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Decentral Bank pauses use of NEAR tokens for minting USN stablecoin

Quick Take

  • Decentral Bank DAO has temporarily paused the use of NEAR tokens for the minting of USN.
  • The DAO announced its USN stablecoin will only be minted with Tether (USDT).

Decentral Bank, a decentralized autonomous organization (DAO), working on the USN stablecoin, stated it has temporarily paused allowing the use of NEAR tokens in the minting process of USN, a pivot away from its original design. The DAO cited shaky crypto market conditions for its decision.

The developers of USN stablecoin, announced version 2 (v2.0) update of their project on Thursday. USN is a decentralized stablecoin soft-pegged to the US dollar and exists on Near Protocol, a scalable Layer 1 blockchain

USN was originally built similarly to TerraUSD (UST), the stablecoin that collapsed and brought down its sister token Luna (LUNA) with it. After UST collapsed, it led to concerns that stablecoins built in the same way would suffer similar fates.

From Thursday, the stablecoin will exclusively be minted with USD Tether (USDT), the largest centralized stablecoin issued by Tether. This means that USN will be 1:1 collateralized and redeemed with USDT, rather than NEAR, the native token of the Near Protocol blockchain as originally decided.

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Furthermore, the DAO said it is planning to use a basket of market-leading stablecoins as its underlying collateral, including USDT, USDC and DAI. The team claimed that this strategy will make the stablecoin more resilient in current market scenario.

"We concluded that given the uncertainty around how long this bear market will last and the selling pressure induced by tightening macro conditions, the v1.0 could, potentially, pose a risk that $USN could become undercollateralized from sustained volatility of the NEAR price," Decentral Bank DAO said in a media statement.


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About Author

Vishal Chawla is The Block’s crypto ecosystems editor and has spent over six years covering tech protocols, cybersecurity, artificial intelligence and cloud computing. Vishal likes to delve deep into blockchain intricacies to ensure readers are well-informed about the continuously evolving crypto landscape. He is also a staunch advocate for rigorous security practices in the space. Before joining The Block, Vishal held positions at IDG ComputerWorld, CIO, and Crypto Briefing. He can be reached on Twitter at @vishal4c and via email at [email protected]