NEAR Foundation Announces $40 Million Endowment Fund!
The NEAR Foundation is taking steps to help USN holders avert another stablecoin collapse and a cryptopandemic. On October 24, the platform stated that it has set aside $40 million for a grant to the “USN Protection Program.”
By guaranteeing that users and holders of USN can redeem stablecoin at a 1:1 ratio with USDT.e, the fund aims to protect them. The move comes after the Decentral Bank (DCB) made a separate announcement on October 24 that it was discontinuing the independent stablecoin, USN, which was built on the NEAR blockchain.
Stablecoin with insufficient security is discarded
USN is a fixed algorithmic stable coin backed by a reserve fund that includes NEAR and USDT. Surprisingly, USN has maintained its position, falling only slightly in recent days.
The risk of undersecurity materialized in the first half of 2022, according to DCB, which launched the stablecoin in April as the first for the NEAR ecosystem. That resulted in an imbalance of $10 million, which has now escalated to a deficit of $21 million.
It noted that the stablecoin was already facing many challenges in recent months as a result of changes in market perception brought about by recent high-profile cases, adding:
We made the difficult decision to wind down the USN project in a responsible and controlled manner to protect USN holders as a result of these issues.
The NEAR Foundation quickly intervened to prevent panic and the collapse of its own original token as consumers feared another LUNA moment. Due to “extreme market conditions”, the algorithmic procedures failed, resulting in a lack of security.
The $40 million disparity, it was said, is set and has absolutely nothing to do with the price of NEAR tokens. This is because there is no hardcoded burn or mint link between it and the USN.
The entire value locked up in NEAR has declined since DCB removed the liquidity, according to private security firm PeckShield. According to DeFiLlama, TVL is down 45% in the last 24 hours to $136 million.
The NEAR Token is not affected
The original coin has so far weathered the storm despite the withdrawal of security from the ecosystem. At press time, NEAR was trading at $2.98, up 2% on the day.
But the bears sunk their teeth into the NEAR during this recession. It is currently 85% lower than its record high of $20.44 set in January.
The layer-1 proof-of-stake blockchain NEAR has a fast throughput thanks to its sharding architecture.
