The NEAR Foundation’s USN stablecoin project will cease operations due to multiple risks, including insufficient collateral.
In response to a recent issue with USN, the @NEARFoundation is funding a protection Programme to safeguard USN holders.
More details below 👇https://t.co/NDMZUO2Wim
— NEAR Protocol | Create Without Limits (@NEARProtocol) October 24, 2022
The launch of the “stablecoin” from a platform competing with Ethereum, took place in April. The operator of the crypto asset was the decentralized autonomous organization Decentral Bank.
Initially, the stablecoin’s price was supported by arbitrage operations and a reserve fund of NEAR and USDT. The launch of USN coincided with an unfavorable market environment, notably with the collapse of the Terra ecosystem.
According to a statement by the NEAR Foundation, the asset has recently become undercollateralized.
«Decentral Bank confirmed that this happened due to the originally algorithmic version of USN (v1). After the June upgrade to the second version, it ceased to be algorithmic, but remained exposed to the risk of undercollateralization under extreme market conditions», — the nonprofit organization’s blog said.
Later, Decentral Bank also published a post about the “gradual winding down of the project”.
A Message to the Community: $USN Wind-down
TLDR; $USN is gradually winding down. The contract will be accessible indefinitely, with only minting disabled. $USN is safely redeemable 1:1 for $USDT through a $40M Protection Program.
Full statement: https://t.co/bnCCFqdzZm
— Decentral Bank (@DcntrlBank) October 24, 2022
Under the USN Protection Programme, $40 million has been allocated, enabling users to swap NEAR’s stablecoin for USDT and other assets over the course of a year.
«Over the past several months, USN has faced a number of obstacles amid heightened regulatory scrutiny and shifts in market perception due to recent high-profile incidents,» said representatives of Decentral Bank.
The chart below illustrates the relative stability of the stablecoin since its launch.
Earlier, in September, NEAR Foundation launched a fund of $100 million focused on Web3.
In the same month, Tether Operations Limited issued the USDT stablecoin on the NEAR network.
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