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Jun 30 24 tweets 6 min read
$USN v2.0 has just been announced:

"A flexible stablecoin that can adapt to any market conditions"

v2.0 Phase I Design: collateralized 1:1 with $USDT + offers a sustainable native yield thanks to $NEAR staking rewards

Keep reading 👇🧵

TLDR; $USN v2.0 shifts to a flexible model that will be split in 2 phases:

- Phase I: USN is 1:1 backed w/ USDT and offers a sustainable native yield obtained from NEAR staking rewards

- Phase II: USN will also be collateralized by non-stable assets, starting w/ NEAR

In this thread we will understand:

1⃣ Why $USN v2.0 was released
2⃣ What is $USN v2.0 and how does it work
3⃣ How the APR depends on pure offer / demand mechanics by the market
4⃣ Arbitrage opportunity
5⃣ Roadmap & use cases

1⃣ Why $USN v2.0 was released

The recent market downturn made stablecoins suffer: $UST, $FRAX, $DAI, $MIM have either crashed or seen their supply dramatically reduced

@DcntrlBank's goal is to create a stablecoin that is truly stable under both bull & bear markets

Therefore, more aggressive simulations were conducted under increasingly challenging market conditions

DCB concluded that $USN v1.0 might pose a risk due to sustained volatility of the $NEAR price given the uncertainty around tightening macro conditions and its duration

2⃣ $USN v2.0 & how does it work

$USN v1.0 was a double-collateralized stablecoin w/ $USDT + $NEAR that used on-chain arbitrage & a self-balancing Reserve Fund

$USN v2.0 shifts to a flexible model
- Phase I: 1:1 backed w/ USDT
- Phase II: reintroduction of non-stable assets

$USN v2.0 offers native yield from $NEAR staking rewards and soon it'll also be backed by other battle-tested stables such as $USDC & $DAI

So think about it: in phase I you hold a safe & reliable stablecoin (since it is 1:1 backed by $USDT) while earning a juicy yield!

Under favorable market conditions, the DAO may vote to transition to Phase II

Phase II leads to greater value accrual to $NEAR as it's used to mint $USN and staked, which means less effective circ. supply

Other assets such as $ETH & $BTC may be used as collateral

The exact mechanism of how $USN v2.0 will work under Phase II will be announced soon

However, we can expect Phase I to be live for several months. Many people expect the market to recover in 2023/24 so $USN will be in Phase I until the market fully recovers

3⃣ The APR

$USN's goal is not to grow immediately to the billions as other solutions have popularized

It will grow sustainably and its growth will depend on pure offer / demand mechanics determined entirely by the market

APR = function of $NEAR price + $USN supply

Let's understand why:

$NEAR staking offers a 10-11% yield in NEAR rewards, which are distributed to $USN (*)

If $NEAR price goes up --> rewards in USD value increase --> the APR for $USN goes up

(*) Rewards will be initially distributed to LPs to build liquidity

As the APR of $USN goes up --> more users will mint $USN (or provide $USDT / $USDC to LPs) to get the juicy APR

Therefore $USN supply grows. Then, the same rewards are to be distributed across a bigger supply --> APR goes down

Same will occur if $NEAR price goes down --> rewards are reduced --> $USN APR goes down --> users burn $USN and supply reduces --> APR goes up

APR will therefore always reach an equilibrium that will be entirely determined by the market

This drastically differs from the strategy other stables such as $UST or $USDD have followed

We can conclude that $USN's scalability at initial stages depends on $NEAR market cap & growth and that the APR is truly sustainable and will be freely determined by the market

I say "at initial stages" cause, let's not be naive, the growth & adoption of a stablecoin at the beginning primarily depends on yield opportunities and unlocked liquidity

$NEAR is working in building a whole ecosystem in top of $USN - which will bring adoption by itself

4⃣ Arbitrage opportunity

On one side, $USN is freely traded on the open market (e.g. @finance_ref & @trisolarislabs and soon in CEXes)

On the other side, 1 $USN can always be minted and redeemed for 1 $USDT via the main on-chain contract


- If $USN trades below $1, users can buy 1 USN in the market for $0.99 and redeem it for 1 USDT

- If $USN trades above $1, users can mint 1 USN via the on-chain contract for 1 USDT and sell it for 1.01 USDT on the open market

5⃣ Roadmap & use cases

- $USN integration on $NEAR & $Aurora dapps
- Fiat on/off ramps
- Off-chain loans
- Micro loans, financing & credit
- Payment in real-world commerces & subscription models
- Multichain
- Option to pay for gas with $USN for $USN transactions

I guess that some people will welcome this design as it offers a good yield opportunity while you hold a safe asset (at least as safe as $USDT and soon as safe as $USDC or $DAI)

However, others might criticize it. My answer is that I agree with Arthur's comments on stables

