The NEAR Foundation has just announced it intends to stop supporting the USN stablecoin project due to multiple risks, including the undercollateralization of the asset.
The stablecoin launch took place in April. Decentralized autonomous organization Decentral Bank became the operator of the crypto asset.
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The stablecoin price was initially backed by arbitrage trades and a pool of NEAR and USDT. The USN launch coincided with unfavorable market conditions, in particular the collapse of the Terra ecosystem.
According to the NEAR Foundation, the asset has recently become undercollateralized:
"CB confirmed that this was due to an initial algorithmic version of USN (v1), which is no longer algorithmic since its upgrade to v2 in June, that was susceptible to undercollateralization during extreme market conditions."