The Anchor Protocol community has put forward a proposal to peg the U.S. Terra stablecoin (UST), which is trading at $0.57 at the time of writing, back to the $1 rate.
- Titled "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 financial protocol (DeFi) through which the majority of UST assets and loans are processed. The total blocked volume (TVL) has dropped from nearly $18 billion to about $3 billion.
- The current 18% yield would be temporarily lowered to a "target rate of 4%," the proposal states. "A devalued UST can no longer sustain 18% APY," the paper says, referring to the interest rate as an annual percentage yield.
- Lowering the interest rate would prevent the Anchor Reserve from being depleted and help "stop the depeg death spiral."
- Another proposed contingency measure is to increase virtual liquidity for terra-to-luna swaps by a factor of 1,000 to avoid a prolonged UST depeg.
- According to DeFiLlama, TVL for the Anchor protocol has fallen to $2.61 billion, down from a high of $17.15 billion last week.
- The protocol's native token, ANC, has lost 69.33% of its value in the last 24 hours and is currently trading at $0.261.