Near Foundation$40 million fund to bail out USN investors in the event of a crash founded. So what is behind the establishment of this fund? Here are the details.
The fund was launched after Decentral Bank, the issuer of NEAR’s stablecoin USN, had concerns about stablecoin depegging due to the algorithmic issue.
Koinfinans.com As we reported, the Near Protocol’s native stablecoin, USN, has recently become unsecured. A similar situation occurred with the Terra (LUNA) and UST collapses. As a result, the company tried to prevent it.
The organization supported the shutdown of the USN to prevent a similar collapse. To support investors, investors have launched a $40 million fund to assist in the withdrawal of equal amounts of wrapped Tether (USDT.e).
Appropriate USN holders will have the opportunity to use 1:1 with USDT.e.
In response to a recent issue with USN, the @NEARFoundation is funding a protection Program to safeguard USN holders.
More details below 👇https://t.co/NDMZUO2Wim
— NEAR Protocol | Create Without Limits (@NEARProtocol) October 24, 2022
NEAR Foundation Takes Precautions
On another note, the USN Conservation Program NEAR token It aims to close the $40 million collateral gap, which it confirms is unrelated to its price. Taking proactive measures to protect investors from a possible collapse, Near noted:
“The NEAR Foundation has recommended that DCB shut down the USN on an orderly basis. To assist this process, it provided a $40 million grant to a subsidiary of Aurora Labs, one of the foremost contributors to the NEAR ecosystem, to establish the USN Conservation Program.”
It was announced that the grant was made available to an Aurora Labs subsidiary. The grant will help users exchange their depegged stablecoin tokens. However, redemptions will only begin after DCB initiates the shutdown process.
According to DCB, after the initial algorithmic version of USN (v1) was upgraded to v2, USN tokens were no longer algorithmic. This made the stablecoin “sensitive to under-collateralization in extreme market conditions”.
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