USN is an algorithmic stablecoin (Algorithmic Stablecoin) first introduced by Decentral Bank on the Near Protocol Blockchain. But the USN’s journey from zero to one still encountered many hurdles as UST began to collapse. Let’s look back at USN’s journey!
Looking Back at USN’s Journey
Prepare thoroughly
In the early days of April, rumors spread that Near Protocol would deploy a new stablecoin, causing a stir in the community and the price of $NEAR Also growing very well. Remember that at that time UST was extremely prosperous, it can be said that at that time Terra was the first project that had 2 tokens in the TOP 10 of the entire market capitalization so it was a thing for Near Protocol to learn and catch the trend. relatively easy to understand.
At the same time Near Protocol deployed USN, Justin Sun also developed USDD on Tron’s blockchain with interest rates up to 30% much higher than Terra’s UST.
April 25, 2022: USN is officially launched by Decentral Bank and USN is inspired by the UST model, of course USN is an algorithmic stablecoin.
But there are differences in the operating models of USN and UST. For UST, users need to burn $1 LUNA to receive $1 UST, then most hold UST to save on the Anchor platform with an APY of nearly 20%. For USN, the user will lock $1 NEAR to receive $1 USN, this amount of NEAR will be staking, and the yield collected will be paid to the user.
At that time, projects began implementing infrastructure for stablecoins, StableSwap. It can be said that at that time USN was considered a tool to help the Near Protocol ecosystem expand strongly.
- Ref Finance, Trisolaris – 2 major DEXs announce implementation of StableSwap.
- Bastion Protocol is a Lending Protocol platform that also deploys Lockdrop Phase 2 to attract users to lock USDT and USDC for liquidity to deploy StableSwap.
Previously, Terra and Near also announced partners and Terra Foundation also provided grants for some projects. All preparations are ready including:
- USN is ready to launch.
- StableSwap has enough liquidity.
- Terra & Near Protocol has announced partners.
- Terra has also granted a grant to the project on Near Protocol.
Collapse begins
May 9, 2022: UST starts to depeg. And the story after that, almost all of you already know.
And after that, the USN no longer had any information. Because deploying an algorithmic stablecoin at that time was definitely a mistake as 96.69% of the community would not accept USN, but even for Near Protocol itself, there would be many users, KOLs would consider Near Protocol to go into ruin. Luna’s car crashes and inevitably collapses.
Therefore, the USN temporarily paused the deployment.
Restart USN V2
June 30, 2022: USN was restarted still under the hands of Decentral Bank but with the name USN ver 2.0 with many changes in mechanism and 2 different phases.
Phase 1: USN is backed 1 – 1 by USDT. This means that users can exchange 1 USN for 1 USDT at any time or vice versa.
Phase 2: After the market stabilizes and Decentral Bank members vote to approve, USN will begin to be backed because the assets that fluctuate in the first time will be Near Protocol and longer will be BTC, ETH ,…
At the time of re-mobilization, the USN’s goals were also relatively clear as:
- Mass adoption across the entire ecosystem of Near Protocol.
- Integrate Near Pay for real-life payments.
- Multichain development.
- Off-chain lending (Mortgage, unsecured credit,…).
Up to now, I see Trisolaris and Ref Finance as two DEXs that have officially deployed StableSwap. As for Bastion Protol, which has not yet integrated USN, it only has pools for USDC and USDT. With Lending platforms, USN has been integrated Aurigami and Burrow Cash.
It can be seen that at this stage, USN begins to cover Near Protocol’s DeFi platforms, but USN still has a lot of work to do to complete the initially set out visions.
Why Near Protocol Doesn’t Want to Abandon USN
I also have a lot of thoughts about this. Obviously, Near Protocol has quite good MQH with Coinbase and Circle to be able to integrate USDC into Near Protocol’s network. But maybe for some reason, at the time UST – LUNA was very hyped, many parties also wanted to learn this model, first of all it was Justin Sun with USDD on Tron’s network and an APY level of up to 30 %.
And at that time, the Near system was still quite small to be able to rely on USDC. Maybe USDC will come to Near Protocol at an appropriate time when the number of projects and TVL of the system is more mature. The fact that an HST has a native Stablecoin I think is necessary in regulating and developing the ecosystem in an appropriate direction. Being proactive in holding stablecoins helps HST proactively orient its development without being dependent on external stablecoins such as USDC or USDT. But the risks are still as obvious as the depeg and the UST story were.
Summary
Near Protocol deploying a native stablecoin is very reasonable in the development direction of an ecosystem. In addition, I have not yet seen a version of “Maker DAO” built on Near Protocol to have a DeFi Stablecoin.
Integrating CeFi Stablecoins such as USDC and USDT is absolutely necessary in the long-term frame if the Near system wants to expand quickly and strongly. The failure of an algorithmic stablecoin like UST does not mean that all algorithmic stablecoins will fail, so I still have certain expectations for USN.
In addition, I think Decentral Bank’s deployment of 1 Tresury includes more assets than Near, USDT needs more BTC or ETH to protect the safety of USN.
