Anchor Community Submits Proposal to Restore UST Peg

The Anchor Protocol community has submitted a proposal to restore the TerraUSD (UST) stablecoin, which was trading at 57 cents at the time of writing, to its $1 peg.

Dubbed "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 finance (DeFi) platform where the majority of UST staking/borrowing takes place. It has seen its total volume locked (TVL) slump to about $3 billion from almost $18 billion.
The current yield of 18% would be temporarily reduced with a "targeted interest rate of 4%," according to the proposal. "A depegged UST cannot sustain 18% APY any longer," according to the post, referring to an annual percentage yield.
Reducing the interest rate would prevent the Anchor reserve from depleting and contribute to "stopping the depeg death spiral."
Another proposed emergency measure is to increase virtual liquidity for Terra to Luna swaps by a factor of 1,000 to avoid a prolonged UST depeg.
TVL for Anchor Protocol has dropped to $2.61 billion from last week's high of $17.15 billion, according to DeFiLlama.
The protocol's native token, ANC, has lost 69% of its value in the past 24 hours and was recently trading at about 26 cents.

CORRECT (May 11, 11:05 UTC): Correct stablecoin's name to TerraUSD. An earlier version had it as US Terra.

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Oliver Knight

Oliver Knight is a CoinDesk reporter based between London and Lisbon. He does not own any crypto.

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