"It's critical to recognize that perfection is impossible. Creating a stable requires several sacrifices. It'll be up to the market to decide if the concessions are worth allowing fiat to ride faster & cheaper on a public blockchain than on centralized banking networks"

More information in the medium article:…

In my humble opinion, $USN currently stands as a reliable solution since it is backed 1:1 to a sufficiently battle-tested stablecoin

It's also appealing since it offers a decent & sustainable yield opportunity for a bear market

With the possibility to transition to a more sophisticated and elaborated solution that relies less on centralized collateral

It is important to note that, even though the collateral is centralized, decisions will be decentralized and voted by the DAO


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More from @resdegen

Jun 19
$USDD might go down to $0.85, but it must stay above $0.85

JustLend shows that $USDD is $1. It seems this is hardcoded

As Collat. Factor = 85%, this means that if USDD goes below $0.85, then ppl can buy worthless $USDD and borrow $USDC for a profit, draining the protocol
Things don’t look good

I wouldn’t touch it. Collateral in stablecoins is higher than USDD in circulation

However, if they buy USDD they are spending money
They minted USDD out of TRX. It doesn’t cost them anything.

As a redemption mechanism does not exist for the market to profit, they need to spend USDC to send USDD back to $1

That would actually cost them money
Read 5 tweets
Jun 15
1/ Given the market situation & extreme fear, you might be tempted to short $TRX due to the $USDD depeg at $0.96-0.97


Pls understand the math first 👇🚨
2/ I don't precisely like their tactics, you know that. The problem is always how they convey information


- $USDD is +158% collateralized by $USDC & $USDT
- Adding $BTC @ $20k, Collat. Ratio increases to 197% (it doesn't rly matter given the stablecoin collateral)
3/ But then, why is $USDD trading at $0.96-0.97?

The reason is because there is no redemption mechanism and therefore no arbitrage opportunity:

if you buy 1,000 USDD with 960 USDT, you can't get $1,000 worth of TRX/BTC back or directly 1,000 USDT
Read 19 tweets
Jun 13
1/ Update on $USDD 👇

I just woke up and saw that USDD has slightly depegged to $0.97

Now trading at around $0.98 Image
2/ The Curve pool for $USDD - 3CRV is getting unbalanced

$USDD = 82.82%
3CRV = 17.18%

Even the native, which has deeper liquidity, is getting more unbalanced:

$USDD = 60.94%
$USDT = 39.06% ImageImage
3/ This is the orderbook in Huobi, and looks empty

The liquidity is very thin: $577k at $0.97

Below that... unless MMs step in to fight the peg, it would get destroyed

There's definitely some sell pressure here as well. Probs because they are keeping an eye on on-chain pools ImageImage
Read 13 tweets
Jun 12
1/ And it's starting

$USDD is currently just 92% collateralized by the Reserves (even considering $TRX funds) ⚠️

If you subtract $TRX, it turns out collateralization ratio is currently 73%

Also, the 140M $USDT are not really USDT, but jUSDT 👇
2/ That means that the 140M USDT are deposited into JustLend, a lending / borrowing protocol on the $TRX network

They are earning some yield on that, which is understandable

However, we need to consider now that those $140M are subject to smart contract and exploit risk
3/ They are injecting more capital to keep the collateralization level:

- 1,000 $BTC were added on the 6th of June for around $30M

- Yesterday, they announced they bought another $50M worth of $BTC and $TRX (those haven't been deposited into the Reserve yet)
Read 10 tweets
Jun 11
This Is Huge:

$NEAR becomes the first non-EVM chain with @MetaMask compatibility 🤯

No need to create a NEAR wallet - just use your Metamask and come play with NEAR dapps directly

By @proximityfi & @NEARProtocol

Some notes:

- The integration is done entirely on the Near side via smart contracts using Ethereum accounts

- The plugin codename is nETH

- This is an early-stage alpha version, so there're still some technicalities

- Contract is already audited

- Unofficial integration

The team is improving the UX so that you get the most seamless experience

1. Use a one-click setup
2. Be automatically headed to the Rainbow bridge & get your funds bridged to NEAR
3. Enjoy NEAR dapps w/ Metamask

Done. You won't even know what's happening under the hood!

Read 7 tweets
Jun 11
$ETH / $BTC is currently at spot where the 2018 bear-market relief rally took place


- Bear market rallies can be strong: $ETH +120%
- Can last longer than most think: 1 month only up
- Can trick you into thinking we go back bull mode
- Macro structure is key: just a LH
If smth like that occurs, don't get fooled

$ETH / $BTC might even go lower without much support though, given the stETH situation

It's backed 1:1 to ETH but liquidations may put some sell pressure on ETH. Then misunderstanding & FUD come, which may trigger a bigger sell off
"depeg" as like stETH < ETH as a result of the open secondary market

not as a failure in the system

- I'd only add stETH is the difference in price is significant (>20/25%) AND ETH is down significantly as well

- will add just ETH to play a quick bounce and sell it
Read 7 tweets

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