The price of the Anchor Protocol (ANC) token has risen in the last 24 hours, avoiding a drop in the crypto market as traders sought exposure to the relatively high return offered by the Anchor protocol. The coin was recently trading up 13% at $5.5, nearing 10-month highs and with a total market capitalization of $1.4 billion.
Anchor provides a 20% return.
ANC is a component of the Anchor project, a decentralized lending mechanism developed by Terra (LUNA). The initiative provides depositors of the stablecoin TerraUSD (UST) with a 20% yearly dividend, which is among the highest rates in conventional stablecoins.
In comparison, returns on leading stablecoins such as Tether, USD Coin, and Binance USD can reach up to 12%.
It is possible that the 20% yield has attracted traders in the midst of the crypto market’s escalating volatility. ANC coins are offered as incentives for depositing on Anchor, and the protocol burns ANC on a regular basis to keep its price stable. LUNA, another token tied to UST, has also increased by 79% in the last 30 days.
Stablecoins also had the highest trading volumes among their peers in February, as investor demand for safe-haven assets grew in response to tensions between Russia and Ukraine.
Anchor is supported by Binance Launchpool and LUNA fundraising.
ANC currency was launched to Binance Launchpool in late January, allowing traders to earn ANC by staking BNB, LUNA, and BUSD tokens for a 21-day lock-in period. The move marked a watershed moment for ANC, with the token surging 255 percent from record lows since then.
The Luna Foundation Guard, a Terra-affiliated society, has completed a $1 billion private token sale to build a Bitcoin-denominated reserve for UST. This step lends credence to UST’s stablecoin reputation and is likely to keep Anchor yields high.
According to reports, Luna intended to increase UST reserves through another sale.
In order to stay up with rising borrowing demand in the protocol, the Anchor community recently advocated switching to a semi-dynamic yield.