Faced with the risks of instability that could affect the USN stablecoin, the blockchain project NEAR Protocol (NEAR) announced the establishment of a $40 million protection plan who owes ensure that USN holders can exchange their tokens on a 1:1 basis for USDT.e (wrapped USDT).
The issuer of the USN stablecoin, Decentral Bank (DCB), in fact recently reported to NEAR Protocol that theUSN had become undersecured and therefore runs the risk of losing its parity with the US dollar (USDT in this case).
In response to a recent issue with USN, the @NEARFoundation is funding a protection program to safeguard USN holders.
More details below 👇https://t.co/NDMZUO2Wim
— Protocol CLOSE | Create Without Limits (@NEARProtocol) October 24, 2022
An issue due to an initial algorithmic version of the USN token (v1), which is no longer algorithmic since it was upgraded to v2 in June, which is susceptible to under-collateralisation in extreme market conditions.
NEAR has since called to stop issuing USN stablecoins, this $40 million fund is meant to allow holders of USN stablecoins to easily exchange them for USDT.
The NEAR blockchain protocol does not want the USN stablecoin to suffer the same misfortune as the UST of Terra (LUNA) stablecoin.
“Given the issues described above, the NEAR Foundation recommends that DCB shut down USN in an orderly manner. To facilitate this process, the NEAR Foundation awarded a $40 million grant to an affiliate of Aurora Labs, a major contributor to the NEAR ecosystem, to establish the USN Protection Program that is now online.
Refunds will begin once DCB has taken certain steps to ensure an orderly settlement. This program will be available for 1 year (until October 24, 2023). Eligible USN holders may choose to redeem their USN through the USN Protection Program or may redeem their USN through any other available route. We are confident that this action will best protect users and the broader NEAR ecosystem by funding the known collateral gap. “, reads the NEAR press release.
NEAR Protocol also wanted to remind that the problems encountered by the USN stablecoin do not have them no connection to its cryptocurrency NEAR which is currently trading around $2.90.
If the USN is clearly little known, the stablecoin market continues to develop actively, even the giant Tether recently launched its USDT stablecoin on the NEAR Protocol (NEAR) blockchain network, click here to read our article.
With nearly $68 billion worth of USDT tokens, Tether remains the market leader in stablecoins.
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