The collapse of LUNA and UST has brought attention to other crypto projects in decentralised stablecoins, such as NEAR’s stablecoin USN. NEAR is one of the most rapidly expanding blockchain networks, but many wonder if that growth trajectory will finally have the same destiny as Terra.
Let’s compare and contrast the two blockchain projects. Both strive to balance the peg via the stablecoin supply, making them similar. They also utilise the native cryptocurrency of their blockchain to mint their stablecoins. While Terra has a mint and burn mechanism, NEAR uses a treasury to preserve the dollar peg.
NEAR is locked in the treasury when USN is minted, and it is unlocked when USN is burned. It is also important to note that the fixed supply of NEAR is one of the measures to prevent an oversupply that might cause a death spiral.
Source: Whitepaper USN
NEAR ensures that the treasury is over-collateralised and supported by NEAR and USDT. This is possible through a REF Finance pool and pools on centralised exchanges.
Although NEAR’s USN method seems more secure than Terra’s UST, it is not as safe as fiat-backed centralised stablecoins. USN has recently seen tremendous volatility but has maintained its peg. Additionally, there are concerns that the USDT is a component of the over-collateralisation system. An imminent likelihood exists that a USDT de-peg would likely disrupt the USN’s peg.
NEAR reached an all-time high of $20.59 in January 2022, but unfavourable market conditions have led to a steep markdown in recent months. The price of NEAR at the time of writing was $5.87, and it was going to form a death cross, indicating a greater likelihood of a downward trend.
The price of NEAR. Source: TradingView
The total amount of NEAR owned by whales has decreased over the last thirty days, as seen by its price action. However, it has shown evidence of whale accumulation over the past three days, hinting that NEAR may be poised for more gains.
NEAR’s long-term success cannot be subject to a death spiral, as its products include the Metaverse and NFTs. There have been considerable quantities of NFT transactions and developer activity in the recent 30 days.