USN, Near Protocol’s in-house stablecoin, recently encountered under-collateral issues, prompting the Near Foundation to recommend the closure of USN to prevent Terra (LUNA)-like scenarios and the collapse of UST. To support this move, the Near Foundation opened a fund. $40 million to protect investors and help them withdraw money from USN with the same amount of Tether wrap.
On Oct. 24, Near Foundation revealed that it had set up a $40 million fund that will allow USN holders to exchange USN tokens 1:1 with USDT.e. The program was launched after Decentral Bank ( DCB), the issuer of NEAR-native stablecoin USN, has expressed concerns about stablecoin depegging as its algorithm fails.
“The NEAR Foundation recommends that DCB close USN and to help with this process, the NEAR Foundation has provided a $40 million grant to the Aurora Labs subsidiary, one of the most prominent contributors to the NEAR ecosystem, to Established the USN Protection Program.”
This grant will be made available to an affiliate of Aurora Labs and will allow users to instantly exchange depegged Stablecoin tokens. According to DCB, the USN token is no longer algorithmic. And after the initial algorithm version of USN (v1) was upgraded to v2, the stablecoin was “susceptible to inaccuracies in extreme market conditions.”
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