Decentral Bank’s decentralized autonomous organization (DAO) issued its native stablecoin called $USN on Near Protocol, a scalable Layer 1 blockchain.
As per the announcement made on April 25, users can ‘mint $USN using $NEAR’. Users can also swap between stablecoin USN and USDT on the multi-purpose DeFi platform, Ref Finance’s StableSwap.
USN is a decentralized stablecoin like TerraUSD (UST) and Frax Finance (FRAX), which are soft-pegged to the US dollar but don’t hold dollar cash reserves. The USN stablecoin can be minted by depositing in NEAR tokens (the native crypto asset of the Near blockchain) — as collateral.
USN can maintain its peg through on-chain arbitrage and a self-balancing ‘Reserve Fund’. $USN is one of the most successful ways to bootstrap liquidity in the NEAR ecosystem.
Note that its website informs that USN is a “semi-algorithmic” stablecoin that is supported by both NEAR and USDT but ensures that there will be no over-collateralization on the part of the user.
It wouldn’t be a surprise if USN is listed on every major decentralized finance (DeFi) platform and on centralized exchanges in the future. However, immediate integration will begin on NEAR and Aurora protocols, as per its road map.
The USN stablecoin will pay approximately 10% annual yield from Decentral Bank. This yield will come from Decentral DAO’s revenue from the native staking of NEAR tokens with security validators. As per its tweet, this staking process currently earns nearly 11% return.
The DAO further reveals that the USN yield will change depending on the NEAR staking percentage and the market value of the tokens. Initially, for the “first lenders,” it could likely add up to more than 20% APY through additional incentives. However, the USN yield will only commence after a DAO vote.
Additionally, the Decentral Bank DAO will have a few stability mechanisms to support USN’s dollar peg. The first is an arbitrage system to make sure that the USN stablecoin trades around one dollar worth of NEAR tokens.
The second is a “reserve fund” consisting of NEAR and USDT tokens owned by the DAO treasury. But what remains undecided is the amount that will be spent on this fund.
The token is issued in partnership with Proximity Labs, which is a contributor to the DAO.
In a similar instance, the founder of TRON, H.E. Justin Sun, announced the launch of USDD, a decentralized USD stablecoin in collaboration with other blockchain industry leaders.
