Investors were provided access to 20% interest for storing their USTC stablecoins in the Anchor protocol.
According to an announcement released on June 7, the initial interest rate that the Anchor protocol proposed was 3.6%. However, the rate was significantly boosted to 20% a week prior to the launch in hopes to draw more possible investors.
The core designer of Terra known as Mr. B noted in a report that he was struck when he saw such a huge interest rate. The designer implied that he didn’t expect that this would end up in a 20% ROI. “I thought I was going to collapse from the beginning. (I designed it), but it collapsed 100%,” he added.
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Mr. B also stated that the Anchor protocol wasn’t built to support more than 3.6% ROI, additionally suggesting that it was too high even then. On top of that, just a week before the platform was fired up, the developers discovered that the plans had been somehow altered. The investors were provided access to 20% ROI for locking up their TerraUSD Classic (USTC) stablecoins in the Anchor Protocol instead of the initial 3.6%.
Mr. B said that before the launch in 2019, he talked with Do Kwon, the founder of Terra Luna, and advised him to lower the interest rate. However, Kwon didn’t find this offer pleasing and simply rejected it:
“I foresaw a collapse from the time we designed it. I informed CEO Kwon in advance, but he said he did not listen at all.”
Moreover, the official statement depicted that Terraform's official internal design documents with the plans to attract more investors with high-interest rates were retrieved.
On top of that, earlier this year, in the wake of the Terra collapse, the South Korean government announced that it would launch a brand new Digital Asset Committee in the first half of June. This way, the country will be able to boost the development of a new regulatory body to oversee the cryptocurrency industry.
Back in May, Do Kwon was in a real pickle when startling legal documents indicated that he apparently closed down two of its branches days before the demise of Terra (LUNA) and the stablecoin TerraUSD (UST).
Moreover, on May 18, Terra’s founder was also charged with a 100 billion won or a $78 million charge for avoiding taxes from South Korea’s National Tax Service.
