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The current price of Anchor Protocol is $0.01294352 and its 24-hour trading volume is $702,591.7. Anchor Protocol has lost 17.4% in the past 24 hours. The current MyToken ranking is #- and its market cap is $4,535,266.53. Its circulating supply is 350,389,360 ANC and its maximum supply is 1,000,000,000 ANC.

What is Anchor Protocol?

Anchor Protocol is a new type of savings protocol created based on the stablecoin project Terra Money. It aims to balance interest rates by coordinating block rewards from multiple different PoS consensus blockchains, ultimately achieving a storage rate with a stable yield.

Implementation principle

In the Anchor Protocol system, there is a money market, which is actually a Terra stablecoin UST asset pool. Depositors deposit UST in the pool and receive a stable UST interest rate. Lenders can pledge the underlying asset tokens of various PoS consensus blockchain protocols, lend Terra stablecoin UST, and pay the borrowing interest denominated in Terra stablecoin UST. At this time, the system will determine the lending rate based on the supply and demand algorithm.

Since the market supply and demand relationship is changing, and this change is even greater in the cryptocurrency market, it is not possible to maintain a stable interest rate in this way. In fact, the interest income of depositors consists of two parts. One is the loan interest paid by borrowers in stable currency UST. This interest rate is based on the dynamic changes of market supply and demand, so it is unstable. In order to maintain stability, Anchor Protocol introduces another source of income into the system, namely the block rewards earned by the crypto assets pledged by lenders, and dynamically adjusts the reward income to borrowers and lenders to achieve the anchor rate (Anchor Rate).

Anchor Protocol wants to converge depositors' deposit rates to a relatively stable value, called the Anchor Rate. The goal of Anchor Protocol is to bring deposit rates as close to the Anchor Rate as possible. In fact, when lenders pledge crypto assets in the money market to lend stablecoins such as UST, Anchor Protocol will generate assets such as bAssets, which represent the ownership tokens of various PoS asset pledgers. Like the underlying assets, bAssets also provide block rewards to holders. However, unlike most pledged assets, bAssets can be transferred and replaced, which means that bAssets will have greater liquidity. In order to maintain a stable storage interest rate, Anchor Protocol will automatically distribute the block rewards earned by the pledged asset bAsset to borrowers and lenders, and dynamically adjust the distribution ratio between the two based on the current interest rate changes, so as to stabilize the deposit rate to be as close to the Anchor Rate as possible. For example, if the current deposit rate is lower than the Anchor Rate, Anchor Protocol will automatically adjust the distribution ratio of block rewards to distribute more income streams to depositors. On the contrary, if the deposit rate exceeds the anchor rate, Anchor Protocol will distribute more block rewards to borrowers, thereby reducing the deposit rate. In short, when the deposit rate is lower than the anchor rate, the block rewards will be distributed more to depositors. Conversely, when the deposit rate exceeds the anchor rate, the yield will be distributed more to borrowers to reduce the contribution of block rewards to the deposit rate.

Stability

The Anchor Protocol wants to converge depositors' deposit rates to a relatively stable value, called the Anchor Rate. In fact, the income of this anchor rate comes from the block reward rates of multiple blockchains, and its goal is to reflect the more market-favored sources of income. The advantage of this model is that as the market's preference for reward accumulation tokens changes, the composition of the collateral assets supported by the Anchor Protocol will also change. This means that the composition of the collateral assets that determine the anchor rate is dynamically changing, and the anchor rate is always linked to the protocol with the highest current reward yield on the market. The anchor rate generated by this model will be much more stable than protocols linked to any single source of income or a package of multiple fixed yields.

Summarize

Anchor Protocol provides a stable savings solution for the DeFi space. The team's main goal is to become the gold standard for creating passive income on the blockchain. Providing open source code provides easier integration, which can be incorporated into any service application that holds user balances using only 10 lines of code. The protocol can be used by anyone in the world, with no minimum deposit, account freeze, or registration requirements. By earning rewards from multiple PoS blockchains, it can make the returns stable and attract customers who plan to invest. The continued growth and adoption of the DeFi space makes projects like Anchor Protocol worth paying attention to