NEAR Protocol's USN Stablecoin Ceases Operations Permanently

The issuer of the USN stablecoin for NEAR Protocol has announced it will cease operations permanently due to the declining value of NEAR.

On the evening of October 24, Decentral Bank, the issuer of the USN stablecoin on NEAR Protocol, unexpectedly announced the permanent shutdown of the project.

As reported by Coin68, USN launched in mid-April 2022, during the peak of the algorithmic stablecoin frenzy with the LUNA-UST model and a UST savings rate of up to 20% per year on Anchor. NEAR’s price surged at that time, fueled by news of an upcoming algorithmic stablecoin that could attract additional liquidity.

At launch, USN was an algorithmic stablecoin backed by NEAR, offering an annual interest rate of 10%. However, following the collapse of LUNA-UST, Decentral Bank announced in June 2022 that it would no longer back USN with NEAR due to concerns over potential devaluation of the cryptocurrency, which could affect USN’s ability to maintain its $1 peg. Since then, the stablecoin was backed by USDT.

Despite this, the remaining 5.7 million NEAR in the USN reserve fund continued to depreciate, leading to a gap of $21 million between the NEAR held and the USN issued.

NEAR/USDT 2D Chart on Binance at 12:10 AM, October 25, 2022

Due to these issues, combined with regulatory impacts on algorithmic stablecoins and the total supply of USN surging to 10 trillion, Decentral Bank has decided to shut down the project. As of the shutdown, the status of USN is as follows:

• Circulating Supply: Approximately 40 million USN locked on Ref.finance will be destroyed by Decentral Bank.
• Backing Assets: 38.9 million USDT and 5.7 million NEAR (worth $16.75 million at the time of update).

For now, Decentral Bank will continue operations normally but will disable the minting mechanism for USN. The closure process will be gradual until all USN is redeemed for USDT for users.

Decentral Bank has informed the NEAR Foundation of the situation, which has agreed to allocate 40 million USDT to allow NEAR holders to convert USN back to USDT. This initiative, called the "USD Protection Programme," is being coordinated with Aurora.

To convert USN, users need to visit the Aurora website, connect their wallets containing USN, complete KYC, and exchange the stablecoin for USDT. Alternatively, users can swap USN for USDT directly on Decentral Bank or Ref.finance.

Steps for Converting USN Back to USDT via the USD Protection Programme

Meanwhile, the stablecoin battle continues amid the downtrend with new entrants emerging despite the collapse of the LUNA-UST model in May. New stablecoins launched this year include TRON's USDD, Aave's GHO, and Coin98's CUSD. Additionally, Curve is rumored to be developing a stablecoin, while Binance has made headlines by consolidating all stablecoin balances, except USDT, into BUSD, its own stablecoin, and expanding BUSD across new blockchain ecosystems.