NEAR Foundation Has Just Set Aside $40 Million for the Protection of $USN Holders
The collapse of stablecoins is becoming a major dread in the crypto-space; the NEAR foundation stablecoins (UST) is one of the worst hits. However, it is already taking measures to prevent another collapse.
In its Oct 24th announcement, the NEAR foundation described the process as a “USN protection programme” to create a 1:1 redeeming ratio for holders.
Marieke Flament, the NEAR Foundation Chief Executive Officer, during an interview, said:
“We are in a regulatory landscape where the crypto space has a bad reputation and so does anything stablecoin-related. It’s about working through this and putting our values of transparency and making sure users are protected.”
No More Under-Collateralization
Every stablecoin is collateralized, but an under-collaterized stablecoin puts it at risk of declining value against the dollar. The USN is an algorithmic stablecoin pegged to the dollar and backed by NEAR and USDT Fund.
As announced by Decentral Bank (DCB) on the 24th of October, the latest developments are a conscious attempt to eliminate the beguiling risk of under-collateralization of the USN Stablecoin. Recall that ever since the launch of USN Stablecoin in April, they’ve been a collateral gap of $10 million and an eventual shortfall of $21 million.
DCB attributed the key issues responsible for this decline to rapidly changing market perception due to recent incidents within the Crypto-space.
In their words:
“As a result of these issues, we have taken the difficult decision to wind down the USN project in a controlled and responsible manner in a way that ensures USN holders are protected.”
Obviously, the majority of fears emanating from the NEAR community sterns from massive LUNA crash that affected USDT.
DCB added $40 million to fill the gap and further reiterated that the move has no connection to or effect on the price of its indigenous token (NEAR) because NEAR was designed to operate independently of any hardcore burn or USN mint relationship. In a statement, they said:
“As a result of these issues, we have taken the difficult decision to wind down the USN project in a controlled and responsible manner in a way that ensures USN holders are protected.”
Although top security firms like peckShield recently, in one of its tweets, notified the public of the sudden decline in the TVL of NEAR from $247M to $140M due to the DCB liquidity withdrawal from Ref Finance’s $USN pool.
However, via its Twitter post on 25th October, Ref finance reassured the community.
In their words:
“TLDR; $USN remains safely redeemable 1-1 for $USDT. Farm rewards remain available through November permitting holders to make adequate market choices.”
But is DCB Really Right About Near Token Been Unaffected?
Despite the significant collateral decline within the NEAR ecosystem, the native token seems to be doing just fine; it currently has a 2- 2.3% up rate with a spot price of $2.98.
Although it’s not isolated from the general bearish trend that has affected other cryptocurrencies, it is currently down by 85% after a decline from the $20.44 ATH in January.
