The recent LUNA-UST crash was one such event in the history of the cryptos which had not been witnessed ever before. Terra’s native token LUNA & stablecoin UST both were dragged to the bottom. However, the projects built on Terra blockchain also suffered a similar brutal slash. One of such projects is Anchor protocol.
Anchor protocol or ANC is a lending and borrowing protocol offering up to 19.5% yield on stablecoin deposits. Lenders can deposit their UST and earn attractive rates on their investments while simultaneously benefiting from low volatility.
Founded by the terra labs’ Daniel Shin and Do Kwon the brains behind Luna and UST. Anchor stands out from countless other money market protocols like Aave and Compound thanks to its elegant user interface and simple-to-use functionality. The protocol’s core value proposition is connecting borrowers and lenders by offering the former a way to borrow in stablecoin without forfeiting their investments and the latter an attractive interest rate on stable assets.
Lenders connect their Terra Station wallet and deposit UST by paying a 1.60 UST transaction fee and earn the protocol’s 19.5% annual interest rate on a pro-rata basis for every block transaction (every eight seconds).
Borrowers bond their LUNA tokens and receive bLUNA (bonded LUNA) in return. They can borrow up to 60% of their deposited collateral in UST and pay an interest rate that is slightly higher than that paid to lenders. Bonded LUNA can be unbonded after 21 days. However, they also receive ANC tokens distributed by the protocol to incentivize its adoption.
All was going well until Terra Foundation began accumulating Bitcoin to back their stablecoin UST. Very soon it became the second-largest holder with more than 80,000 BTC in its reserves. This was not accepted by either the Bitcoin maximalist or the Ethereum veterans who criticized the idea very often. During the times when the deposits on Anchor Protocol reached their peak, a huge $248 million UST was liquidated on Curve and Binance.
This led to a huge panic in the crypto space and as UST began to de-peg, huge UST withdrawals were witnessed on Anchor. To avoid the volatile condition of the stablecoin, traders just exited the lending platform in huge masses which led to the ANC price slash. Further, when the Luna Foundation Guard liquidated all of its BTC reserves, the market collapsed which impacted the ANC price as well.
Speaking of which the current price of ANC is $0.1976 which is up by 3.05% in the last 24 hours however it has come down substantially form an all time high of 5.9 in the last year. ANC have a 24 hour trading volume of $44 million which is down by 32.62% and a market capital of $69.2 million.
The ANC price was poised to undertake a parabolic recovery and hence ignited a strong upswing since the beginning of May’s trade. However, the market collapse triggered by the UST de-peg, slashed the price by more than 95% much similar to LUNA and UST prices.
As i said earlier, Anchor Protocol’s 19.48% interest was the main reason for the LUNA price rally which in turn fuelled the ANC price rally. The deposits on the ‘high-yield savings protocol’ had risen extremely high and reached their peak just before the crash. Interestingly, the borrowing remained less volatile during the same time.
Within the last one month, the price of ANC decreased by -86.208%, eliminating a whopping average sum of $1.22 from its current value. This sudden down means that the coin is in dip right now, meaning that it can be a good buy opportunity for quick investment.
The 90 days price change is around -94.28% and the price circulated from a minimum average price of $3.15 to maximum average price of $3.42 in the past 90 days.
Anchor Protocol is down by -94.40% with the maximum average price of the coin was around $3.05 and the minimum average price of was around $2.80 in past 4 months.
What are your thoughts in the future of anchor protocol will it be able to stay afloat after the Luna cash and tumultuous ride of the second chain, thanks for watching, make sure you subscribe to the channel and hit that like button, i will see you in the next one.