Anchor Protocol’s ANC Has Rebounded 300% In Just 1 Month

Anchor Protocol – a great project on Terra

Anchor Protocol is a Terra blockchain-based decentralized money market that pays UST depositors a 20% annual percentage yield. It allows borrowers to use bonded LUNA (bLUNA) to collateralize UST loans.

As a result of the Anchor Protocol’s requirement for UST, additional LUNA tokens are expected to be removed from circulation. This is due to Terra’s economic mechanism, which encourages users to mint UST by burning the LUNA supply when its value rises beyond $1.

The governance token of Anchor Protocol, ANC, has risen over 20% in the last 24 hours and has rebounded 300% in a month. At the time of publication, the token was trading at $4.6.

According to Henrik Andersson, co-founder of Australia-based crypto-asset investment company Apollo Capital, the ANC price growth is due to a combination of ANC giving a high annual percentage yield (APY) and talks of new tokenomics,

“Anchor offers among the highest APY for crypto stablecoins which has driven demand of UST,” said Andersson. “At the same time, stablecoin yield on aggregator platforms like Yearn and Convex has fallen dramatically from low single-digit to low double digits.”

“This makes TerraUSD the only stablecoin (with reserve backing) that is fully decentralized,” said Shawn Dexter, DeFi analyst at Quantum Economics, in a telegram chat with CoinDesk. This is because the coin is not issued by a central party, nor are the reserves controlled by a central party (unlike USDT or USDC, for example).

“This was an inflection point for Luna and instantly made most projects on the ecosystem (including Anchor) that much more attractive,” said Dexter.

“The confidence in Anchor Protocol and its prospects for long-term success is dependent on the success and stability of the Terra ecosystem,” added Dexter.

Terra’s LUNA token has also risen 43% in the previous seven days and is currently trading at $93.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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