Near Foundation spends $40 million to replace USN stablecoin's 'collateral gap'

Quick Take

  • Near Foundation announced a fund to replenish a $40 million collateral deficit found in USN stablecoin.
  • Decentral Bank, the developer of USN, said the team will be gradually winding down the stablecoin.

Near Foundation has announced a $40 million grant toward replenishing a deficit found in collateral reserves for USN, a decentralized stablecoin on the Near Protocol blockchain that had become undercollateralized earlier this year.

After being approached by USN’s developer Decentral Bank (DCB), Near foundation, the organization leading the Near blockchain, agreed to replenish the collateral deficit, the foundation said in a statement on Monday. This has been made available via a grant called the “USN Protection Programme.”

The Near Foundation said the allocated grant fund will replenish the gap of $40 million in the total collateral funds backing USN’s value. The foundation had recommended that Decentral Bank should retire the stablecoin.

"In order to safeguard users and to facilitate the orderly winding down of USN by DCB, the Near Foundation has elected to set aside $40m in fiat (equal to the known collateral gap as described above), to be made available via a grant for the creation of a USN Protection Programme," it said.

In response, Decentral Bank stated in a blog post that it will be "gradually winding down" the USN stablecoin even though it has been recollaterized. The team added it has disabled new USN minting, and asked USN holders to redeem their funds. 

What is USN?

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