What Is Anchor Protocol (ANC) How It Works & Where To Buy It?

Please note Anchor Protocol was part of the Terra (LUNA) collapse. It is still traded on some exchanges but should be viewed with extreme caution.

Some of the information below was written before the collapse so may be out of date.

Anchor Protocol was a lucrative DeFi platform in the Terra ecosystem. The protocol grew significantly in popularity because of its high stablecoin yields.

ANC token is the governance token of the protocol and grants users voting power when proposals arise.

The ANC token is currently the 380th largest cryptocurrency by market capitalization.

How Anchor Protocol (ANC) Works

As a permissionless and decentralized DeFi application, Anchor Protocol enables the creation of a primary contact between those looking to deposit their UST stablecoins for a consistent, low-risk return and generous yield and those looking to borrow money in exchange for posting collateral.

The Anchor Protocol makes an effort to establish a lucrative solution to a common financial situation.

Anchor utilizes a Proof-of-Stake (PoS) blockchain consensus algorithm, whereby staking digital assets is required to validate blocks on the chain. Validators who act maliciously are penalized and their staked coins are forfeited. Validators are tasked with confirming or denying the validity of a block.

Anchor’s primary elements are:

• bAssets: These are liquid versions of staked crypto assets. At the present moment, bLUNA and bETH are among the supported assets. Staked assets typically aren’t usable and lose their liquid functionality once locked. The innovative ”liquid asset” is more efficient and enhances the utility of the staked asset.
• Money market: UST stablecoins are deposited into a pool. Users deposit their UST stablecoins for others to meet borrowing demand and earn a 20% deposit interest rate on their tokens.

To secure a loan, borrowers need to place a bAssets (bonded asset) as collateral on the protocol. The profits for network depositors are largely facilitated by the profits obtained from the staked assets. However, considering bAssets are inherently volatile, borrowers are forced to over-collateralize their loans.

Despite this, Anchor will start selling the assets to pay back the debt if the loan-to-value ratio falls below the minimum threshold. Essentially, individuals use the underlying POS asset to earn a low-risk passive income.

The Anchor token is the native utility and governance token of the protocol. The token grants users unique and exclusive voting rights that they can exercise when proposals arise. Some proposals may include adjusting assets, block rewards, earning various rewards from the same asset, the borrowing cost, how much users need to stake, yields users can earn, and more.

Terra stablecoin money markets may expand to accept other crypto assets but Anchor Protocol’s governance token will need to recover from its catastrophic collapse before the protocol finds its feet again.

Anchor’s inflationary protocol token experienced significant volatility during the Luna saga, and the loan liquidation rate on the protocol skyrocketed during this time.

The unique features, high yields, and seemingly efficient mechanism are what made the Anchor protocol work so well for a long period. Still, ultimately these features and mechanisms weren’t sustainable and eventually led to a drastic collapse.

Users can read more about the protocol’s unique automated interest rate algorithm and more in the Anchor Protocol whitepaper.

What Is Anchor Protocol (ANC) Used For?

The Anchor Protocol was largely utilized by UST holders looking to earn high yields on their stablecoin assets. This yield is incredibly high compared to other stablecoin yields, and this is what drove so many individuals to make use of the protocol.

Anchor is one of the largest platforms in the Terra ecosystem alongside Mirror Protocol. The Terra ecosystem has shrunk from a value of more than $30 billion to less than $9 million in the space of a month.

The Anchor protocol, at its peak, had more than $18 billion total value-locked, but this has dropped drastically to less than $10 million.

However, some individuals are still using the protocol, and the ANC token is still listed and frequently traded on a host of cryptocurrency exchanges. Many swing and arbitrage traders try to capitalize on price fluctuations in cryptocurrencies; this can be profitable, but it is also very risky.

Where To Buy Anchor Protocol (ANC) Token

ANC has been a popularly traded cryptocurrency in recent years. The developers worked hard to create an exceptional product that is in high demand from a large portion of the market.

ANC tokens are commonly traded on most centralized crypto exchanges. Before you’re able to purchase ANC, you’ll need to deposit fiat money onto an exchange; sequentially, ANC tokens will then be credited to your digital wallet on the exchange.

The crypto exchanges below are amongst the safest place where you can buy, sell and store tokens.

