NEAR’S USN Stablecoin Will Stop Working Due to Insufficient Collateral

The NEAR Foundation has issued a notice stating that the NEAR stablecoin USN issued by Decentral Bank (DCB) is not fully collateralized under extreme market conditions and the NEAR Foundation recommends that DCB cease operations of this stablecoin permanently.

On the evening of October 24, Decentral Bank, the issuer of stablecoin USN on NEAR Protocol, suddenly announced to stop the project permanently.

Decentral Bank said that it had informed the NEAR Foundation and was approved by the NEAR Protocol management organization to spend 40 million USDT for NEAR holders to convert USN back to USDT. This campaign of the NEAR Foundation is called “USD Protection Program”, implemented in collaboration with Aurora.

To redeem, users need to visit Aurora’s website, connect a wallet containing this stablecoin, complete KYC and exchange the stablecoin back to USDT. In addition, users can also swap USN directly back to USDT on Decentral Bank or Ref.finance.

USN was launched in mid-April 2022, when the algorithmic stablecoin “craze” peaked with the LUNA-UST model and the interest rate on UST deposits up to 20%/year on Anchor. The price of NEAR at that time surged thanks to the news that the ecosystem was about to welcome an algorithmic stablecoin that could attract more liquidity.

It is an algorithmic stablecoin backed by NEAR, but only offers an annual interest rate of 10%/year. However, after the collapse of LUNA-UST, Decentral Bank in June 2022 announced to stop securitizing USN with NEAR due to concerns that the cryptocurrency would slip, affecting the stablecoin’s ability to maintain the peg. The stablecoin has since been backed by USDT.

However, the price of NEAR continued to fall, causing the difference between NEAR holding and USN issued to now reach 21 million USD.

Meanwhile, the stablecoin war in the middle of the downtrend continues with the emergence of many new players, despite the collapse of the LUNA-UST model in May. New stablecoins appearing this year include USDD of TRON, Aave’s GHO and Coin98’s CUSD.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Website: coincu.com

Foxy

CoinCu News