
Still on the Dashboard, under the Coins / UST, select “Buy.” A pop-up then displays the various exchange options you can use for purchasing UST.
When you select one of the exchanges that can be used, it takes you out of the Terra Station App and to that “Exchange.”
I first tried Binance. However, when trying to validate my user information it would not allow users in the US for UST.
Binance (EUR) Home Page
I then tried KuCoin. It allowed the transaction though had in-depth KYC steps. They ask for a picture upload of your Driver’s License front and back. You then have to write a handwritten note where you sign your name and put some requested codes on the note, then take a picture of yourself holding the note, then upload the picture to them. It then took a few days to be validated.
KuCoin home page.
My KuCoin Dashboard after opening an account.
KuCoin purchase and KYC validation screenshots.
Buying with a credit card.
Being verified.
I abandoned using KuCoin and then ended up using Kado Ramp. It was simpler and more expedited. You still have to upload your Drivers License, but no photo or handwritten card. I was “Verified” in minutes.
Buying UST on Kado Ramp
When you select the “Kado Ramp” exchange on Terra it takes you to the separate website for Kado.
At Kado Money’s Home page when you select “Get Started” it takes you to a page showing the three products they offer: Ramp-where you buy coin, Pay-where you use coin, and Save-where you earn interest (this module is not where your Earn or stake UST using the Anchor Protocol).
When you select “Ramp Now” it takes you to a page to buy the stablecoins. Note I did have to set up an account on Kado. Below I am selecting how much UST stablecoin I want to buy. I still had not “Connected” my (Terra) wallet.
When I select “Buy Now” the next pop-up seeks my wallet address, which I previously created on Terra. Note the fee was 2 UST, basically $2 or 2%.
When selecting “Buy UST” it then takes you to a payment page. I bought my UST stablecoin with a credit card, notice too it now lists the “Terra” Wallet I am using.
Upon selecting “Submit” and following the security confirmation link sent to my email I executed the purchase.
This is the confirmation that I have purchased the UST stablecoin on Kado Ramp.
Staking
Once the UST was bought on Kado Ramp I went back to my Terra Wallet. The USTs seamlessly showed up in my Terra Wallet since I connected it while executing the purchase.
Below depicts my UST stablecoin in my Terra Wallet, before staking it.
From here, I then selected “Earn” to move my UST from my Wallet into “Anchor Earn.” The fee was 0.1324 UST, $0.13 cents.
The below snapshot confirms the deposit into the Anchor Market. Note the deposit amount is 97.8676 after the fee was taken out.
Below I revisit my Terra Dashboard home page and see the crypto deposited into Earn.
Below shows the History of the transaction.
Recap — to stake UST stablecoin, follow these basic steps.
- Create an account and wallet on Terra Station, the host that facilitates staking and Earning on UST.
- Select an exchange to purchase UST stablecoins, and connect your Terra Station wallet during the purchase.
- Once purchased, go back to your Terra Station wallet and post your UST into Earn.
Logistically, you can do all of this easily within a couple of hours, or less. Your biggest challenge may be in trusting what you are doing.
Hopefully, this information will help you with the steps and the trust needed to become a staker in stablecoin.
Fees and Performance to Date
There were three fees associated with this transaction:
- a Network Fee of 2 USTs on Kado Ramp to make the purchase, i.e. converting my dollars to UST.
- a Transfer Fee of 0.143718 USTs to place my Kado purchase into my Terra wallet.
- a Staking Fee of 0.1324 USTs on Terra to deposit into Anchor.
In total, for my $100 investment, 97.8676 USTs went into an earning interest status. Total fees were 2.28 USTs, essentially $2.28.
Nine days after staking UST I went back to see how it was performing.
First I went to my Terra Wallet where it shows I staked 98 USTs.
However, this is not where the USTs actually are and just shows what I put into Earn. To get the current status of my staked UST I had to go into Anchor.
Anchor Dashboard before logging in by connecting my wallet.
From their Dashboard, I had to re-connect my Terra Wallet (via its address). Once done, it shows the current number of USTs I have, 98.363.
My Anchor Dashboard after connecting my Terra Wallet.
