What is USN?

USN, a stablecoin, aims to enhance the usability of the NEAR Protocol by offering a fast, scalable, and cost-effective solution. Taking inspiration from Terra, which demonstrated how stablecoins can generate network demand, USN strives to achieve the same outcome for the NEAR protocol. By promoting liquidity and usability on the blockchain, USN endeavors to overcome challenges such as low transaction speeds, high costs, and poor interoperability, which are common in current blockchains.

Although USN entered the market on April 25, 2022, it is still in the early stages of testing its viability. The coin is "soft-pegged" to the US dollar, meaning its value is equal to $1 without the need for any dollar cash reserves.

USN aims to become a swift, economical, and stable cryptocurrency for NEAR Protocol users. The NEAR network, known as the world's first certified climate-neutral blockchain, was designed as a community-driven blockchain with a focus on usability. NEAR claims to have developed solutions to address the challenges faced by blockchains, including slow transaction speeds, high costs, and limited interoperability.

The introduction of USN follows a recent attack that drained $76 million from BEAN, another stablecoin that avoids US dollar reserves. NEAR's stablecoin has implemented measures to safeguard its future against similar attacks. Decentral Bank DAO, a newly established decentralized organization, launched the stablecoin, and its members have the authority to vote on staking rewards, USN integration, and other related aspects.

How does USN work?

USN coin utilizes various techniques to achieve stability in the cryptocurrency. Primarily, it employs an arbitrage smart contract that facilitates the exchange of NEAR and USN, aiming to maintain the value of USN at one dollar's worth of NEAR tokens. This mechanism allows arbitrageurs to exploit price disparities and restore USN to its intended $1 value when it deviates from the peg.

Additionally, the stablecoin is backed by a reserve fund, which currently employs a double-collateralization approach. This ensures that USN is continuously supported by a reserve that exceeds 100% of its total value. In extreme scenarios, this collateralization enables the DAO to repurchase all USN and stabilize its price.

Furthermore, Decentral Bank has introduced the stablecoin alongside a USDT and USN pool on Ref Finance, enhancing the asset's stability even further.

How to mint USN?

Despite its recent launch, there are multiple avenues available for investors to acquire the newly introduced NEAR stablecoin. Users can convert their NEAR coins into the USN cryptocurrency by utilizing a smart contract associated with the stablecoin's designated address.

Furthermore, third-party NEAR-enabled wallets, such as Sender Wallet, have begun accepting swaps to USN, providing an additional option for users. Additionally, the NEAR exchange Ref Finance permits users to exchange USN with other assets.

For those curious about the use case of the USN coin, holding this stablecoin offers advantages. The DAO has the ability to vote on staking its NEAR reserve fund, allowing USN holders to receive automatic earnings as a result.

USN’s competitor

NEAR is not the sole established network venturing into the launch of a new stablecoin. Justin Sun, the founder of the Tron blockchain, revealed plans for Tron to introduce USDD on May 5, 2022. In an open letter, Sun emphasized the collaborative efforts of TRON DAO and prominent blockchain entities in creating USDD (Decentralized USD), hailed as the most decentralized stablecoin in history. The objective was to democratize finance by leveraging mathematics and algorithms.

USDD operates in a similar manner to USN, with TRX as its underlying asset. It incentivizes arbitrageurs for maintaining the stablecoin's value at $1. Sun's letter provided an illustration: "When the price of USDD falls below $1, users and arbitrageurs can submit 1 USDD to the system and receive TRX worth $1."

Both stablecoins are relatively new to the market, making it challenging to assess their performance. Nonetheless, the primary aim of USN remains to enhance liquidity within the NEAR Protocol and drive the adoption of its ecosystem, mirroring Terra's goals.

The future of USN

Decentral Bank has disclosed its future plans for the USN cryptocurrency, both in the short and long term. In a blog post, the bank stated that users can anticipate the integration of $USN on centralized exchanges (CEXs) and other blockchain networks in the near future.

The upcoming steps involve incorporating the stablecoin into the protocol, enabling users to utilize USN for paying gas and storage fees. This integration aims to enhance the utility of the cryptocurrency and further drive its adoption.

According to The Motley Fool, there is potential for USN coin to contribute to the success of the NEAR Protocol and potentially rival Terra. In their analysis, they mentioned that NEAR currently holds a market cap roughly one-third the size of Terra. However, they acknowledged that significant adoption and time will be required for NEAR to reach Terra's level.

Nonetheless, with the imminent launch of USN coin, NEAR appears to be taking its initial steps towards that trajectory. Even if NEAR doesn't surpass Terra, there remains significant potential for growth between its current position and Terra's market standing.