Anchor Protocol vs Celsius – Which Is Better?

Last updated on February 15th, 2022

If you’re looking for a way to earn interest on your cryptocurrencies, 2 platforms that you may have heard of include Anchor Protocol and Celsius.

How are they different, and which should you choose?

Here’s what you need to know:

The difference between Anchor Protocol and Celsius

The Anchor Protocol is a decentralised platform that only allows you to earn interest on UST. Meanwhile, Celsius is a centralised platform that allows you to earn interest on a wider variety of cryptocurrencies, such as BTC, ETH and ADA.

Here is a further comparison between these 2 platforms:

Supported cryptocurrencies

Here are the different cryptocurrencies that you can deposit into either account:

Anchor Protocol only allows you to deposit UST

The only cryptocurrency that you can deposit on Anchor Protocol is UST, which is an algorithmic stablecoin.

This is a stablecoin on the Terra Network, and you will need to have a Terra Station wallet to interact with this protocol.

Celsius allows you to deposit 44 cryptocurrencies

Celsius has a really diverse offering. You are able to deposit 44 currencies into their platform.

As such, Celsius allows you to earn interest on a wider range of cryptocurrencies.

Supported networks

The Anchor Protocol is built on the Terra network. This means that you are only able to send the Terra version of UST to your Terra Station wallet.

You are unable to send the wrapped version of UST (ERC20) that is on platforms like Gemini or Coinbase.

Meanwhile, Celsius mainly supports the ERC20 versions of the tokens on its platform. There are some cryptocurrencies like MATIC or USDC that can exist on several networks.

However, you are only able to send the ERC20 versions of the cryptocurrencies to Celsius.

If you want to transfer BNB to Celsius, you will need to use the Binance Smart Chain (BEP20) network.

Type of platform

Anchor Protocol is a decentralised platform. This is advantageous as you do not require to do any Know-Your-Customer (KYC) before you can use this platform.

All you’ll need is to connect your Terra Station wallet, and you can deposit UST straight into the protocol.

However, this means that it is also harder to navigate around the platform, especially if you are new to the decentralised finance (DeFi) world.

You will need to buy UST on a centralised exchange, before sending it to your Terra Station wallet and connecting with the Anchor Protocol.

Meanwhile, Celsius is a centralised platform, where you are required to do KYC before you can use the platform.

Interest rate

For the Anchor Protocol, the platform aims to pay you a fixed ‘Anchor Rate’ that is pre-determined beforehand.

Currently, the rate fluctuates between 19.3% to 19.5%.

This is a rather high yield, especially since you are earning interest on a stablecoin that is pegged to USD.

However, there is a chance that this yield may not be sustainable in the long run. If that is the case, the interest rate may drop eventually.

The interest rates that are provided by Celsius is dependent on the cryptocurrency that you deposit on its platform.

These rates will be reviewed weekly, and you will be informed of any changes to the rates.

How you earn your rewards

For the Anchor Protocol, you will be able to earn your interest in UST.

You can find out more about the differences between aUST and UST, and how this affects the interest that you earn.

Meanwhile, Celsius allows you to earn interest in 2 ways:

1. In-kind reward (same currency that you own)
2. Interest in CEL token

Celsius allows you to earn a higher interest rate, if you choose to earn it in CEL tokens.

However, the option to earn in CEL is not available if you’re from the United States.

Withdrawal fee

If you are looking to withdraw UST from the Anchor Protocol to your Terra Station wallet, you will be required to pay a transaction fee in UST.

For Celsius, you do not incur any fees when withdrawing any cryptocurrency to another platform.

This is really advantageous for ERC20 tokens, which charge a high withdrawal fee!

Lock-in period

Both platforms do not have any lock-in periods, and you are able to withdraw your funds at any time. This means that you are able to freely withdraw your crypto any time you wish!

Platform

For the Anchor Protocol, you are currently only able to access it via your desktop.

Meanwhile, Celsius has both a desktop platform,

as well as a mobile app.

Security

The risk of your funds in the Anchor Protocol is dependent on 2 things:

1. The safety of Anchor Protocol
2. The safety of your Terra Station wallet

In the event that the Anchor Protocol fails, it is possible for you to buy insurance.

You can do this to provide cover against a smart contract failure, or if the UST loses its peg to the US Dollar.

Another thing you’ll need to take note of is the security of your Terra Station wallet. When you are creating your wallet, you will be given a 24-word phrase.

It is important that you do not share this with anyone, as this phrase will allow anyone to gain access to your funds in your Terra Station wallet!

If you lose your 24-word phrase, you will be unable to recover your wallet in the future. As such, do remember to keep your phrases in a secure place!

Celsius is insured, but only for assets under their custody

Celsius does not disclose the security measures that they have.

However, the assets under their custody are insured by Fireblocks and PrimeTrust.

Your assets are only insured when they are under the custody of Celsius. Once they are loaned out to borrowers, your assets are no longer insured!

However, Celsius is a pretty well established company. Its services are available in more than 100 countries around the world.

Furthermore, Celsius has dedicated support for their customers, which you can contact should anything go wrong.

This is the difference between a decentralised and centralised platform!

Verdict

Here is a comparison between these 2 platforms:

	Anchor Protocol	Celsius
Supported cryptocurrencies	Only UST	44 different cryptocurrencies
Supported networks	Terra	ERC20 and BEP20 (for BNB)
Type of platform	Decentralised	Centralised
Interest rate	19.3% – 19.5%	Depends on cryptocurrency
How you earn rewards	In UST	In-kind or in CEL
Withdrawal fee	Small fee in UST	Free
Lock-in period	None	None
Platform	Desktop only	Desktop and mobile
Security	Safety of wallet and platform (insurance provided)	Insured by Fireblocks and PrimeTrust Has dedicated support

So which platform should you choose?

Choose Anchor Protocol for a high interest rate

The Anchor Protocol provides a very high yield on UST, which is very advantageous since it is pegged to USD.

In this way, you do not experience as much volatility compared to a cryptocurrency.

However, it is much harder to access the Anchor Protocol as you will need to know how to:

1. Send UST to Terra Station
2. Deposit UST from Terra Station to Anchor Protocol

Furthermore, the yield may be unsustainable and it may be reduced over time.

You may also want to be very careful about the security of your Terra Station wallet!

Choose Celsius to earn interest on a wider variety of cryptocurrencies

Celsius allows you to earn interest on different cryptocurrencies, and not just on stablecoins. This is useful if you want to earn interest on BTC, ETH or other cryptocurrencies.

As a centralised platform, you are able to obtain support from Celsius should anything go wrong. With strong security on their end, this will allow your funds to be safer from hacks.

Conclusion

Both platforms allow you to earn interest on your crypto.

Here are some things you’ll need to consider between them:

1. The type of currency you intend to earn interest on
2. Whether you are familiar with using a decentralised wallet
3. The amount of interest that you wish to earn

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