[{"category":{"name":"BitScreener Exclusive","exported_url":"bitscreener-exclusive"},"id":"24e2df8b-9999-40d5-863e-d2c69a6bdddc","updated_at":"2022-05-25T10:48:00+00:00","account":{"firstName":"Marigold","lastName":"Vance"},"description":"Anchor Protocol is considered to be one of the most highly valued protocols within the Terra-Luna ecosystem. Currently, Terra’s coins, LUNA and UST, are sinking in the wave of a crash, while the ANC token is experiencing a huge upsurge. Let’s take a deep dive into Anchor Protocol!","sapo":"Anchor Protocol is considered to be one of the most highly valued protocols within the Terra-Luna ecosystem. Currently, Terra’s coins, LUNA and UST, are sinking in the wave of a crash, while the ANC token is experiencing a huge upsurge. Let’s take a deep dive into Anchor Protocol!","title":"Anchor Protocol is Soaring! Here’s why!","content":"

Why is Anchor Protocol Soaring?

Anchor Protocol was introduced as a decentralized savings protocol for UST stablecoin deposits on the Terra ecosystem. This win-win relationship between Anchor and Terra is deemed to be a solid base to strengthen their position in the crypto market.

However, the matter arose when Terra could not govern investors’ demand towards the imbalance of unusually large withdrawals, which led to the sudden collapse of LUNA and UST tokens. At the time of writing, LUNA and UST are trading at $0.00016, $0.0648 and $0.3735, respectively.

In response to that, Anchor’s token, ANC, also experienced significant downtrends, dropping to its all-time low of $0.05 on May 13, 2022.

However, the token seems to start showing signs of recovery as on May 23, 2022, it got an enormous upswing of over 150%, pulling its price from $0.079 to $0.56 on May 24.

This sudden increment in ANC price is triggered by Anchor’s latest announcement made on 21 May that it is creating a bridge between their bETH tokens of Terra to Ethereum.

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Specifically, users are enabled to swap bETH tokens from the Terra protocol to Ethereum and earn stETH with staking yields of over 3.8% APR (Annual Percentage Rate, or the yearly interest charged on loans).

Introduction to Anchor Protocol

Built on the Terra network, Anchor Protocol is a decentralized lending and borrowing protocol that offers instant withdrawals, and stable and low-volatility interest rates on Terra stablecoin (UST) deposits.

Anchor Protocol stabilizes the deposit interest rate with block rewards accumulated on user-supplied assets to borrow stablecoins. Those block rewards will provide depositors with a secure interest rate, thereby making Anchor Protocol the standard for creating passive income on the blockchain.

Anchor will offer DeFi’s benchmark interest rate, determined by the yield of the PoS blockchains with the highest demand.

To borrow stablecoins, individuals will lock Bonded Assets (bAssets) as collateral and take stablecoins under the LTV rate (Loan-to-Value) determined by the protocol, only supported by LUNA now.

About Anchor Protocol token (ANC)

Anchor Protocol (Symbol: ANC) is the native governance token of Anchor Protocol, used to create new governance polls in which ANC holders are the ones to vote.

ANC is designed to capture a portion of Anchor’s yield, thus allowing its value to scale linearly with Anchor’s Assets Under Management (AUM).

ANC tokens generate buying pressure that grows in direct proportion to Anchor’s AUM. Protocol fees are used to buy ANC tokens from Terraswap, distributed to ANC stakers as staking rewards.

ANC makers are encouraged to suggest, discuss and vote on further worthy proposals for the protocol.

ANC tokens are also used as incentives to support loan demands and stabilize initial deposit interest rates.

How Anchor Protocol works

Anchor Protocol operates based on three main mechanisms:

bAsset is one of the main mechanisms of the Anchor protocol or a tokenized stake on the PoS blockchain, representing ownership of the Proof-of-Stake property. bAsset allows holders to collect all block rewards without changing the fungibility and liquidity. There are 2 bAssets on Anchor: bLuna and bETH, collateralized to borrow UST from the Anchor platform.
Money Market is a compound-inspired lending protocol for deposited Terra stablecoins to borrowers. Borrowers have to put digital assets as collateral to borrow from the pool. Anchor derives its deposit yields from bAsset-collateralized loans, where rewards of their bAsset collaterals are utilized to subsidize the deposit rate.
Loan liquidation is applied to refrain borrowers from defaulting on their loans. Anchor encourages liquidators to observe and liquidate loans with an amount more than the allowed borrowing limit. The Liquidation Queue is used to convert collaterals of a liquidating loan to TerraUSD (UST), which are then used to repay the loan.

The participants in Anchor's ecosystem comprise depositors (lenders), borrowers, liquidators, and ANC liquidity providers.

Features of Anchor Protocol

Basically, the Anchor Protocol will promote the use of UST stablecoin in the Terra ecosystem by attractive annual interest rates (18% since the beginning of May 2022). This thereby boosts the demand for LUNA token and the whole ecosystem.

Anchor Protocol is structured to grant depositors:

stable and high deposit rate backed by rewards of bAsset collaterals;
instant withdrawals through combined lending of stablecoin deposits;
capital protection through liquidation of loans with financial risks;
easy interaction between developers and Anchor through Anchor Earn or EthAnchor.

Who is behind Anchor Protocol?

Anchor Protocol is built by Terraform Labs (TFL), a South Korean fintech company founded by Daniel Shin and Do Kwon.

The birth of Anchor Protocol is the realization of TFL's vision that is to integrate three primary financial primitives: (1) payments via UST, (2) savings via Anchor, and (3) investing via Mirror Protocol) on the Cosmos SDK-based Terra blockchain.

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","tags":[],"image":{"fileName":"anchor-protocol-deep-dive.png"}}]

Anchor Protocol is Soaring! Here’s why!

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