Anchor Protocol (ANC) was a Terra-based money market that accepted UST deposits and issued aUST receipt tokens. Its deposit rate was governed as a target and was marketed at about 20% APY; it was supported by borrower interest, staking rewards, a yield reserve, and ANC incentives rather than guaranteed as a fixed bank rate. The protocol became non-operational after the Terra ecosystem failed in May 2022.
Market data: CoinGecko’s former ANC listing currently redirects to its homepage, so no current CoinGecko market table is shown. This reflects the listing’s status, not a live quote of zero.
How Anchor Worked
Depositors supplied UST to Anchor’s money market and received aUST, a receipt token representing their claim on the pooled deposit and accrued interest. Borrowers could take UST loans against approved bonded assets (bAssets), while liquidators could close positions that fell below collateral requirements.
Governance set the Anchor Rate as a target deposit yield. Interest paid by borrowers and rewards earned on eligible bAsset collateral contributed to the pool’s real yield. When that yield fell short of the target, the yield reserve could cover some of the gap; ANC emissions also encouraged borrowing. The reserve could run down, so the target was not a guaranteed return.
ANC Tokenomics
ANC was used for governance, borrower incentives, and liquidity incentives. Anchor’s published distribution plan set a total supply of 1 billion ANC over at least four years. Its planned allocations were 20% for investors, 10% for the team, 5% for a LUNA-staker airdrop, 10% for LUNA staking rewards, 40% for borrower incentives, 5% for ANC-UST liquidity-provider rewards, and 10% for the community fund. These were the original planned allocations; they do not establish how many tokens were ultimately distributed before the protocol stopped operating.
Why Anchor Matters
Anchor concentrated a large share of UST demand in a product whose headline yield depended on a mix of market income, incentives, and a reserve. When UST lost its dollar peg in May 2022, depositors’ unit of account and the wider Terra system were severely impaired. This history is useful when assessing advertised yields: a target rate, reserve subsidy, and token incentives are different from a sustainable yield earned from borrowers alone.
Related Terms
- Stablecoin — explains the asset type that UST was designed to represent.
- Algorithmic Stablecoin — covers the mechanism and risks behind UST’s peg design.
- Stablecoin Yield — distinguishes underlying income from subsidies and token rewards.
See Also
- Why Algorithmic Stablecoins Keep Failing (And Why People Keep Trying Anyway) — compares the design and failure modes that made Anchor’s UST exposure important.
- What the Celsius Collapse Actually Tells Us About Crypto Lending Risk — examines lending and yield risks across centralized and on-chain products.
- What Is Tokenomics — And Why It Determines Whether a Crypto Project Survives — explains how incentives and supply plans shape a protocol.
- ChangeNOW — Check supported assets, networks, and local availability before using this third-party service.
Sources
- Anchor Protocol overview documentation — describes aUST deposits, collateralized borrowing, the target Anchor Rate, yield reserve, and ANC incentives.
- Anchor Token (ANC) documentation — records ANC governance and incentive uses plus the original one-billion-token distribution plan.
- SEC litigation release on Terraform Labs and Do Kwon — documents how UST was marketed with an advertised yield through Anchor and the May 2022 depeg.