Oliver Knight is a CoinDesk reporter based between London and Lisbon. He does not own any crypto.
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The Anchor Protocol community has submitted a proposal to restore the TerraUSD (UST) stablecoin, which was trading at 57 cents at the time of writing, to its $1 peg.
- Dubbed “Emergency measures for restoring Terra peg,” the proposal aims to lower minimum interest rates to 3.5% and maximum deposit rates to 5.5%.
- Anchor is a decentralized finance (DeFi) platform where the majority of UST staking/borrowing takes place. It has seen its total volume locked (TVL) slump to about $3 billion from almost $18 billion.
- The current yield of 18% would be temporarily reduced with a “targeted interest rate of 4%,” according to the proposal. “A depegged UST cannot sustain 18% APY any longer,” according to the post, referring to an annual percentage yield.
- Reducing the interest rate would prevent the Anchor reserve from depleting and contribute to “stopping the depeg death spiral.”
- Another proposed emergency measure is to increase virtual liquidity for Terra to Luna swaps by a factor of 1,000 to avoid a prolonged UST depeg.
- TVL for Anchor Protocol has dropped to $2.61 billion from last week’s high of $17.15 billion, according to DeFiLlama.
- The protocol’s native token, ANC, has lost 69% of its value in the past 24 hours and was recently trading at about 26 cents.
CORRECT (May 11, 11:05 UTC): Correct stablecoin’s name to TerraUSD. An earlier version had it as US Terra.