On Thursday, the team behind the Anchor lending protocol announced that a proposal has been passed and that the decentralized money market will “implement a more sustainable semi-dynamic earning rate.” Following the announcement, the value of the protocol’s native token ANC has fallen by about 2% in the past 24 hours.
Anchor Protocol changes the earning rate of the application
Anchor Protocol, the decentralized financial (defi) money market and lending application built on Terra, makes some changes to the earning rate. According to a recently passed board vote, Anchor Protocol will dynamically adjust payout percentages.
The earning percentage can increase or decrease per period up to 1.5% expenditure on the increase and decrease of the revenue reserves. The results of the Anchor governance vote show that 14.98% voted “yes” against the proposal, while 2.4% voted “no”.
In addition, the official Twitter account of Anchor tweeted on the proposal to be adopted on Thursday. “With the expiration of Prop 20, Anchor will now implement a more sustainable semi-dynamic earning rate,” the team said. The Anchor team added:
In its simplest form, this proposal involves two parameters on the earning side and we will break them down each: 1. Frequency – how often the rate can change, [and] 2. Cap on rate changes – How big the rate changes can be.
Examples of rate adjustments, according to the Anchor Protocol Twitter thread.
According to the thread, the protocol payout percentage will adjust the frequency once a month and the adjustment will be based on the revenue reserve performance for that month. “The rate adjustment limit is set at 1.5%, so the maximum it can increase or decrease each month is 1.5%,” details from Anchor’s Twitter thread. “The rate adjustments will be positive or negative, depending on whether the revenue reserve has increased or depreciated that month.”
Anchor recently adds interchain support with avalanche, Anchor’s locked value is up 44.59% in 30 days
Anchor’s project announcement went on to add that changes that occur that are less than 1.5% “will result in an equal adjustment of the earning rate.” The news follows Anchor’s one-year anniversary and the protocol’s inter-chain direction. Anchor executive Ryan Park announced on March 17, that anchor now supports Avalanche (AVAX) via Xanchor (Cross Anchor), which is an “extension of Anchor Protocol”.
“In line with [Anchor Protocol’s] With its first birthday, Anchor has taken its first step into the interchain,” Park said. “Powered by Wormhole, Xanchor brings Anchor’s functionalities to other non-Terra blockchains. First starting with Avalanche. Xanchor is unique with its seamless cross-chain UX – focused on the fact that most users care [about] what chain they are on, not what chain their app is on. Only Metamask allows users to interact directly with Anchor contracts on [Terra]† No Terra wallet extensions required,” the Anchor manager added.
Terra currently has the second largest decentralized financial (defi) total value locked-down (TVL) and Anchor Protocol is one reason why. While Terra’s TVL is $26.97 billion, Anchor takes $14.4 billion of the total, or 53.39%. Anchor Protocol’s TVL is up 44.59% in the past 30 days, recently surpassing Anchor Aave as one of the largest defi loan applications in the ecosystem today.
Anchor’s recent announcement also follows the Luna Foundation’s purchases of bitcoin (BTC). The Luna Foundation uses the BTC to support the stability of the Terra stablecoin UST. Anchor’s team believes that reconfiguring the earn rate will allow the project to sustain itself in the long run.
“The addition of a semi-dynamic earning rate will contribute to Anchor’s long-term sustainability and benefit users of the protocol by enabling revenue reserve growth while continuing to provide attractive returns on UST,” concludes. the announcement of Anchor Protocol.
Tags in this story
Aave, Anchor, Anchor Lending, anchor protocol, Anchor Protocol’s TVL, Avalanche, Avalanche (AVAX), DeFi, defi lending, do kwon, dynamic earn rate, earn rate, Interchain, Luna Foundation, proposal 20, Ryan Park, Terra, terra (LUNA) , Terra BTC purchase
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Jamie Redman is the news leader at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source code and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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