What is the benefit to holding ANC? And what happens if ANC goes to $0.50?

Hi guys,

Just curious, what is the benefit of holding ANC? I’m trying to figure out why someone would buy ANC when they can earn 20% just depositing UST on Anchor? Also, is there any risk to the UST deposited with Anchor Protocol if ANC price keeps collapsing? It’s down 20-30% over the past month (which seems to be in-line with other crypto) and 10% over the last 7 days. If it continues on it’s current trend (and I don’t see why anyone would buy it), it could be below $1 by year end. Any thoughts here? Not trying to be negative, because I really do like the protocol, just trying to understand how it works and if there’s anything that can be done to support the price of ANC (since it seems to be imploding).

Thanks!

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Only governance, which means nothing to most people. Aka ANC is just a money printer that Anchor Protocol uses to give value out of thin air. This is what most crypto tokens do though. Although we have the option to change that with gated Earn yield.

If ANC drops to $0.50, then the incentive for everything such as borrow, LP Tokens won’t be worth it. And people will stop supporting the system if there aren’t any rewards. In my opinion it will definetly drop below $0.50, unless a solution is implemented.

The gated yield proposed in other threads is the most feasible solution.

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I agree. How quickly can we implement the gated yield solution as it would appear that we’re very close to Anchor / ANC collapsing? I would note that Celsius has a tiered gated yield system. My suggestion would be to implement something similar to what they have, since it clearly works for them. Here is their tier system:

Celsius loyalty tiers

Raise your holdings, raise your status. And in true Celsius fashion, it’s based on your ratio,
not your amount – so anyone can access meaningful rewards.

CEL Loyalty Level CEL Token Holdings Bonus Rewards Loan Interest Discount
Bronze 5 - 10% 5% 5%
Silver 10 - 15% 10% 10%
Gold 15 - 25% 15% 15%
Platinum > 25% 25% 25%

Tiers are based on the %age of your deposits held in CEL tokens and offer you discounts on both loan interest as well as bonus interest on your deposits. This should create demand for ANC and prevent the collapse of the protocol. Thoughts?

BigM

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On that table, does “Bonus Rewards” would equate to Anchor Earn UST Interest Rate Received?

For simplicity sake, I believe we should just start off with gated yield on Earn and hold off in “Loan Interest Discount” or “Borrow APY” as that would just hurt revenue. Correct me, if I’m wrong.

If so

ANC Token Holdings UST Interest
0% 10%
4-8% 12%
9-10% 15%
11-15% 20%

As you can see I lowered the requirement of ANC holdings a bunch relative to Celsius’s system. Don’t want to scare off a bunch of people. Baseline 10% to stay competitive with other DeFi protocols. In reality, I do want a higher ANC Token requirement, because the reality is if this is implemented, ANC becomes an appreciating asset and not a depreciating one. So it would actually be easy to maintain your account level. In my opinion, ANC would grow more than the Anchor Earn Rate.

A question brought up in other threads though, is what is considered to be a part of the ANC portfolio? ANC in LP Tokens? ANC in Staked? ANC in your Wallet? etc.

I guess we should continue on a single thread about this topic as there are too many now:

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I totally agree with what you said. But if there is a Hack fir anchorprotocol before the losses will be greater. Because everyone would like to sell the token ANC. Chain event.

Yeah that could happen, but everyone is selling now regardless if hack or no hack.

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Not impressed by any of this, and a fair bit of mis-information, and in saying that, so much focus on bumping the price up of a governance token, then actually the main part of Anchor protocol, The Earn/Borrow side, doing as you have suggested goes against all dapps tiik,Alice,Orion,Astral,Kash etc etc it wouldnt work at all, please have a seat, and rethink this whole post, more collateral = healthy Protocol, price of Anc doesnt effect rewards Apr of borrowers.

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Agreed. I don’t know anyone who holds ANC, everyone I know sells all the ANC they receive as rewards as soon as they can.

