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What Role Did the “Anchor Protocol” Savings Rate Play in the Initial Confidence and Eventual Panic Surrounding Terra/Luna?

Anchor's high, "safe" yield created massive confidence, but its unsustainability fueled the subsequent panic and bank run.
Greeks.Live21.11.25

What Role Did the “Anchor Protocol” Savings Rate Play in the Initial Confidence and Eventual Panic Surrounding Terra/Luna?

The Anchor Protocol offered a high, stable yield (around 20%) on UST deposits, which created immense demand for the stablecoin. This high yield, perceived as a safe return, was the primary psychological driver for adoption and fostered deep confidence in the Terra ecosystem's stability.

However, this yield was artificially subsidized. When market turmoil caused UST to de-peg slightly, investors rushed to withdraw their funds from Anchor, realizing the yield was not sustainable.

The rush to exit the system's main pillar of confidence turned into a full-blown panic.

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