The stablecoin issuer USN for NEAR Protocol announced that it could no longer maintain the project because of the decline in the price of NEAR.
USN was introduced in April 2022 as a partly algorithmic stablecoin. However, the spectacular collapse of Terra's algorithmic UST stablecoin in May demonstrated the danger of similar projects becoming undercollateralized, which prompted Decentral Bank to make USN solely mintable against USDT deposits.
In spite of Decentral's efforts, USN's value fell to almost $0.98 in early July. After experiencing significant price declines starting in August, the stable token's collateralization was insufficient by around $40M.
Consequently, Decentral Bank, the DAO that created the Near-native USN stablecoin, announced on October 24 that USN would be shut down.
USD Protection Programme
Through the USN Protection Programme, which is funded by a grant from the Near Foundation, holders of USN can exchange their tokens for USDT.
“This collateral gap of $40m USD is fully covered by the USN Protection Programme,” Near Foundation said in a statement. “The NEAR Foundation is recommending that DCB wind down USN in an orderly manner.”
To redeem USN, users need to visit Aurora's website, connect a wallet containing USN, 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. The redemption program will run for an entire year.
Decentral Bank’s reserves hold 5.7M NEAR ($16.7M). According to Decentral, the NEAR tokens will be donated to the Near community.