1. Gate.io
2. HTX
3. KuCoin
4. Binance
5. Bitfinex

Token holders can transfer their tokens to compatible wallets, but it should be noted that this isn’t investment advice. However, users can earn interest on their tokens by making use of various decentralized platforms.

About Anchor Protocol (ANC)

How long has Anchor Protocol (ANC) existed?

Anchor Protocol positions itself as a unique and innovative savings platform where individuals can receive high yields on their digital assets. The company was initially founded in 2020.

What’s controversial about Anchor Protocol (ANC)?

The crypto space is notorious for being controversial, and anyone entering the space should always exercise caution. It’s essential to learn as much about crypto and blockchain as possible before deciding to invest in any crypto project. Individuals should invest more than they’re willing to lose.

There is a distinct lack of regulation in the crypto space, and ill-intentioned projects try to capitalize on this by exploiting retail investors.

Let’s take a look at the top controversy surrounding Anchor Protocol (ANC):

• The Protocol’s Value Collapsed – There is always a risk when investing in crypto, but it’s not often that an incredibly valuable blockchain project and ecosystem collapses entirely. A collapse so huge that billions of dollars are lost virtually overnight. This catastrophe took place, and LUNA, UST, and the entire Terra blockchain ecosystem were hit hard.
• There are various arguments as to how and why the detrimental event took place, many blame Do Kwon, and many blame the tokenomics and unsustainable UST yield returns that the Anchor Protocol facilitated.

How many Anchor Protocol (ANC) Tokens are there?

At the time of writing, Anchor Protocol (ANC) has a circulating supply of 350,381,852.32 ANC

The total supply of Anchor Protocol (ANC) is 1,000,000,000 ANC

The max supply of Anchor Protocol (ANC) is 1,000,000,000 ANC

Can Anchor Protocol (ANC) be mined?

ANC tokens can’t be mined. The Anchor Protocol uses a proof of stake consensus mechanism to secure the network and facilitate the validation of transactions. Unlike most mineable coins, which use a proof of work mechanism, ANC tokens are unmineable.

However, users can earn yields on their ANC tokens by participating on decentralized platforms – they’ll need to use innovative and yield-bearing DeFi products such as farming and liquidity provision.

Some centralized exchanges allow users to earn yields from staking their ANC tokens.

What is the market cap of Anchor Protocol (ANC)?

The market cap of Anchor Protocol (ANC) is: the total amount of coins in circulation x the current market price of ANC.

Anchor Protocol (ANC) Market Cap = 350,381,852.32 ANC x $0.12 = $44 million (380th largest market cap)

ANC is currently one of the top 500 cryptocurrencies by market capitalization.

Biggest Competitors Of Anchor Protocol (ANC)

The Anchor protocol positioned itself to mainly provide UST holders with high yields and use their tokens as collateral for individuals who want to borrow the stablecoin. The protocol gained immense popularity but proved to be over-exposed to UST loans, which inevitably led to a monumental crash in the protocol.

However, the protocol is still being used today and offers users returns of other digital assets, including Ethereum. The Anchor protocol still uses the same system, namely the bonding of assets and utilization of liquid assets.

Anchor Protocol’s Biggest Competitors are:

• Mirror Protocol
• TerraSwap

What Are The Future Plans of Anchor Protocol (ANC)?

The protocol will look to build back and establish itself again in the crypto space. Until very recently, the protocol was among the most valued in the entire crypto space. Following the crash, the protocol experienced a brief loss of functionality and a share decline in investors and users.

Going forward, the protocol has announced its intention to diversify the assets it has exposure to and to provide a transparent, credible, and smooth user experience for all individuals using the platform. Additionally, the Anchor Protocol seeks to regain the trust of its users and ensure that individuals feel confident in using the platform.

Pros And Cons Of Anchor Protocol (ANC)

Pros:

• Listed On Large Exchanges – The ANC token is currently listed on several large centralized exchanges, including Binance and KuCoin. These listings help bolster drive exposure to the project and add a certain level of credibility to the project.

Cons:

• Enormous Collapse – Anchor Protocol had one of the highest total value-locked of any protocol in the crypto space. At its peak, the TVL exceeded $18 billion, but in a few days, the TVL was less than $10 million. This was as a result of the LUNA collapse, which had a ripple effect and caused the Terra ecosystem’s collapse. Many individuals consider Anchor Protocol to be a ‘dead project’ that doesn’t have a future – this is seen as one of the largest cons of the project.