The Near Foundation has called for the demise of the USN stablecoin and revealed that it would allocate $40 million to a “USN Protection Programme.” USN is a Near-native stablecoin that was designed and launched by Decentral Bank (DCB) in April.
In light of recent market volatility, DCB reportedly approached the Near Foundation to inform them that USN had become undercollateralized, a risk “inherent” to algorithmic stablecoins. The DCB allegedly verified to the foundation that the double-minting of the USN contributed to the under-collateralization.
The Near Foundation suggests that the USN should discontinue operations. According to Near, the Foundation strongly recommends that DCB take this action as soon as possible reasonably and professionally that safeguards all of its users.
According to the announcement, the Near Foundation has decided to put aside $40 million to ensure user safety and help DCB wind down USN.
With the USN Protection Programme, Near Foundation understands that USN is now overcollateralized, as there is also approximately 5.7 million NEAR tokens in the DCB treasury, which the foundation expects DCB to donate to the Near community.
When asked about the regulatory climate, Flament said, “We are in a regulatory environment where the crypto sector has a terrible image, and so does everything stablecoin-related.” It is important to put the ideas of openness and user protection first and “work through this.”
Flament has said that he thinks this kind of help will no longer be needed as the ecosystem grows and new recruits are made. Flament said,
As an ecosystem we can learn from this and prevent it in the future.
