Overview

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Anchor Protocol’s market-beating UST deposit returns attracted yield-chasing investors, as total value locked (TVL) on the protocol rose to more than $17bn by early May 2025, data from Anchor Protocol (ANC) returned to its bullish form this May after plunging by over 70% in the previous two months. ANC’s price rebounded by a little over 42.50% between 7 de sept. de 2025 Anchor’s own recommended LTV is at 45%, leaving you some breathing room with the max LTV at 60%. Your LTV is the first line of defense against liquidations. Anchor Protocol (ANC) volvió a su rumbo alcista este mes de mayo, luego de haberse desplomado más de un 70% en los dos meses anteriores. El precio de ANC As I explained, with the increase in deposits relative to loans, interest rates in the system fell sharply, making the system very vulnerable to capital outflows. In the future

Why Anchor Protocol Remains Vulnerable to Another Sell-Off

Despite a recent resurgence, Anchor Protocol (ANC) remains susceptible to another significant sell-off, echoing the market volatility experienced in the past. While Anchor Protocol (ANC) volvió a su rumbo alcista este mes de mayo, luego de haberse desplomado más de un 70% en los dos meses anteriores. El precio de ANC rebounded by a little over 42.50% between 7 de sept. de 2025, fundamental vulnerabilities persist, making it crucial for investors to understand the risks.

The Lure of High Yields and the Subsequent TVL Spike

Anchor Protocol\'s primary draw was its exceptionally high UST deposit returns. Anchor Protocol’s market-beating UST deposit returns attracted yield-chasing investors, as total value locked (TVL) on the protocol rose to more than $17bn by early May 2025, data from Anchor Protocol (ANC). This rapid growth in TVL, while seemingly positive, masked underlying structural issues.

The Achilles\' Heel: Loan to Deposit Ratio and Interest Rate Sensitivity

The core problem lies in the protocol\'s dependence on maintaining a healthy loan-to-deposit ratio. As I explained, with the increase in deposits relative to loans, interest rates in the system fell sharply, making the system very vulnerable to capital outflows. In the future, this imbalance makes Anchor incredibly sensitive to shifts in market sentiment. When deposits significantly outweigh loans, interest rates plummet, diminishing the incentive to keep UST locked within the protocol.

Liquidation Risks: The Importance of Monitoring LTV

Furthermore, the liquidation process can exacerbate sell-off events. Understanding your Loan-to-Value (LTV) ratio is paramount. Anchor’s own recommended LTV is at 45%, leaving you some breathing room with the max LTV at 60%. Your LTV is the first line of defense against liquidations. Falling below the recommended LTV can trigger liquidations, further depressing the price of ANC and UST, and initiating a cascading sell-off.

Conclusion: Proceed with Caution

While Anchor Protocol has demonstrated resilience, the inherent vulnerabilities related to its loan-to-deposit ratio and reliance on yield-chasing investors remain a significant concern. Monitoring LTV ratios and understanding the potential for capital outflows are critical for investors to mitigate risks and avoid being caught in another potentially devastating sell-off.

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