USN had been inadequately collateralized as per the NEAR Foundation.
NEAR Protocol’s USN was an algorithmic stablecoin at launch but later switched.
After exhibiting violent behaviors similar to those seen with TerraUSD, a cryptocurrency that dramatically crashed this year and cost investors billions of dollars, the NEAR Protocol stablecoin is being shut down.
NEAR, a blockchain that competes with Ethereum, is widely used to create decentralized applications (dapps) and NFTs. The DAO Decentralized Bank released its own stablecoin (USN) in April.
Controlled and Responsible Manner
Yet the NEAR Foundation, a nonprofit that promotes blockchain technology, said on Monday that USN had been inadequately collateralized. It suggests the token’s backing is insufficient. Because of this, the NEAR Foundation said, the token will be discontinued. It was later that day that firm made official the news that it will be closing down the USN project.
According to a statement released by Foundation:
“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.”
Stablecoins, digital assets often backed by real-world assets like the US dollar or other fiat currency reserves, are widely regarded as the backbone of the crypto economy. One of the largest blockchains, Terra, which had a market valuation of over $30 billion, entirely crashed in May, so authorities have been keeping a careful check on them.
There was a lot of loss for investors, and policymakers have often used the Terra project’s demise as an example of why the cryptocurrency industry needs regulation. When it was started, NEAR Protocol’s USN was likewise an algorithmic stablecoin, but it has since switched to being backed by USDT tokens, the biggest stablecoin on the cryptocurrency market.