How USN can be a game-changer for NEAR Ecosystem?
(Information provided below is not investment advice. Please DYOR!)
Decentral Bank is the great facilitator for USN adoption, sharing yield among multiple protocols in the NEAR ecosystem. In other words, it drives growth through broad distribution and yield generation.
Can USN be a game changer for the NEAR Ecosystem? Let's take a look at some of my research below.
Instead of burning NEAR to mint USN, NEAR is simply held in a reserve meaning USN is always overcollateralized. Staking yields from the NEAR reserve are distributed to users of protocols which integrate USN. Yields come from and are distributed to more than one source not just Anchor like UST.
The following is a diagram illustrating the Basic Model of a smart contract on the main USN chain on the NEAR Protocol:
Currently, $USN is backed by a self-balancing Reserve Fund that contains $NEAR, along with $USDT initially. NEAR conducted thousands of market simulations, and USDT was the most robust asset to back USN and maintain peg in the early stages. Decentral Bank will progressively diversify the assets in backing, potentially including other stablecoins such as $UST and $FRAX down the line.
Starting April 25th, users can mint $USN using $NEAR through Near Wallet or Sender Wallet. Users can also swap between $USN and $USDT on Ref Finance.
In the near future, a swap page will also be available on the Decentral Bank website. At the moment, $USN-$USDT pool with $Ref Reward on Ref Finance is out.
At the time of writing, APR is hitting 14.08% & Total Deposit surpasses $21.71M.
To maintain peg, USN can be minted and burned when it falls above and below peg respectively, offering arbitrage opportunities with zero slippage.
When USN/USD exchange rate drops below $1, arbitrageur purchases USN from an exchange (e.g. for $0.99), then exchanges it for $1 worth of NEAR via the main on-chain contract. This offers an arbitrage opportunity.
When the USN/USD exchange rate exceeds $1, arbitrageur exchanges NEAR to USN through the main on-chain USN smart contract at a 1:1 USN/USD rate.
The acquired amount of USN can then be sold on an exchange, e.g. for $1.01. Again, this allows to earn arbitrage profits.
In conclusion, USN combines the growth potential and the risk management, strong peg defense; all while adding utility and reducing volatility of $NEAR. In the near future, users can expect $USN to be integrated on CEXs as well as other chains. $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