Anchor Protocol Targets Interest Rates and Deposits to Restore UST Peg

Anchor Protocol Targets Interest Rates

The Anchor Protocol Community has forwarded a proposal to restore TerraUSD peg by lowering the minimum interest rate to 3.5% and the maximum deposit rate to 5.5%.

The proposal, called Emergency measures for restoring Terra peg, aims to intervene in the price of TerraUSD stablecoin, which is now at $0.57.

The proposal will see the current yield of 18% temporarily cut with a targeted interest rate of 4%. The proposal maintains that a unpegged UST cannot sustain the current annual percentage yield.

The community has also proposed to increase virtual liquidity for Terra to Luna swaps by a factor of 1,000 to avoid a prolonged UST depeg.

Anchor is a decentralized finance protocol for staking and borrowing UST. The platform has recorded a drop in the total value locked from $18 billion to $3 billion. 

Anchor’s native ANC tokens have dropped 69.33% in the past day to currently trading at around $0.261.

Source: Coindesk

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