A decentralized stablecoin called USN has launched today on Near Protocol, a scalable Layer 1 blockchain, according to statement shared by Near’s DeFi arm Proximity Labs. The stablecoin can be checked on Near's official blockchain explorer at this account address.

The launch confirms previous reporting by The Block that the stablecoin was in development. USN is a decentralized stablecoin similar to TerraUSD (UST) and Frax Finance (FRAX), which are soft-pegged to the US dollar but don’t hold dollar cash reserves. The USN stablecoin can be minted by depositing in NEAR tokens — the native crypto asset of the Near blockchain — as collateral.

An independent team called Decentral Bank — organized as a DAO — is leading the USN stablecoin effort. It is working in collaboration with Proximity Labs, which is a contributor to the DAO.

A Proximity spokesperson said USN can serve as an effective way to bootstrap liquidity for DeFi protocols. Near is home to protocols like Ref Finance, Burrow, Aurigami, and Bastion. These protocols have decided to integrate the USN stablecoin.

The USN stablecoin will pay roughly 10% annual yield from Decentral Bank. To kick start this process, the DAO will need to vote it through.

This yield will come from Decentral DAO’s revenue from native staking of NEAR tokens with security validators, a process that currently earns the same 10% return. The yield will vary depending on the NEAR staking percentage and the market value of the tokens.

In addition, the Decentral Bank DAO will have a few stability mechanisms to support USN’s dollar peg. The first is an arbitrage system that will try to ensure that the USN stablecoin trades around one dollar worth of NEAR tokens. The second is a “reserve fund” made of NEAR and USDT tokens owned by the DAO treasury. How much will be spent on this fund is still undecided.