Price of Near token bounces back after Near Protocol stablecoin goes live

NEAR, the native token, of the Near Protocol, has surged today after the Near Protocol blockchain launched its widely anticipated stablecoin, the USN.

At the time of writing, the NEAR token had bounced back to $14.96 up 8.38% over the past 24 hours. The token is however still down by about 12% over the past week following a broader plunge in the crypto market over the past week.

Near Protocol’s USN stablecoin

The newly launched USN stablecoin is an algorithmic stablecoin. It uses a mix of tokenomics to maintain a ratio of 1:1 against the US dollar. It was launched by the NEAR Protocol-based decentralized organization called Decentral Bank.

People can burn NEAR tokens to mint the USN stablecoin and they can also burn the USN stablecoin to get NEAR tokens.

Decentral has said that early lenders would receive a yield of up to 20%, something that rivals that of the popular Terra’s UST stablecoin.

The reserves of the USN stablecoin will be maintained by the Decentral Bank DAO and the DAO shall hold monthly votes to distribute rewards amounting to $10 million for trading the USN.

Crowded stablecoin market

The USN will face tough competition within the stablecoin with Terra’s UST stablecoin being its main competitor. Terra’s UST already enjoys the backing of $2.5 billion in US dollars that are already in reserves.

There is also another anticipated stablecoin, the USDD from the Tron blockchain, that promises a 30% APY.

The majority of investors seem to use a wait-and-see approach to the USN stablecoin with the expectation that there will be more DeFi options in Near Protocol that shall give the USN stablecoin more utility.