What is Anchor Stablecoin?
Table of Contents
Anchor (ANCT) is a two-token algorithmic stablecoin whose value is pegged to the sustainable and predictable growth trend of the global economy. These unique qualities make this stablecoin stand out among the crowd.
So, what’s special about Anchor?
While fiat-pegged stablecoins currently dominate the market, those stablecoins backed by fiat and real world assets can susceptible to the same market fluctuations, depreciation and loss of purchasing power as their traditional counterparts to which they are pegged.
The global economy, on the other hand, has a sustainable and predictable growth trend with global GDP steadily increasing over time. Data from the World Bank shows that since 1960, global GDP has expanded from $1.3 trillion to $80.7 trillion, with 2019 projections approximating $88.08 trillion.
Providing an alternative to fiat-pegged stablecoins, Anchor aims to remain stable regardless of any fiat currency’s strength, market fluctuations, or economic recessions.
Thanks to the fact that it is pegged to the real, stable, and predictable growth of the global economy, ANCT will not experience the inflation that fiat-pegged stablecoins experience.
Anchor is providing traders with a grace period on transaction fees, during which time they will cover the costs of Anchor’s stability fee.
For the first 3 months or until the Grace Period Allocation is spent, sending ANCT anywhere in the world will incur no fee for the sender or recipient.
In order to prevent market manipulation, and remain stable, Anchor has designed a six pillar safety net that stabilizes the system. Its task is to prevent volatility and fluctuation within the Anchor System.
How it Works
ANCT is based on the Ethereum network. It is a two-token stablecoin whose market cap is algorithmically determined based on the simple laws of supply and demand in order to maintain the value peg.
Anchor’s value peg is a proprietary non-flationary financial index called the MMU (Monetary Measurement Unit). The MMU represents global economic growth by tracking a series of macroeconomic indicators. It factors in daily fluctuating financial data from more than 190 countries, and is adjusted for inflation and further stabilized with the FX Indicator and the MMU Premium. The data in use is coming from reputable sources such as Bloomberg, IMF, and Knoema.
The Value of the MMU Against USD (2012-2019)
The graph below displays the US dollar’s loss of purchasing power since 2012 (yellow). What had once cost 1 million USD on January 1 2012 has inflated to more than 1.24 million USD today. Conversely, a currency pegged to the MMU, such as ANCT, preserves its value and steadily appreciates over time (green).
The MMU is calculated via the application of a proprietary algorithm conceived by Anchor Founder and CEO Daniel Popa and further developed by Anchor’s team of PhD economists, including macroeconomics researcher and professor Dr. Zoran Grubisić, and quantitative finance expert Aleksandar Manić.
How ANCT Remains Stable
As mentioned, Anchor’s system consists of two tokens. Anchor tokens (ANCT) serve as the main currency/payment tokens. Then, there are Dock tokens (DOCT), the utility tokens that stabilize the currency ensuring ANCT remains pegged to the MMU regardless of external fluctuations.
Anchor’s flexible currency supply is regulated by Contraction and Expansion Phases. These are stabilizing mechanisms through which Anchor’s system programmatically buys and sells ANCT and DOCT. If ANCT’s price deviates from the value of the MMU, the system will correspondingly mint or burn ANCT to brings its price back to the value of the MMU.
DOCT can only be exchanged for ANCT during Contraction and Expansion Phases internally on the Anchor platform.
DOCT is not available for trading on Liquid or any exchange.
DOCT cannot be used as a means of payment or transferred from one token holder to another.
Contraction and Expansion Phases
A Contraction Phase is triggered when ANCT’s price falls below the value of the MMU due to a decrease in demand. When this occurs, an open auction with a reward system will be initiated to incentivize token holders to exchange their ANCT for DOCT in order to stabilize the currency and maintain equilibrium between ANCT’s price and the value of the MMU.
An Expansion Phase is triggered when the exchange rate for the Anchor token rises above the MMU due to an increase in demand causing a decrease in supply. At this time, the system will incentivize DOCT owners to convert their tokens into ANCT at favorable exchange rates. If equilibrium is still not met, ANCT will be airdropped to holders until its price returns to the value of the MMU.