May 23, 2022
Is Near Protocol USN stablecoin the new Crypto Apocalypse? Just like Terra Luna?
Crazy timing, NEAR Protocol (currently one of the more hyped crypto projects) and “Decentral Bank” launched an algorithmic stablecoin — USN. A coin similar to Terra Luna. Important detail, Decentral Bank is not a bank, it’s a DAO. What is a DAO? It’s just a group of people that sell financial products trough crypto and insinuate that they have an official organization, but they don’t. Looking at DB website (https://decentral-bank.finance), you can clearly see it’s not legitimate business or official in any capacity. They have one single page and a link to shady terms and conditions. There is no mention of company or structure. If you lose your money, it’s your fault.
The funny thing is that they claim USN peg to US Dollar is secured through on-chain arbitrage and the Reserve Fund. Sounds cool, but what does it mean?
It means, USN maintains its peg through a smart contract (code). As soon as USN loses its peg, arbitrageurs will exploit the price difference until USN returns to its peg. In theory, if the price of your stable coin drops because of market crash a peace of code is supposed to return it to the price of 1$.
What about the reserve fund? They claim USN is initially double-collateralized by NEAR and USDT via the USN Reserve Fund. USDT? Tether? One of the shadiest projects in Crypto, the organization that was fined $41 million in 2021 for lying about their reserves?! Meaning, they printed Tether coins and claimed it was colaterised by real $. Sounds good. :)
The USN 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. This means that in an extreme case, Decentral Bank could buy back the entire amount of $USN ever issued and still be left with the initial reserve equal to the initial USN issuance.
Sounds cool, right? Well, they could have written anything and most people would not understand it, and those who do… well there is no proof that this works.
p.s. Interesting fact, Near Inc are currently targeting Terra Luna users, investors, and startups with Ads on Twitter to make the switch to USN and Near Protocol from Terra.
To me, everything I found so far about this project is very shady.
#nearprotocol #USN #cryptocurrency #btc #arosconsulting
