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Finally a stable coin that’s actually stable: Daniel Popa on Anchor Coin

Anchor stable coin

One of the fundamental problems with cryptocurrencies is not security or the lack of awareness but the fear of uncertainty. Cryptocurrencies have had a rough history sticking to stable growth.

It may be the case where bitcoin tainted the reputation of cryptocurrencies by being highly volatile.

But all of that chatter seems to be getting dusted under the rug with the advent of stablecoins. A stablecoins is known as a cryptocurrency that has a mechanism to keep it aligned to its value peg, which can range from stable to volatile. The mechanism is either backing/collateral, guaranteeing liquidity to holders, or algorithmic that keeps the stablecoin pegged by programatically regulating the supply of currency to keep the price aligned to the peg.

Anchor utilizes the seigniorage shares model, meaning that it is not collateralized by any other currency or commodity, and relies on algorithmic control of supply to keep it aligned to its value peg. In addition to this, Anchor has created a non-volatile peg, the Monetary Measurement Unit (MMU), which ensures that the volatility of the value peg, an issue with other stablecoins pegged to fiat, crypto, and commodities, does not destabilize the pegged currency. By contrast, crypto-collateralized stablecoins are subject to the same volatility as their crypto counterparts, and fiat-collateralized stablecoins will inevitably suffer the same inflation as their fiat counterparts. Stablecoins pegged to commodities and other assets are similarly difficult to predict and adjust for various market impacts.

What is Anchor Stablecoin?

Anchor is a stablecoin developed by the swiss company Anchor AG, which is unique in comparison with other stablecoins. Unlike most other stablecoins, Anchor is pegged to the sustainable and predictable growth trend of the global economy.

In the words of its founder, Daniel Popa, “Anchor is a stable platform for any crypto or traditional currency to peg its value to and to be a cornerstone for price stability as a global currency and financial standard. Anchor’s core mission is to be a driver of global economic stability.”

Putting things into perspective, consider Anchor as a global currency. Since 1960, the global GDP grew from $1.3 trillion to $80.7 trillion and is still growing. Based on this historical data, we know that global GDP has steadily grown at an average annual rate of 2.5% for the past 25 years, enabling Anchor to provide a single financial index that can be relied on, irrespective of inflation or other market impacts.




The Nuts and Bolts of how Anchor Stablecoin works

Daniel Popa interview

Anchor pegs its value to the growth of the global economy via the MMU. As Daniel Popa puts it, “The Anchor stablecoin is an algorithmic stablecoin with a two-token mechanism. We have created this platform that is pegged to the global growth of the economy via a non-flationary, financial index known as the Monetary Measurement Unit (MMU). The price of Anchor (ANCT) is determined by various algorithms that create this index, taking into account numerous macroeconomic indicators from more than 190 countries to create the most accurate measure of value that exists in the world today.”

Daniel explains that the Anchor team created the MMU by reviewing and understanding the factors impacting global GDP. He says, “So, we are looking at the GDP of 190 countries. Data that comes from valid, trusted sources like the IMF, World Bank, and Bloomberg. We have created this unit that actually gives us the growth of the global economy. We can go back 25 years using mathematical modeling, and see that the MMU stays consistent.




Why go back to 1994? Because before 1994 the Communist Bloc did not report to the IMF, World Bank, and so forth. Due to global geo-political shifts, countries in this region started reporting GDP in1994. So now, we can go back for the last 25 years and see that the global economy is growing, growing and growing.”

As an alternative to fiat-pegged stablecoins, Anchor is not subject to the inflation inevitably suffered by fiat counterparts like the US dollar, Euro, or Chinese yuan. By contrast, Anchor offers token users long-term price stability, preservation of purchasing power, and protection against inflation, while hedging market volatility.

On asked about how different they are compared to the other stablecoins, Popa says, “The difference in what we (Anchor) are doing and what other stablecoins are doing is that many peg themselves to crypto assets, fiat currencies, or commodities, none of which are in and of themselves stable value pegs. By contrast, Anchor is pegged to an index that maintains stability and predictability over the long run.  

We choose stability because we created this unit very similar to the index of the IMF, which they call the SDR (Special Drawing Rights), a unit of account for the IMF.”

As is the case, there happens to be a lot of buzz about cryptocurrencies, especially stablecoins on how they deem to survive recessions or hits as such.

When asked about how Anchor can survive such recessions, Daniel says that since Anchor is pegged to the growth of the global economy, not to the economy of individual countries, even in the case of a recession, Anchor will continue to appreciate in value over the long-term.

He adds that the impact of recessions such as the Financial Crisis of 2008 would be at a range of just 1% on the Anchor coin.

“Anchor’s two-token system allows for automatic adjustments for price changes by incentivizing token holders to take their coins out of the market or inject them into the market to address dips and rises in value above or below the MMU.”

When asked for an example of how Anchor can support individuals facing real-world situations, Popa says that if, for instance, a house is bought for $70k and the market crashes, it does not lose its value because, at the time of purchase, the value is pegged to the MMU of the Anchor coin. This MMU value is readjusted every day based on real-world data inputs.

Daniel explains this further: “So, in theory, we wouldn’t need to go sell the property to cover anything because the market should take care of the whole thing throughout the recession period, as we are looking at one number only and not what the market is doing. The system is looking at what the market is doing. We trust the Anchor system because data from the past 25 years demonstrates that our model would react positively to recessions and other market events, which is why we can promise value retention and appreciation over the long-term. 

We believe that the MMU we created is healthy enough mathematically to resist inflation and weather market crashes. Our system is further backed by several pillars that we are relying upon to stabilize and make sure there is liquidity always.”




Investments and the Future of Anchor coin

Anchor Coin logo

Anchor started in 2018 and thought of going for a casual ICO, but shifting regulations led the team to decide on a traditional equity raise instead. Anchor is currently preparing for its first fundraising round, offering equity in the company in exchange for financing that will be used for further development of the Anchor system and products powered by it.

Popa says that Anchor is now listed on two cryptocurrency exchanges, IDEX and Liquid Exchange. By planning on listing on new exchanges in 2020, he says that they are now ready with all the financial data to start conversations with investors.

On questioned about whether they are to approach any banking or financial companies for possible collaboration, Daniel says that “We are open to that idea, especially given that we will have twenty-one validator slots and so are looking for the financial institutions to fill some of those roles.” These validators will be a core component in Anchor’s governance model, responsible for overseeing the decentralized consensus over the value of the MMU, the token price, token volume, and other processes.




Wrapping it up:

With a revolutionary concept for a stable and predictable global financial index, Anchor is on a mission to establish the mainstream use of a cryptocurrency without the fear of loss of value through inflation, volatility, and other detrimental market events.




IMPORTANT DISCLAIMER

Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.

We do not endorse or guarantee the accuracy of the information and claims made.

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