Price of ANC does affect the rewards because the rewards to borrowers are paid in ANC. If ANC collapses, borrowers go away. I am one of those borrowers and will be pulling a LOT of my liquidity if there’s no resolution here. Once the borrowers go away, how will Anchor pay 20% interest to depositors? Please explain that to me since you have thought this through so carefully.

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Chain event is already happening which is why when all the other cryptocurrencies rally (at any point over the past few months) ANC continues to decline.

In the case of Celsius, the bonus rewards are a %age increase on top of the regular rewards paid so the increase is actually quite small. They label it like that because the rates are different for each cryptocurrency they support. So if they are paying 5% regular interest on ETH at bronze you get 1.05*(5%) = 5.25%, 5.50% at silver etc. So they get a lot of bang for their buck (ie the benefits aren’t enormous for holding CEL but they still have a huge number of their users buying and holding it).

One thing I would note is that Celsius is trying to earn a profit whereas Anchor does not need to take as much for the protocol - so Anchor can be more generous with interst rates as long ANC isn’t collapsing (though taking some to support future initiatives does make sense).

Your last question regarding what is considered part of the ANC portfolio is interesting and needs further discussion / debate. Does holding ANC in your wallet count? Or do you need to stake it and/or provide liquidity? I have no idea. I would think as long as you have some, that’s supporting the protocol but would like to hear from others about what they think.

Lastly, where is the Anchor team? I’m surprised they’re not more actively involved here as the protocol seems to be in trouble… Any thoughts on this?

Cheers,
Bm

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These rate ranges seem rather large, I don’t think that’s necessary. 10% won’t be enough to draw anyone in from other yield generating platforms. Instead of 10-20%, I think the same results could be achieved with a spread of say 15/16-20%. Having a base rate of 15-16% is high enough to draw people onto the platform who don’t plan to buy ANC, but then once they’re here they may change their minds.

Do you know what the highest stablecoin yield is in crypto without any requirements or at best limited requirement? I would put stablecoin LP tokens in a different class.

The highest I have found was on Crypto.com USDC stablecoin 3 month lockup for 12%. I would consider this a low requirement.

This is why I came up with the 10-20% spread. I am not sure if I agree with up to 15/16-20% spread. Maybe 12-20%? Cause I haven’t found a stablecoin rate close to 12% without some sort of requirement.

Another leg up Anchor has is decentralized as well.

Only real con I can think of, is that secondary protocols will have the most ANC. Does that give them more voting power? Please correct if I am wrong.

We need to force people to buy/hold ANC or the price will collapse ending the protocol and payouts for everyone. If having a base rate of 15% for no ANC holdings and 16-20% for those who hold ANC is sustainable, great. But I suspect that at those rates, very few people would take the risk of holding ANC for a tiny pick up of 1 - 5% when you’re getting 15% without any risk. While I can’t be certain, I think the 15% rate needs to be lowered so that people who don’t hold ANC don’t get a REALLY good yield and only ANC holders get the premium yield. Just guessing, but I suspect the rates would be 10% for no ANC holdings and 11-20% if you hold ANC.

ie you support the protocol, you get the benefits. You don’t support the protocol, you get a mediocre yield.

Thoughts would be greatly appreciated!

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3 month lock up is a big requirement vs on demand liquidity. If they offer 12% on 3 month lock-up, their on demand liquidity would be lower than 10%. Not sure what’s currently out there as the yields move around quite a bit (especially now that crypto is falling) but I suspect 10% would be considered a high yield (without providing liquidity or staking).

If they choose to purchase ANC, maybe. No idea, depends on how many deposits they bring and how much they purchase. Are there any secondary protocols currently using Anchor?

There’s really no incentive to hold ANC. Unfortunately, like every yield farm token, it will go to $0 (if nothing’s implemented). They need to act fast.

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I think these are building on top of Anchor: Pylon, Orion.money, Angel Protocol, Alice, Saturn

Even if a proposal goes through, I fear how long it will take to implement. Probably not before ANC hits $0