Near Protocol launches algorithmic stablecoin USN

The Near Protocol developers have launched an algorithmic stablecoin, USN, pegged to the US dollar and backed by the native NEAR token. It will be governed by the Decentral Bank DAO.

Meet $USN, the first NEAR-native stablecoin by Decentral Bank!

Starting today, users can mint $USN using $NEAR through the NEAR web wallet (https://t.co/Kc7Tr4M7B8). Users can also swap between $USN and $USDT on @finance_ref‘s StableSwap. pic.twitter.com/ZacQNGaTOV

— Decentral Bank (@DcntrlBank) April 25, 2022

The peg will also be backed by a reserve fund consisting of NEAR and USDT. Its size will be determined in due course.

Users can swap USN for USDT on Ref Finance.

Rumours of the token’s forthcoming launch appeared on April 4. At the time, a user spotted in the Ref Finance protocol interface a mention of a token with the corresponding ticker.

USN is, in its mechanism, similar to TerraUSD (UST), Frax Finance (FRAX), USDB and USDD.

The stablecoin is intended to attract additional liquidity for DeFi projects operating in the ecosystem, such as Ref Finance, Burrow, Aurigami and Bastion.

Proceeds from NEAR staking into the Decentral Bank Reserve Fund will underpin a minimum annual yield for USN holders. Currently, it stands at around 11% per year.

🏦What is Decentral Bank?

DAO managing the $USN Reserve Fund & main smart contract operations. The DAO can vote to stake $NEAR from the Reserve Fund, meaning $USN will automatically generate yield based on NEAR staking rewards. Thus, minimum $USN yield = NEAR staking APY (~11%).

— Decentral Bank (@DcntrlBank) April 25, 2022

APY may vary depending on issue size and Reserve Fund. Early participants are likely to see 20% APY or more. The yield growth will be delivered by monthly payouts from lending protocols in the ecosystem after a vote by the DAO members.

🤔 $USN yield?

With the DAO vote, $10m+ in rewards will be distributed monthly via lending protocols such as @burrowcash @aurigami_PLY @BastionProtocol. Though APY can change depending on circulating supply & Reserve Fund size, the first lenders will likely receive 20%+ APY

— Decentral Bank (@DcntrlBank) April 25, 2022

NEAR’s price rose about 8% in the last 24 hours, according to CoinGecko. It ranks as the third-best performer in the top-20 after Dogecoin (+29.1%) and Terra (+8.4%).

Earlier, in March 2021, Do Kwon accepted a $11m challenge from users who doubted the stability of the price of LUNA, which backs UST.

By mid-April, the Luna Foundation Guard’s reserves backing UST stood at $2.44 billion, of which 70% was Bitcoin. The remainder consisted of USDT, USDC and LUNA.

Earlier, UST surpassed Binance USD in market capitalisation.

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