NEAR Protocol is doing away with its native protocol USN because of the risks of under-collateralization. As such, the Near Foundation has set aside $40 million to fund a USN Protection Programme.
USN is independently operated and run by the community, it has no direct financial assistance from the Near Foundation. The stablecoin was created and launched by Decentral Bank (DCB) in April. The DCB recently advised Near Foundation that USN had become undercollateralized, which is common with algorithmic stablecoins in extreme market conditions. It said there was double-minting of USN which in turn led to the under-collateralization of the stablecoin.
Near Foundation took the decision to wind down USN and encouraged DCB to do the same at the earliest opportunity in a responsible and professional manner that protects its users. In an effort to protect users and facilitate the winding down of USN, the Near Foundation decided to set aside $40 million. It believes this will be available through a grant for the creation of the USN Protection Programme. The Foundation knows that USN is now overcollateralized as there are approximately 5.7 million NEAR tokens in the DCB treasury. It will donate the amount to the Near community.
Marieke Flament, the chief executive officer of Near Foundation, outlined that the organization has been focusing on being transparent. It has been communicating with the community about what happened. Flament said Near Foundation is in a regulatory landscape where the crypto space has a bad reputation, thus it does anything which is stablecoin-related. Near Foundation is working through this and is putting its values of transparency and making sure that users are protected. The CEO is quite confident that as the ecosystem grows and matures, this type of intervention should not be required in the future.