NEAR Protocol Launches Stablecoin on Testnet, Aims to Compete with Terra’s UST

Near Protocol has been making news lately but what’s causing the most excitement for the cryptocurrency is the purported launch of its own algorithmic stablecoin.

Speculation has been ongoing about the launch of the stablecoin dubbed USN, which many believe to mimick Terra’s UST and also offer an equivalent interest rate to Anchor Protocol at ~20%. The USN stablecoin recently went live on the Near public testnet on 20th April, bringing it closer to reality. 

Recent Developments Put NEAR On The Edge Of A Breakout

As of Q3 2021, the NEAR token was one of the few regularly held cryptocurrencies by crypto-focused venture and hedge funds. According to Messari, NEAR was the 2nd most commonly held asset by crypto funds as of Q3 2021 after Polkadot.

Consequently, with its recent rally, Near protocol has become the 18th-largest cryptocurrency by market cap, according to Coinmarketcap.

Near protocol enables smart contracts and prioritizes being a user-friendly and developer-friendly platform, while its Aurora protocol is compatible with the Ethereum Virtual Machine(EVM).

Recently, a flurry of news speculation has thrown investors into a frenzy as the outlook of the protocol turns more bullish. The platform raised $350 million in a funding round led by Tiger Global to help accelerate the development of the network. Also, Investors are now waiting for the protocol’s ERC-20 token, and NFT’s to be listed on Coinbase. This could see NEAR’s price rise further.

However, it should be noted that the public test network launch of NEAR’s stablecoin USN is an important milestone for the protocol, but there is no set deadline for the project’s successful completion.

Near Protocol Stablecoin Could Mimic Terra’s UST

The launch of the USN will see the stablecoin battle intensify, with NEAR expected to compete with Terra by offering a similar algorithmic stablecoin with a really high interest rate for holders.

UST, now the third-largest stablecoin by market capitalization has been a trailblazer within the sub-sector. Its expansion has been aggressive, growing over 100x in 2021 and flipping Binance’s BUSD in size.  

Terra works by burning its native token Luna to mint more UST. Through this mechanism, the increased demand for UST is beneficial for Luna holders. A similar setup for USN is expected, which should cause a boon for Near holders and the overall network as well. 

Furthermore, the USN will offer an attractive 20% APR. This might ignite DeFi capital rotation into the Near ecosystem and siphon the total value locked from other alternative layer-one protocols. A similar offer on the Anchor protocol has led to Terra’s Luna breaking its all-time high price and having its total value locked exceed $26 billion.

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NEAR’s Price Action Validates Bullish Momentum

Interestingly, several analysts have substantiated the bullish sentiment on NEAR after assessing its price movement. According to Deribit Insights analysts, the NEAR price chart is an example of underperformance in a sideways market. Since April, NEAR has outperformed the majority of Ethereum layer-1 solutions.

Another pseudonymous analyst, @Crypto_McKenna, believes that Near may hit a new all-time high after its current consolidation.

Consequently, the bullish sentiment for NEAR heats the already tough competition between Layer 1’s and stablecoins. However, the protocol has a long way to go to challenge other “Ethereum Killers” and Terra’s UST stablecoin. However, the pending launch of its USN coin shows NEAR may be taking the first steps on this path to being a worthy challenger.

Do you think the USN launch will cause increased adoption of Near, similar to what UST does for Terra? Let us know your thoughts in the comments below.