What are Stablecoins?
Stablecoins are types of cryptocurrencies that obtain their market value from some external reference. In simple words, it means that like fiat currency stablecoins are also backed by reserve assets.
Because stablecoins are a viable form of digital cash that can be exchanged with traditional currency, it makes everyday transactions accessible through cryptocurrency without the risks of value variance with market volatility.
“It’s transactional value volatility and also just general store value volatility that you’re solving for,”
Stablecoins offer the ability to complete transactions, without which an economy would not function. Businesses, otherwise sceptical of cryptocurrency that is volatile, can launch new use cases with a simple, secure and stabilized form of digital cash.
USN Launch
★Stablecoin USN launches on Near Protocol
A decentralized stablecoin called USN was launched today on Near Protocol, a scalable Level 1 blockchain, according to a statement distributed by Near DeFi Proximity Labs. Stablecoin can be checked out in Near's official blockchain reviewer.
The launch confirms previous reports that Stablecoin is in development. USN is a decentralized stablecoin similar to TerraUSD (UST) and Frax Finance (FRAX), which have a soft peg to the US dollar but no dollar cash reserves. A stable USN coin can be issued by pledging NEAR tokens, Near's own blockchain crypto-asset.
NEAR ECOSYSTEM
What do you think of when you heard the word ecosystem? Most people think of nature maybe a jungle that contains plants and fungi and snakes, small mammals, birds, bacteria and everything that requires a whole system to function on its own. All these organisms use each other to survive in different ways. They are independent and they rely on each other. That's what makes an ecosystem works.
So if you heard the word financial ecosystem what would you think?
The idea is the same. It's a collection of different people, organization, processes and system that let us buy and sell things, use money, save it, invest it and everything else related to finance.
Let's take a step further. What about the phrase crypto financial ecosystem. Now this is a whole new arena. The crypto world may have some isolated individual projects but what it really needs is an ecosystem.
The Stablecoin USN The Part Of Near Ecosystem
Now think about this question. Near uses a blockchain right? And Bitcoin uses a blockchain too. What's the difference why would a merchant want to use Near when they could use a Bitcoin? Well, here's the thing is Bitcoin is volatile. The value of Bitcoin measured in dollars changes constantly. I mean all day long. This is important because we usually things in dollars. Whether that's a bag of candy, a car payment, your rent. Everything thinks in dollar bills.
The volatility problem is inspired by something called stablecoins. As mentioned above stablecoins are simply cryptocurrencies that are pegged to fiat currencies. So if people have measured their wealth in these fiat currencies and they use this fiat currency most consistently. They don't want to use something like Bitcoin which could change value because nobody wants to be a guy who spent 10,000 bitcoin on some pizza at the time it may have only 20dollars worth but if they spend it. People fear that there may be a chance, it could go up and if they accept it as a purchase. They also have a dear that maybe the price could go down.
Now the core idea of Near for USN is that we want to create an ecosystem where $USN will be use to make a payment and $NEAR to invest in. We don't want them to be the same thing. We want our money to have a stable value so that we can expect that it will be worth the same thing tomorrow and the next day hopefully the next year.
Near is on the mission to solve this by using a stablecoin algorithm that allows certain tokens on the network to stay at a single price. Near stablecoin USN which is the representation of US dollars. Now USN is the simple way of using cryptocurrencies to transact in a simple, faster and cheaper way than before. So simply put USN will bring the advantages of crypto, DeFi and all of those decentralised applications but without the volatility and unpredictability of the prices.
The Purpose For USN
Near created a stablecoin with purpose. In fact Near is built around an entire blockchain ecosystem for all the dapps and platform to use.
Think about this. Where did $NEAR get its value from? It gets it's value from ecosystem surrounding Near, all the dapps and the smart contracts and protocols. This is exactly Near stablecoin USN banking on as well.
Hope you have a clear understanding about the Near ecosystem and it's stablecoin USN. Now let's see -
How USN Can Be A Game Changer In Near Ecosystem
★ Circulating Supply
As more and more people will buy $USN, $NEAR will grow in price. This means we can basically shrink the circulating supply of $NEAR causing the price to go up.
★ Easy To Trade
Using stablecoin $USN you will be able to trade back and forth from $USN to $NEAR and $NEAR to $USN. This way you will no need to pay as many fees plus you don't have to wait as long.
Let's say you purchase 100 $NEAR for $100. Near value then goes up to the $100 per coin. So you sell 50 $NEAR for $5,000. So you trade 50 trade of those $NEAR to $USN, and then you hold it. And you can then buy back at a lower price. It's almost like a cryptocurrency saving account.
★ Global Transfer
Social networks have already allowed users to make payments with stablecoins across the world, with $USN you will be able to do the same and even banks are planning to integrate stablecoins into international transaction processes.
★ Lending
Stablecoin $USN will also help when investing on the platform like
Aurigami ( Lending and Borrowing protocol in Near ecosystem). Where you can actually earn interest on your stablecoin $USN. You don't have to worry about the price fluctuations.
20% APR on crypto asset is not matters if the choosen crypto asset drop by half. However 20% APR on your $USN will be delicious
★ Remittance
Near has been suggested as an attractive medium for international remittances because of the borderless nature of cryptocurrency. Since anyone can use the Near Blockchain, there's no need to send payments through a bank or RSP. These services replace RSPs with software to facilitate Near transactions.
★ Merchant Services
A stablecoin USN will be use anywhere in the world and is not subject to trade restrictions or other economic restraints that traditional currencies are. Businesses can grow their services and global reach without these restrictions. USN will be a huge help to the people who wish to build a more open economy for themselves in order to attract more customers.
Final Thought
Stablecoins are the great advancement for the cryptocurrencies at the current moment. Having a Stablecoin like USN in a crypto market characterized by high volatility is an essential factor. Above all, if you want to take advantage of the maximum returns that this type of negotiation can offer you.
Exchange your USN for fiat money and get the real value of its collateral currency, the dollar. In addition, there is no emission limit, which implies greater opportunities for you and the protection of your assets without devaluation.
