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USN shutdown: How to redeem holdings in NEAR Protocol’s ‘Terra-like’ stablecoin 

By Alara Jordan

Edited by Charlie Mellor

15:06, 25 October 2022

Digital render of stablecoin
The NEAR Foundation said it will wind down the USN project in a “controlled and responsible manner” – Photo: Shutterstock

NEAR Protocol’s native stablecoin USN will shut down due to risks of “undercollateralisation during extreme market conditions”, the NEAR Foundation has confirmed in a statement.

USN, which according to CoinMarketCap had a 24-hour trading volume of $9.5m at the time of writing, began to showcase risky behaviour similar to Terra’s stablecoin terrausd (UST), which subsequently collapsed in May and was rebranded terraclassicusd (USTC). 

NEAR to USD

The NEAR Foundation said: “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.”

$40m fund to protect users

NEAR confirmed that it would deploy a $40m fund through its USN Protection Programme in order to protect investors and token holders.

Decentral Bank (DCB), which launched the stablecoin in April, confirmed that minting of new USN had been permanently stopped.

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“USN has faced many headwinds over the last few months with increased regulatory focus and changes in market perception from recent high-profile incidents,” DCB said in a statement.

“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.”

In addition to USN, the NEAR Protocol also operates the native NEAR crypto token of which there are approximately 5.7 million NEAR in the DCB treasury, the NEAR Foundation said in its statement.

Redeeming USN tokens

As well as outlining the next steps for the stablecoin, DCB advised tokenholders to redeem their USN by applying to the USN Protection Programme, or to exchange their USN “via any other available route.”

NEAR added that USN holders will be subject to various checks including anti-money laundering and potential geographic restrictions in addition to their submission of the programme. It added that in order to prevent abuse of the protection programme only “legitimately minted USN in existence immediately prior to the time of this announcement will be eligible”.

DCB said: “The DCB team would like to apologise to the entire NEAR community for this regrettable event.

“The team has worked incredibly hard to self-rectify this issue but were unable to. We are grateful to the NEAR Foundation, Aurora and wider community for their support in best protecting our users.”

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