Anchor Overview: Why Is It a Safe Harbor for Your Holdings
New cryptocurrencies appear on a daily basis. Many of them have amazing ideas and promise outrageous results. However, most of them don’t come through. So, how is Anchor different from those, and why is it worth investing in?
In this day and age, having a lot of money is no guarantee of financial safety in the future. After all, money is losing value at an incredible pace due to the ever-going rate of inflation.
Even those that aren’t experts in the field of the economy are aware of the fact that inflation is a really big factor in the everyday life of fiat currencies. When you discuss something as simple as box office success, you have to adjust the amounts for the rate of inflation in the past years. Even a movie as young as Avatar have box office numbers that had their value changed by as much as 16% from the moment they were released. And, if you look a bit further into the past, you can see that a dollar (one of the strongest currencies in the world) has lost over half of its value in the past 30 years.
So if you have a considerable amount of money, you would do well to make sure to find a safe way to keep it.
For that very simple reason, we have created a new stablecoin that will help you keep your holdings safe in the long run.
What is Anchor
Anchor is a new, dual-token blockchain-based cryptocurrency built on Stellar with an optional outlet towards ETH-20. It is a stable currency pegged to the value of the global economy rather than to the value of any single fiat currency.
Unlike many others, it is a cryptocurrency that you can’t mine, and that can’t be manipulated internally or externally, with a complex governance model that acts as a security layer against machinations.
And finally, it is a stable currency that can act as a financial standard for all other currencies.
What Does Anchor Do
Anchor offers a unique opportunity to invest in a new cryptocurrency that has the potential to resolve most of the problems that plague the world’s economy and most of the other cryptocurrencies. Namely, Anchor is here to fix the stability issue that almost every other currency in the world is facing right now. With the dual-token mechanism, Anchor represents the ideal opportunity for investors and traders to truly protect their holdings.
And, as promising as the world of cryptocurrencies is, we know that stability is definitely in high demand. After all, we have seen one coin tumble after another. That is why Anchor plans to become the first coin ever that offers almost no volatility whatsoever. We even have systems specifically designed to prevent pump and dump strategies that have destroyed other similar projects in the past.
If you’d like to know why exactly pump and dump won’t work with Anchor, check out this article.
How Does Anchor Work
Anchor is designed to work on two platforms, Ethereum and Stellar. Core business logic of the system is built on Stellar network while there is ERC20 token on Ethereum to ease enrolment of new users to the platform since Ethereum has a much stronger community. With this fact in mind, Anchor also provides the possibility to transfer ERC20 tokens from Ethereum to Stellar network or to buy ANCH for ETH or BTC directly.
The system itself is a two-token one, where the Anchor is the utility token, and the Dock is the internal, stabilization mechanism token. This system will react to any changes in the value of Anchor on the market with a contraction, or an expansion phase, that will stabilize the currency to its desired value peg.
What is The Monetary Measurement Unit (MMU)
In the simplest terms, the MMU is the formula we use to determine the value of the global economy. The system will use a proprietary algorithm to go through macroeconomic indicators on a global scale to create a numerical index it can use to peg all existing currencies to. And that includes the Anchor.
To create this peg, our algorithm uses two key elements – the FX indicator, and the MMU premium. The FX indicator indexes the currencies of the 20 biggest participants in the world economy. In fact, the indicator only uses currencies of the countries that partake in the world economy with at least 1%. From there, the FX indicator uses the exchange rates of the international market to enable the nominal expression of the MMU.
This part of the system was created to mimic and improve the IMF’s SDR. For comparison, the IMF (International Monetary Fund) is basing all of its calculations for the SDR on the values of top five currencies that aren’t even picked based on their real part in the global economy, but are rather politically chosen.
Anchor is offering a stable peg of value that will be expressed primarily in US dollars and that takes politics out of the equation completely.
The second element in our MMU is the Premium. The MMU Premium calculates the amount of growth that can be expected based on sovereign bond yields of countries we have chosen to invest in and the average inflation rates. This Premium is about 0.4% on a yearly basis. That represents a steady growth that can outpace the rate of inflation, growth that can be securely maintained in the years, or even decades to come.
The Anchor Safety Net
One thing a business can never go overboard with is safety. In order to avoid the mistakes other stablecoins are paying for dearly now, we have taken all of their cases into account, and created an array of safety mechanisms.
We have created a concept of a Safety Net in order to keep the value of Anchor at a consistent and stable level. That net rests on 6 safety pillars:
The Global Economy
The first pillar is directly connected to the MMU algorithm. Thanks to the abundance of studies on that matter, we can base the MMU on the stable and predictable growth of the global economy.
The Daily Adjustments
The FX indicator allows our algorithm to adjust the MMU regularly with pertinent data extracted from reliable sources.
A part of the capital that is successfully raised and placed into the system is to be invested into a variety of stable assets such as government debt in order to boost the stability of the Anchor project.
The Investment Pillar will help the Anchor project to acquire treasury bonds and assets that will generate interest. As the system receives the interest, it can reinvest it and acquire new assets without minting new Anchor Tokens. That process acts as a safeguard against inflation and devaluation.
The validated formula allows the system to combat the inflation by re-adjusting the value and keeping the price of the Anchor at a stable level.
The Two-Token Model
The Anchor project uses two tokens to prevent value fluctuation. The Anchor, which is tradeable, and the Dock token that is there to serve as a buffer against fluctuation. The system will manage the value of the token through the use of the stabilization mechanism that includes the Contraction Phase and the Expansion Phase. And, those two phases will allow Anchor to enhance the value of the holders’ investments, at the same time, making sure that the value of our stablecoin remains the same.
Our main vision is to become a financial standard that shifts the current economic paradigm towards a stable and sustainable global economic ecosystem.
Our entire system is made to enable us to bring that goal to fruition.