Decentral Bank announces the launch of its first semi-algorithmic stablecoin, $USN. $USN is a NEAR-native stablecoin soft-pegged to the US Dollar, backed by a Reserve Fund that contains $NEAR, along with $USDT initially. $USN’s core stability mechanisms consist of on-chain arbitrage and a self-balancing Reserve Fund based on the Currency Board Principle. Combining the growth potential of $UST and the strong peg defense of $FRAX, $USN is positioned to be one of the most effective ways to bootstrap liquidity in the NEAR ecosystem; all while adding a new layer to $NEAR’s utility as a token.
The Decentral Bank DAO manages all the aspects of the Reserve Fund and main smart contract operations. The DAO can also vote to stake the $NEAR part of the Reserve Fund and distribute the staking rewards to the users of the protocols that integrate $USN. At launch, Decentral Bank will receive a grant from Proximity Labs to bootstrap initial liquidity for $USN on CEXs and DEXs.
$USN’s peg to the US Dollar is secured through on-chain arbitrage and a self-balancing Reserve Fund. $USN maintains its peg through a smart contract which allows for the exchange of $NEAR\<>$USN with 0 slippage and minimal commissions. As soon as $USN loses its peg, arbitrageurs will exploit the price difference between the on-chain smart contract and the exchanges until $USN returns to its peg.
The $NEAR used to mint $USN goes to the Reserve Fund. The Reserve Fund is based on the Currency Board principle, and automatically balances to maintain a backing of $USN at a rate greater than 100% at all times. Initially, $USN will be double-collateralized by $NEAR and $USDT, the latter of which is pooled on NEAR’s main DEX, Ref Finance, and other CEXs to secure $USN’s peg to the dollar in the open market. The stability design of $USN means that in a worst case scenario, Decentral Bank could buy back the entire amount of $USN ever issued.
Starting today (April 25th), users can mint $USN using $NEAR through the core smart contract via the NEAR web wallet. Users can also swap between $USN and $USDT on Ref Finance’s StableSwap. During this initial bootstrapping phase, Decentral Bank will receive a grant with which the $USN \<> $USDT pool on Ref Finance will be seeded.
The Decentral Bank DAO can vote to stake the $NEAR part of the Reserve Fund, meaning $USN will automatically generate yield based on the $NEAR staking rewards. With this decision, $10m+ in rewards will be distributed monthly to $USN holders through lending protocols on NEAR and Aurora (NEAR’s EVM layer), such as Burrow, Aurigami, and Bastion. The exact $USN APY can change depending on the circulating supply and treasury size, but at its lowest it will be equal to NEAR’s staking APY (currently ~11%). The first lenders will likely receive over 20% APY through additional incentive mechanics.
In the near future, users can expect $USN to be integrated on CEXs as well as other chains. After maturation, $USN can also be integrated on the protocol level as a native asset on NEAR, which will be used to pay for gas and storage fees.