TerraUSD’s (UST) nightmare will not be forgotten by its former investors, who lost over $ 30 billion equivalent last May. The stablecoin Luna Foundation, created by Do Kwon (now wanted by Interpol) is certainly the biggest crash in the cryptocurrency world to date and has left its mark.
For other cryptocurrency projects, many lessons to learn. And precisely, for the USN stablecoin, from the NEAR foundation, it is time for caution. His token will be gradually withdrawn, due to lack of guarantee.
The NEAR blockchain, which wants to compete with Ethereum, has been offering USN since April, a few weeks before the fall of TerraUSD (UST). It too is part of the controversial family of algorithmic stablecoins, which are not backed by an existing (and placed in a bank) fiat currency reserve, but by an IT protocol.
The regulation, for TerraUSD, was completely out of control after extraordinary movements occurred in trading volumes, particularly the cryptocurrency Terra (Luna), which also lost all of its value in record time.
Balance is no longer guaranteed
Gradually, the USN had learned the lessons from TerraUSD by moving from its algorithmic protocol to a more traditional protocol, with a reserve currency. It was supported by USDT, the largest stablecoin by volume in the cryptosphere. Things did not go as planned and the balance is no longer guaranteed today. For the NEAR foundation, the risks would therefore be significant for its token earning the equivalent of 1 USN = 1 USDT = 1 US dollar.
Decentral Bank, which operates the stablecoin, said in a statement: “The USN has faced many headwinds in recent months with an increased focus on regulation and changes in market perception following recent high-profile incidents. […] Because of these issues, we have made the difficult decision to end the USN project in a controlled and responsible way, in a way that ensures the protection of USN holders. ”
In his letter, they tried to reassure by explaining that accidents could only happen due to extreme market conditions – and the drop in the price of Bitcoin and the arrival of the bear marketthe volumes traded are not as high as those recorded between 2020 and 2021.
That said, NEAR has yet to release a $ 40 million fund to protect investors during this closing operation. The idea is not to fall into the same traps as TerraUSD and its founder Do Kwon, currently wanted by Interpol (appeared in red since September).
The arrest warrant for the developer behind TerraUSD, “To serve his sentence”Interpol explained, it is a “Dangerous precedent” for Hasseb Qureshi, of Dragonfly, a well-known investor in the world of the web3. Since the fall of Bitcoin, however, the problems for companies trying to compete with flagship blockchains have not been able to leave passive regulators. Celsius, a bankrupt cryptocurrency lender since June, had frozen withdrawals for its users. Another nightmare.
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