Key facts:
Anchor allows you to generate annual interest with deposits in UST, the Terra stablecoin.
The decision to change was made through a vote with the governance token ANC.
Anchor Protocol abandons its stable rate of return of around 20% per annum on the stablecoin Terra US (UST) and will switch to paying variable interest. It is a decentralized finance (DeFi) platform that lives on the Terra blockchain and has made this decision in order to have a long-term sustainable protocol and be able to support the massive arrival of new investors.
Because Anchor is a decentralized platform, changes are proposed and voted on by those who own the native governance token, Anchor (ANC). hours ago ended the vote of this proposal with a favorable result. From now on interest rates will be “semi-dynamic”.
In total, 17.38% of those who had the possibility of voting voted. 14.98% of the voting power was expressed by “yes” and only 2.4% gave a negative vote. In Anchor, the necessary quorum to make a decision is at least 10% of the holders who have their tokens in stake.
The foundation of proposal is power keep the DeFi protocol active in the long term without the interest paid completely draining the treasury reserves.
One of the alternatives that were considered was to limit the amount of funds that each user can deposit. However, it was considered that this would bring a viable solution only in the short term.
How will the change in Anchor Protocol be?
Investors who were attracted to Anchor Protocol for its high fixed rate of return on a stablecoin that is pegged to the US dollar need not worry too much about the change.
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The new interest rates will not have a large variation and will occur once a month. The Anchor protocol will automatically review the relationship between the number of users, funds in the treasury and interest paid and will make adjustments that will never exceed 1.5% (either increase or decrease) from one month to the next.
In this way, the loan and interest protocol seeks to prepare for a greater adoption of the UST stablecoin, which, as a consequence, would provide Anchor with a greater number of users.
Attention for Terra rises thanks to bitcoin
Terra, the blockchain that Anchor runs on, has drawn a lot of attention thanks to recent events involving bitcoin (BTC).
On March 23, as reported by CriptoNoticias, Luna Foundation (one of the organizations behind the development of Terra) bought almost 6,000 BTC that will serve as backing for UST. They have previously purchased BTC and their backing reserves total more than 15,000 BTC ($660 million) at the time of writing.
The stablecoin UST, with a market capitalization of USD 16 billion, is currently ranked number 14 in the general ranking of cryptocurrencies.
It is the fourth largest capped stablecoin after Tether (USDT), USD Coin (USDC), and Binance USD (BUSD).
Possibly the attractive performance of Anchor Protocol was what led UST to climb positions in the table and outperforming even another decentralized stablecoin: DAI, developed by MakerDAO on Ethereum.