The Binance exchange, the world’s largest crypto brokerage platform by trading volume, has announced that it would offer Anchor Protocol (ANC) on its launchpool platform. According to the exchange, the listing will allow users to farm ANC tokens by staking their Binance Coin, Terra (LUNA), and Binance USD (BUSD).
Beginning on Wednesday, January 26th, ANC farming began for a 30-day period. According to the launchpool information, there are 1 billion ANC in total, with about 21.35 percent, or 213,538,202 ANC tokens, now in circulation. Stakeholders in the Launchpool will have the opportunity to win a total of 2 million ANC coins across the three unique pools.
The pool with the greatest allocation is the Binance Coin pool, which has 1.4 million allocated coins available for farming and so accounts for 70% of all payouts. The Terra pool receives 400,000 ANC coin prizes, or 20% of the overall allocation, while the Binance USD pool receives the remaining 10%, with 200,000 ANC coins up for grabs.
While most decentralized finance (DeFi) systems allow demand-supply mechanisms to set lending and borrowing rates, Anchor provides customers depositing UST a nearly fixed 20 percent annualized percentage yield (APY). Holders of Anchor’s governance token, ANC, determine the so-called “anchor rate.” According to data source defirate.com, other industry heavyweights were providing loan rates of less than 10% at the time of publication.
The super-high deposit rate is funded by three kinds of income: the interest charged to borrowers, staking rewards collected from borrowers’ collateral – such as liquid staking proof-of-stake assets from major blockchains like bonded luna (bLUNA) or bonded ether (bETH), and liquidation fees. The Terra network’s native token is Luna, while the Ethereum blockchain is powered by ether (ETH).
Downplay Concerns
Kwon of Terraform Labs is attempting to assuage worries about reserve depletion by stating that the method was designed specifically to assure stability during market downturns. Kwon informed crypto fans on Twitter earlier today that the protocol would work as a typical DeFi money market if the dreaded scenario of reserves falling to zero occurred.
“If we were to get to this hypothetical situation, Anchor will *still* offer the highest return on stablecoins. By far. It will be fine,” Kwon tweeted.
It will be interesting to observe what remedial actions are put in place. Following the crypto meltdown of May-June 2021, which disrupted the larger market bull run, Terraform Labs made a capital infusion of 70 million UST.
“The deployment is a one-off solution that will prevent the need for future intervention, allocating a significant runway for the protocol to introduce self-sustainable mechanics even during periods of low borrowing demand,” Terra Research Forum’s blog post Bolstering Anchor’s Sustainability published in July said.
