Decentral Bank, a decentralized autonomous organization (DAO), working on the USN stablecoin, stated it has temporarily paused allowing the use of NEAR tokens in the minting process of USN, a pivot away from its original design. The DAO cited shaky crypto market conditions for its decision.
The developers of USN stablecoin, announced version 2 (v2.0) update of their project on Thursday. USN is a decentralized stablecoin soft-pegged to the US dollar and exists on Near Protocol, a scalable Layer 1 blockchain.
USN was originally built similarly to TerraUSD (UST), the stablecoin that collapsed and brought down its sister token Luna (LUNA) with it. After UST collapsed, it led to concerns that stablecoins built in the same way would suffer similar fates.
From Thursday, the stablecoin will exclusively be minted with USD Tether (USDT), the largest centralized stablecoin issued by Tether. This means that USN will be 1:1 collateralized and redeemed with USDT, rather than NEAR, the native token of the Near Protocol blockchain as originally decided.
Furthermore, the DAO said it is planning to use a basket of market-leading stablecoins as its underlying collateral, including USDT, USDC and DAI. The team claimed that this strategy will make the stablecoin more resilient in current market scenario.
"We concluded that given the uncertainty around how long this bear market will last and the selling pressure induced by tightening macro conditions, the v1.0 could, potentially, pose a risk that $USN could become undercollateralized from sustained volatility of the NEAR price," Decentral Bank DAO said in a media statement.