Anchor Protocol ANC

What Is Anchor Protocol (ANC)?

ANC is the native token of the Anchor Protocol, which is a stablecoin-based lending protocol. It allows lenders to store their stablecoins and earn interest while borrowers take out uncollateralized loans. To be more precise, the protocol was made specifically for lending Terra USD (UST) tokens.

Make sure to check out the Anchor Protocol price chart above if you want to find out the current (or the previous) ANC price.

The protocol's key advantage is that it connects lenders and borrowers by offering lenders a competitive interest rate and a means for borrowers to borrow stablecoins without risking their initial investments.

So, how exactly does it work? The Anchor Protocol is dependent on three main components – bAssets, money market, and loan liquidation.

A bAsset (bonded asset) is a token that symbolizes ownership of a staked asset. Borrowers must use bAssets if they want to take out a loan. Initially, the Anchor Protocol only allowed a bonded version of LUNA (Terra’s native token). However, as of writing this, Anchor also supports bETH, bSOL, bATOM, and wasAVAX tokens.

The money market is where lenders deposit their UST holdings which are then pooled and lent to borrowers. In order to secure the loan, borrowers have to deposit bAssets as collateral. Lenders receive an interest rate for depositing their assets.

Loan liquidation is the process of safeguarding lenders. Essentially, there are liquidators who monitor the loans and liquidate them once they see that there might be a default. Defaults happen when borrowers fail to cover their loans in time.

The Founders of the Anchor Protocol

Terraform Labs is the company behind the Anchor Protocol. The protocol was founded in 2021. Daniel Shin and Do Kwon are the founders of Terraform Labs.

Daniel Shin has a degree in economics. Prior to founding Terraform Labs, he worked as a business analyst at McKinsey & Company. Besides that, he also co-founded such companies as Fast Track Asia, TMON, and Chai Corporation.

Do Kwon has a degree in computer science. Apart from co-founding Terraform Labs, he also founded Anyfi which builds P2P connectivity solutions using mesh networks.

The Purpose of ANC Tokens

The Anchor Protocol coins come in two forms – ERC-20 tokens on Ethereum and CW-20 tokens on Terra. The main use of ANC tokens is governance. Users can deposit ANC tokens into governance pools this way getting voting rights.

Moreover, ANC tokens can be staked in order to get staking rewards. Depending on the amount of their staked tokens, ANC holders get a portion of the protocol’s fees.

Besides that, ANC tokens are also used as rewards. The protocol rewards Anchor borrowers depending on the size of loans they take out.

FYI, don't forget to check out the ANC price chart to see how much the token is worth.

Tokenomics of ANC

The max supply of ANC tokens is 1 billion. 40% of the total supply is dedicated to rewarding borrowers. 30% is split between LUNA staking rewards, community fund, ANC liquidity, and airdrops. The remaining portion is dedicated to investors and the Anchor team. 

Besides, it should be noted that the revenue generated from interest rates by the Anchor Protocol is used by Terra to pay staking rewards.

Lastly, it's important to understand how the ANC price changes, especially if you're planning to invest in the token. You can see how and when it tends to change on the Anchor Protol price chart placed above.