Given I originally staked 97.8676 USTs, I earned 0.494 USTs in nine days, an increase of 0.505%. Projecting that same performance over the year would equate to a 20.47% annual increase. The actual performance supports their claim of high yield interest on staking UST. Whether that is sustainable remains to be seen.
Terms and Definitions/Terminology
Staking — letting others use your crypto coin and pool it to achieve their financial objectives. In return, they pay you interest.
Stablecoin — a type of cryptocurrency, different than more common Bitcoin and Ether in that the coin’s value is fiat based and hence more stable.
UST — a specific stablecoin. UST is a stablecoin whose value is correlated to the value of the US dollar. As the US Dollar is fiat-backed currency, by association so is UST. UST is also supposed to be backed by LUNA, Terra’s native token of which the administrators of UST must hold in reserves in equal value to the total UST on hand. Stablecoin such as UST, while being crypto, is considerably less volatile than non-fiat backed crypto such as Bitcoin and the various Alt-coins. More technically per CoinMarkCap, “UST is a fully decentralized algorithmic stablecoin built on the Terra Blockchain and pegged to United States Dollar (USD).”
Fiat — simply means the currency is backed by something tangible (like gold) or a stated promise, such as the US dollar backed by the US Government’s promise. Years ago, the US dollar was backed by gold. President Nixon changed that and substituted the Federal Reserve’s promise to pay rather than using gold. For more see fiat-based currency.
Wallet — virtual location to store your cryptocurrency, unique to you and controlled by you. Allows you to transact buying and selling of crypto across different platforms and exchanges. See “Your First Crypto Wallet, How to Use It, and Why You Need One.”
KYC — short for Know Your Customer. Required by US government financial regulations (BSA — Bank Secrecy Act) to track and ensure integrity in financial transactions. The institution conducting the financial transaction has to know who you are, and you have to be able to prove it. Basically prevents, theoretically, money laundering.
Anchor Protocol — a web-based saving protocol for cryptocurrency based on its own blockchain. Anchor is like a decentralized bank anybody can use to store their crypto and earn value independent of the currency’s fluctuations in market price. It’s like dividends for a stock. Anchor is how your money is handled, such as the security, rules, distribution, and storage for the digital asset once it has been deposited.
Kado Ramp — a specific exchange you can use to buy UST, and other stablecoins. It is a marketplace where you shop for UST.
Terra Station — a specific deskstop wallet application in the Terra ecosystem to interact with the Terra blockchain.
Terra Money — the larger entirety of the Terra ecosystem, compromised of many elements, included but not limited to Terra Station and Anchor.
Additional Comments
There were more than a few things I learned while staking UST.
My Coinbase wallet would not work for the transaction. UST cannot be bought on an Ethereum based platform. I needed a wallet that accepts UST and uses the Anchor protocol used by Terra. Coinbase doesn’t do this. Coinbase’s stablecoins are USDT which uses the Tether Token and USDC which is a coin, both are based on the Ethereum blockchain protocol, not Terra’s.
I had to temporarily turn off two security features I typically use. First, I had to remove my adware blocker. Secondly, I could not get into the exchanges with my VPN running. Remember to turn those back on. When you do set up your accounts, you can also go back in under the settings and turn on Google Authenticator two-factor verification.
Be aware once you deposit your UST into an “Earn” status your coins are no longer in your wallet and available for your use. They have been allocated to staking mode for others to use. You can “unstake” your coins anytime by “withdrawing” them from the Anchor protocol, but then they are no longer earning interest.
Helpful Articles
- Guide to Anchor Protocol on Terra — 20% APY on UST | by Stakingbits | on Medium
2. Anchor Protocol: Insane 20% APY on a Stablecoin and Why It Is Safe | by Max Petrusenko | Dare To Be Better | Jan 2022 | Medium
3. Anchor Protocol: A Savings Protocol Offering Up to 20% APY | by Everstake | Medium
4. Terra USD (UST) Vs Tether (USDT) | on LeoFinance
5. Anchor White Paper: The Gold Standard for Passive Income on the Blockchain |June 2020
6. 4 Steps To ‘Stake’ UST On The Anchor Protocol | Financially Independent Pharmacist
7. What is Terra (Luna) Coin? — Terra Guide |@crypto-guides on LeoFinance
Disclaimer — this is not investment, legal, or accounting advice; proceed at your own educated risk and tolerance levels.
