Forward the Original Title‘三分钟速读 Usual Protocol：如何构建 RWA 抵押型稳定币 USD0？’

The Holy Grail of the cryptocurrency industry has always been to achieve the status of money. Since the birth of Bitcoin, the dream of realizing monetary attributes has been continually pursued. Interestingly, the real embodiment of large-scale payment attributes in crypto is not the initially born BTC, but stablecoins. Stablecoins are the first use case for RWAs. Whether it’s fiat-backed stablecoins or algorithmic stablecoins seen as the crown jewels, they are all racing for the Holy Grail. USDT monopolizes the market with its total market value, USDC has made a name for itself through compliance, and the emerging algorithmic stablecoin USDe is forging its own territory through celebrity endorsements and continuous brand collaborations.

Stablecoins are also profit-making machines. In the first quarter of this year alone, Tether, the issuer of USDT, made over $4.52 billion in profit, hitting a historical high. For comparison, Tether’s net profit for the entire year of 2023 was only $6.2 billion, showing the dramatic growth in its profit margin.

The money-making track never lacks new entrants. The stablecoin start-up Usual Labs completed a $7 million financing round in April this year, led by IOSG and Kraken Ventures, with participation from GSR, Mantle, StarkWare, and others. Usual Labs then launched the stablecoin USD0 at the end of May.

What is Usual Labs?

Usual Labs is a stablecoin start-up company that is building the DeFi protocol, Usual Protocol, with its core product being the stablecoin USD0. In Usual’s view, the problem with the traditional financial system is that the profits from customers’ deposits all flow into the banks’ pockets, while the risks are shifted to the public. Fiat-backed stablecoins are also not perfect, as their centralized participants behind them have the same structural problems as the traditional banking industry.

How does Usual Protocol work?

When users deposit assets, they receive a synthetic asset, the Liquid Deposit Token (LDT), which represents their initial deposit value in the Usual Protocol. LDT can be freely traded in a permissionless manner and is 1:1 supported by the original assets deposited into the protocol. LDT provides holders with the perpetual right to withdraw, allowing them to redeem the underlying assets at any time under normal circumstances.

In this way, users can leverage LDT to open the door to profit leverage, such as providing liquidity or issuing Liquidity Bond Tokens (LBT). LBT is a token that locks LDT for a period of time, providing liquidity, transferability, and composability, promoting seamless integration and trading within DeFi. Users who participate in the interaction will also receive Usual’s governance tokens.

What are the features of the stablecoin USD0?

The stablecoin USD0 is the most important product on the Usual Protocol, and it is also the first Liquid Deposit Token (LDT) on the protocol. Its name comes from being equivalent to the central bank’s money (M0) on Usual, hence the name USD0. Unlike stablecoins like USDT and USDC, USD0 is 1:1 backed by ultra-short-term real-world assets (RWA).

Due to the reserve system of some banks, fiat-backed stablecoins also face risks. Last year’s Silicon Valley Bank event showed the systemic risk to the DeFi caused by traditional commercial banks due to insufficient collateral.

USD0 takes multiple factors into consideration. It first chooses government bonds as its best choice due to their high liquidity and safety. Secondly, to ensure the stability of the assets, the issuer must use ultra-short-term assets to provide collateral for the stablecoin, ensuring a high level of safety for the holders. This strategy can prevent forced liquidation at a discount price during large redemptions and can also prevent events that might decrease the value of the collateral.

Usual has already integrated Hashnote, and is waiting for confirmation from Ondo, Backed, M^0, Blackrock, Adapt3r, and Spiko. It can be foreseen that its liquidity will be greatly enhanced after these integrations are completed.

Usual Token Distribution: 90% Goes to Community

The official tokenomics have not yet been released, but the use of Usual tokens, mainly for governance and utility, has been clarified. Usual is designed with a deflationary mechanism, allowing early adopters to acquire more tokens. As the Total Value Locked (TVL) increases, fewer Usual tokens will be distributed.

In addition, Usual token holders have control over the treasury. When acting as governance tokens, holders can participate in the decision-making process. Staking tokens can also earn rewards while supporting the security of the protocol.

Unlike other protocols that distribute 50% of the total tokens to Venture Capitalists (VCs) and advisors, Usual distributes 90% of the total tokens to the community. The allocation for its internal team members will not exceed 10% of the circulating supply. This demonstrates the spirit of ‘decentralization’ in the community, especially in the current wave calling for ‘fairness’.

Summary

Usual has chosen RWA support to redesign the stablecoin USD0 in the racing track of fiat-backed and algorithmic stablecoins. The stablecoin market has huge potential. As for how USD0 will perform in the future market, let us observe patiently.

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