The price of the Anchor Protocol (ANC) token has skyrocketed in the past 24 hours, avoiding a plunge in the crypto market as traders sought exposure to the relatively large yield offered by the Anchor protocol. The token last traded up 13% at $5.5, hovering around its 10-month high and with a total market cap of $1.4 billion.
Anchor offers 20% yield
ANC is part of the Anchor project, a decentralized lending protocol built by the developers of Terra (LUNA). The project offers depositors of stablecoin TerraUSD (UST) an annual yield of 20%, which is one of the highest rates in conventional stablecoins.
In comparison, returns on stable coins, including Tether, USD Coin and Binance USD, run as high as 12%.
It is likely that this 20% yield has attracted traders amid the rising volatility in the crypto market. ANC tokens are issued as an incentive for depositing to Anchor, while the protocol burns ANC regularly to support the price. LUNA, another token linked to UST, is also up 79% in the past 30 days.
Stablecoins also had the largest trading volumes among their peers through February, when tensions over Russia and Ukraine sent investors into safe-haven assets.
Binance Launchpool, LUNA Fundraising Support Anchor
At the end of January, an ANC token was added to Binance Launchpool, which allowed traders to earn ANC by staking BNB, LUNA and BUSD tokens for a 21-day lock-in period. The move was a watershed moment for the ANC, with the token rising a whopping 255% from record lows since then.
More recently, the Luna Foundation Guard, a Terra-affiliated community, concluded a $1 Billion Private Token Sales to establish a reserve denominated in Bitcoin for UST. The move adds more credibility to UST’s stablecoin status and is likely to keep Anchor earnings high.
Reports suggested Luna planned to further bolster UST reserves through a new sale.
The Anchor community has also recently suggested switching to a semi-dynamic yield to keep up with the increased demand for protocol loans.
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About the author
With over five years of experience in global financial markets, Ambar plans to leverage this knowledge for the fast-growing world of crypto and DeFi. His main interest lies in finding out how geopolitical developments could affect crypto markets and what that could mean for your bitcoin holdings. When he’s not scouring the internet for the latest news, you can watch him play video games or watch Seinfeld reruns. You can reach him at [email protected]
This post Why is Terra-Based Anchor Protocol ($ANC) Price Rising Amid Crypto Crash?
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