The Anchor Token Has Dropped 70% Due To The Worsening UST And Luna Crises.

The Anchor (ANC) has dropped 70% in a single day, from $0.85 to $0.20. Anchor’s token selloff could be due to diminishing deposits and a loss of faith in UST.

Anchor Protocol’s token, ANC, has dropped more than 70% in the previous day, owing to a dramatic drop in overall deposits and the TerraUSD (UST) stablecoin failing to fulfill its dollar peg.

According to Coincu, ANC has dropped from $0.85 to $0.20. According to commentators, the continuous price gap between UST and the US dollar may have contributed to a big selloff of the ANC token, which relies on UST for its operations. The algorithmic stablecoin is currently trading at around $0.30, a 70% difference from its stated value.

Eden Au, research director at The Block Research, said:

“The ANC price crashed due to the loss of confidence in UST and the Terra ecosystem as a whole, as a result of the UST de-pegging,”

Anchor is a Terra network lending protocol that provides UST depositors with a yield of up to 20% using yield reserves. To fund Anchor’s lending and borrowing operations, the system generates fresh ANC coins.

Users have made massive withdrawals from Anchor due to the UST dollar peg problem. These users are likely to have rushed to withdraw their UST investments in order to avoid being exposed to the risky stablecoin.

 Au added:

“There has been a mass exodus from Anchor because of UST de-pegging, as UST depositors rush to withdraw and offload their UST tokens,”

Because UST accounts for the majority of deposits on Anchor’s flagship Earn program, the value of deposited assets has declined dramatically since last Friday, from 14 billion UST to 3.7 billion UST. This is due to a combination of withdrawals and a drop in the price of UST.

ANC has met the same fate as LUNA, Terra’s primary asset for sustaining its peg. It has dropped 93% from $30 to $2 today.

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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Patrick

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