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Highlights
- The LUNA ecosystem was under heavy stress at the time of writing, with linked tokens down
- Bitcoin fall has made headlines, but the decline in ANC and LUNA token was even sharper
- How the ecosystem maintains its reserves to preserve the value of UST may be the factor
What is the biggest risk involved in cryptoverse? Scams and cyberattacks aside, the steep fall in a very short span of time in even biggest assets like Bitcoin is arguably what ails the cryptoverse the most.
With the total market cap tracked by CoinMarketCap now below US$1.5 trillion, the crypto fear is all here to haunt enthusiasts. Bitcoin (BTC) was down nearly eight per cent in the past 24 hours, and Ether nearly five per cent as of writing. One asset, Terra (LUNA) crypto, was reeling under over 50 per cent decline over the past 24 hours.
Another asset, though not a top 100 crypto by market cap, was also down more than 40 per cent. It was Anchor Protocol or ANC token. The decline matters because the project promises stable returns to users through its DeFi lending and borrowing services.
What is Anchor Protocol and why is ANC down?
According to its whitepaper, the project is a “savings protocol”. Anchor Protocol accepts deposits in a stablecoin, TerraUSD or UST. Depositors, it says, can earn “passive income”, and steering clear of the usual crypto market volatility to provide “stable returns” is highlighted. The DeFi protocol uses Terra’s blockchain network and is said to be a part of the wider Terra ecosystem.
Also read: Why is Dogecoin down? 3 likely reasons
One of the reasons behind the decline of ANC token might be the decline in the value of UST. Pegged to the US dollar, UST stablecoin is expected to match the value of the USD at all times. However, UST was trading at nearly US$0.85 as of writing. Another linked token, LUNA, of the ecosystem had also lost heavily over the past 24 hours, with many pointing fingers at the same factor.
ANC crypto price
ANC, the native token of Anchor Protocol’s DeFi protocol, was priced nearly US$3.5 at the beginning of this year. It fell under US$1.5 by the end of the first month. A sustained surge, however, took ANC price to over US$5.5 by early-March.
Since then, a prolonged bearish phase has gripped ANC token, and the recent fall had taken the price to under US$1 at the time of writing. That said, Anchor Protocol crypto was still in the top 150 assets by market cap.
Data provided by CoinMarketCap.com
Also read: 3 most expensive cryptos in cryptoverse by per token price
Bottom line
The cryptoverse is under stress, with some assets having lost massively. These assets include TerraUSD stablecoin, and LUNA and ANC tokens. Anchor Protocol claims to provide stable returns to investors, with ANC serving as its native token. The recent fall in the values of digital assets linked to the LUNA ecosystem may serve as a reminder of risks that are refusing to leave the cryptoverse. How the LUNA ecosystem maintains its reserves to back the UST stablecoin may be one of the factors to blame.
Also read: Terra (LUNA) crypto falls more than 50%: Why?
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