Lending and borrowing protocol Anchor Protocol (ANC) has announced its vision to become the foundational money market on the Terra ecosystem and for DeFi in general.
ANC, the project’s governance token, has rallied from a seven-day low of US$2.68 to a high of US$4.00, gaining almost 50 percent in a week.
Anchor Protocol offers very high yields for staking, currently 19.32 percent APY on UST stablecoin deposits. This attractive APY beats most others offered in the market.
Anchor is currently the top protocol on Terra in terms of total value locked (TVL). The price rise has seen TVL reach a record US$11.21 billion, doubling in a month and breaking ANC into the top 100 cryptocurrencies by market cap.
New Tokenomics Explained
In a recent Twitter thread, Anchor said it was looking to upgrade its tokenomics. The proposal plans to introduce further economic and governance incentives for ANC investors. People who lock up their ANC tokens for between one and four years will receive increased voting power and more ANC emissions. The longer the lock-up period, the higher the voting power and ANC distribution will be.
Retrograde to Build on Terra
Anchor also announced that a new protocol, Retrograde, will be building on Terra and rolling out a new governance structure for the Terra ecosystem:
It is generally bullish news for the price of tokens to rise after the announcement of new protocols building on the network. For example, DeFi token UMA soared 63 percent following the launch of Across Protocol last November.
It is always wise to be cautious of new DeFi protocols, however, as rug-pulls are a dreaded and constant possibility. Avalanche-based Atom Protocol is an example of this, closing down only hours after it was launched last month.
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