Anchor Protocol’s token called Anchor (ANC) has lost more than 70% in the last day, in part due to a sharp decline of overall deposits on the protocol and TerraUSD (UST) stablecoin failing to meet its dollar peg.
Anchor’s native token has fallen from $0.85 to $0.20, per CoinGecko. The ongoing price separation of UST from the US dollar may have contributed to a large selloff of the Anchor (ANC) token, analysts say, since Anchor depends on UST for its operations. The algorithmic stablecoin is currently trading at about $0.30 — a deviation of about 70% from its supposed dollar value.
Track live crypto price of 10000+ coins!
“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,” said Eden Au, research director at The Block Research.
Anchor is a lending protocol on the Terra network, which pays out a yield of up to 20% to UST depositors through yield reserves. The protocol generates new ANC tokens to fund Anchor’s lending and borrowing activity.
The crisis surrounding UST’s dollar peg has seen users make large withdrawals from Anchor. These users likely rushed to withdraw their UST deposits so they could no longer be exposed to the volatile stablecoin.
“There has been a mass exodus from Anchor because of UST de-pegging, as UST depositors rush to withdraw and offload their UST tokens,” Au added.
As UST constitutes the majority of the deposits on the flagship Anchor’s Earn product, the value of deposited assets Anchor has dropped significantly since last Friday, going from 14 billion UST to now 3.7 billion UST. That’s in part due to both withdrawals and the decrease in the price of UST.
ANC has suffered from a similar fate as LUNA, Terra’s main asset used in maintaining its peg. It has declined from $30 to $2, down 93% today.
© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Download MAXBIT Android App, Your best source of all crypto news!
Share this article: