Anchor community, a Terra-based DeFi protocol, has proposed to reduce its yield from 19.5% to 4% to make the yield reserves sustainable.
The proposal, currently under a vote, comes at a volatile period in the cryptocurrency space that has seen TerraUSD depeg as low as $0.3. The algorithmic stablecoin has since reversed to trade at $0.5.
The drop in TerraUSD against the dollar peg has seen massive liquidations in the Anchor protocol, with its UST deposits plunging from 14 billion UST to around 2.5 billion UST.
Anchor relies on UST to maintain its operations, and the depeg has caused problems in the protocol. Terra’s Daniel Hong remarked that a depegged UST cannot manage an APY of up to 20%.
The voting on the proposal is expected to close on May 18, where the 4% will be implemented if it gets approval. The yield will reportedly depend on the demand for the services and the reserves.
Source: Anchor Protocol