Le protocole Anchor s

The Anchor protocol was liquidated for $1 billion during the UST raid

Anchor now holds the record for biggest liquidations

The protocol anchorone of the pillars of the success that the UST has known, recorded $1 billion total liquidation last week. This is, to date, the amount of liquidation highest ever in decentralized finance (DeFi) over this time frame.

Anchor was best known for offering up 19.5% returns on the UST, which is a very high rate for a stablecoin. Thus, shortly before UST’s loss of value, Anchor held over $20 billion in total value locked (TVL).

In comparison, today this value is close to a billion dollars. Of course, this impressive decline is directly related to the loss of value of the UST and the LUNA, which today are respectively at 0.05 dollar and 0.0001 dollar.

In addition to being able to deposit UST on Anchor to benefit from this famous attractive rate of 19.5%, it is also possible toborrow on Anchor with a return of 10%.

Thus, users can, for example, borrow UST by depositing AVAX, SOL, ATOM or LUNA as collateral. It is possible to obtain up to 60% of the collaterals deposited in the form of UST, but if ever the value of the collaterals drops too much, then the user is liquidated.

👉 Find our file on the consequences of the collapse of the Terra ecosystem (UST / LUNA)

Consequences of the LUNA collapse

Some users had thus wished to take advantage of this loan solution offered by Anchor, but in depositing LUNA tokens as collateral. The price of the LUNA having gone from 80 dollars at the beginning of the month to currently 0.0001 dollar, loans of this order were of course no longer insured.

The consequences were not minor: out of a total of 1.048 billion dollars liquidated over one week, the LUNA collaterals alone been liquidated to the tune of 750 million dollarsis 75% of total. The collaterals in AVAX were liquidated to the tune of $261 millionand the rest was split between ATOM, SOL and Ether (ETH).

By comparison, the last time the DeFi ecosystem saw a sell-off of this magnitude was during the overall cryptocurrency market downturn last year. Protocols Compound and Aave had then liquidated for 633 million dollars.

Most liquidations over the past week took place on May 9 and 10i.e. during the period when the price of the LUNA began to fall significantly.

Remember that a vote is currently taking place on Agora to determine whether the Terra blockchain will be forked or not next May 27.

👉 To go further: Do Kwon owes more than 78 million dollars in taxes to the South Korean tax authorities

Source: The Block Data

About the Author : Maximilien Prue


Passionate about the world of decentralized finance and the novelties brought by Web 3.0, I write articles for Cryptoast to help make the blockchain more accessible to everyone. Convinced that cryptocurrencies will change the future very soon.
All articles by Maximilien Prué.

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