The Anchor Protocol Community has presented a proposal to restore the TerraUSD (UST) stablecoin, trading at $0.33 to its $1 peg.
UST USD -58.07%, ANC USD down -63.37%
The Proposal dubbed ‘Emergency measures for restoring Terra peg’ aims to reduce minimum interest rates to 3.5% and maximum deposit rates to 5.5%.
Anchor is a decentralized finance (DeFi) protocol whereby the majority of UST staking/borrowing occurs. It has seen its total volume locked (TVL) crash to nearly $3B from almost $18B.
The current yield of 18% would be temporarily lowered with a targeted interest rate of 4%. A unpegged UST cannot maintain 18% APY any longer.
The reduction of the interest rate would prevent the Anchor reserve from depleting and leading to “stopping the depeg death spiral.
Another proposed emergency action is to increase virtual liquidity for Terra to Luna swaps by a factor of 1,000 to prevent a prolonged UST depeg.