Usual is a stablecoin protocol that has launched USD0, a permissionless and fully compliant stablecoin backed 1:1 by real-world assets (RWAs). USUAL is a governance token that allows the community to guide the network’s future development. Usual addresses current issues in the stablecoin market by redistributing profits to the community and rewarding token holders with real yields generated from RWAs.

Funding Background

Usual Financing Information

Usual has gone through two rounds of funding. The first round was on April 17, with an amount of $7 million; the second round was on November 6, with $1.5 million. The rounds were led by IOSG Ventures and Kraken Ventures, with GSR and StarkWare also participating. IOSG Ventures has invested in several well-known infrastructure projects, including Eigenlayer and Celestia, while Kraken Ventures is the venture capital arm of the prominent exchange Kraken. As a result, Usual has gained a significant development advantage.

Project Vision

Rebuilding On-Chain Tether: Neutrality and Transparency

Features of Usual

Cryptocurrencies require a fully on-chain, fiat-backed stablecoin supported by infrastructure that ensures enhanced neutrality, transparency, and security. However, Tether, the issuer of the largest stablecoin USDT, has faced concerns due to its centralized structure, which poses risks to transparency and compliance. In 2023, Tether was repeatedly questioned by the SEC regarding its compliance, while Circle, the issuer of the second-largest stablecoin USDC, faced a de-pegging event in March 2023 due to the collapse of Silicon Valley Bank, which damaged the market. These events have led the market to reconsider the necessity of decentralizing and integrating stablecoins.

Usual introduces a model designed to fully rebuild Tether on-chain. In this system, the issuer is controlled by the holders of Usual’s governance token, ensuring complete decentralization. This includes decision-making on risk policies, collateral types, and liquidity incentive strategies.

Fiat-Backed Stablecoins Must Avoid Bankruptcy

USDT/USDC Trading Pair Trends

Currently, the major stablecoins are divided into fiat-backed stablecoins and algorithmic stablecoins. Among them, some fiat-backed stablecoins are guaranteed by reserves held by commercial banks. This makes them susceptible to the impact of these banks’ fractional reserve practices, which can undermine the security and stability of stablecoins, making them less stable. The de-pegging event triggered by the collapse of Silicon Valley Bank in March 2023 highlighted the systemic risks posed to DeFi by commercial banks’ insufficient collateral.

Due to Exposure to Fractional Reserves, Fiat-Backed Stablecoins Face Greater Risk

The primary requirement for a stablecoin is that its value remains stable relative to the currency it represents. Users must have firm confidence in the security of their capital. Usual’s collateral model is not tied to the traditional banking system but directly linked to short-term bonds. This prudent approach provides security further strengthened by strict risk policies and an insurance fund.

Profit Sharing

Usual Redistributes 100% of Value and Control Through Its Governance Token $USUAL

Tether and Circle, with their stablecoins USDT and USDC, generated over $10 billion in revenue and were valued at over $200 billion in 2023. However, this wealth has not been shared with the users who contributed to their success. Usual aims to offer an alternative to fiat-backed stablecoins by privatizing the profits from customer deposits while socializing the losses.

Usual’s approach seeks to create a more equitable financial system by redistributing value and power more fairly among all users. The goal of Usual is to make users the owners of the protocol’s infrastructure, funds, and governance. By redistributing 100% of the value and control through its governance token, Usual ensures that its community holds the power. The Usual protocol allocates its governance tokens to users and third parties who contribute value, realigning financial incentives and returning power to the participants within the ecosystem.

Revolutionizing Stablecoin Ownership and Profit Redistribution

Some models only redistribute a portion of the profits generated by stablecoins. However, Usual adopts a different model where users pool the profits generated from stablecoin collateral. These profits constitute the protocol’s funds. In return, users receive governance tokens, giving them control over the protocol, funds, and future revenue.

This mechanism not only redistributes income but also reassigns ownership of the system. It incentivizes early adopters by offering them substantial upside potential.

Features of the Usual Model:

• Ownership and Profit Sharing:
  • Treasury Allocation: 100% of the protocol’s revenue flows into the treasury, with 90% of this revenue’s ownership being distributed to the community through governance tokens.
  • Actual Cash Flow: Reflects the real-time protocol income in the treasury.
  • Future Cash Flow: Based on the potential growth of Total Value Locked (TVL) and protocol revenue.
• Governance Rights:
  • $USUAL token holders can influence key decisions such as income redistribution, collateral management, and risk policies.
• Utility:
  • The $USUAL token unlocks staking opportunities, validator token mechanisms, and “bribe” strategies similar to Curve Wars, allowing users to redirect liquidity incentives and enhance token utility.

Main Products

Usual’s main products include USD0, USD0++, and the governance token $USUAL.

USD0

USD0 is the first Liquid Deposit Token (LDT) launched by the Usual Protocol. It is 1:1 backed by real-world assets (RWAs), and has an extremely short duration, ensuring unparalleled stability and security.

USD0 is the world’s first RWA-backed stablecoin that aggregates various U.S. Treasury bond tokens, providing a solution independent of traditional bank deposits and free from the risk of bankruptcy. USD0 is fully transferable and permissionless, ensuring seamless integration and accessibility within the DeFi ecosystem. USD0 has the following features:

• Transparency and Trust: By maintaining real-time transparency of reserves and avoiding fractional reserve practices, USD0 ensures that users can trust its value and stability, thereby fostering a safer and more reliable DeFi environment.
• Enhanced Security: Compared to other fiat-backed stablecoins, USD0 offers higher security standards. Its real-time transparent reserves are fully collateralized by U.S. Treasury bonds and repurchase agreements, which mitigates some of the risks and potential bankruptcy issues associated with commercial banks, as mentioned earlier.
• Unified Liquidity: The primary use case of USD0 is to unify the liquidity of various deposits, creating a cohesive and efficient financial ecosystem within the protocol. The ultimate goal of USD0 is to be backed by cash equivalents from different issuers.

2.USD0++ (Enhanced T-Bill)

USD0++ is an enhanced 4-year DeFi Treasury bond, secured by the principal and locked in USD0 over 4 years, ensuring the principal’s return. It allows users to benefit from the growth and success of the protocol. Unlike traditional models, USD0++ not only provides protocol income but also allocates ownership of the protocol through its innovative reward mechanism.

It generates returns in USUAL tokens, aiming to surpass the risk-free rate while ensuring risk-free returns. USD0++ will yield returns in the form of $USUAL tokens. To guarantee a minimum return, USD0++ uses a mechanism called the Basic Interest Guarantee (BIG). USD0++ has the following features:

• No Risk to Principal: USD0++ is a bond with locked USD0 as collateral. Locking USD0 poses no risk to the protocol, as the funds remain static.
• Insulated from Interest Rate Fluctuations: USD0++ guarantees returns tied to the underlying RWA interest rate via the Basic Interest Guarantee (BIG) in the form of USD0. Since the collateral consists of very short-term overnight repurchase agreements, USD0++’s value is unaffected by interest rate fluctuations, whether rates rise or fall.
• Liquidity on Secondary Markets: Unlike many permissioned assets, USD0++ has liquidity on secondary markets. It can be minted through USD0 or purchased directly on secondary markets.
• Permissionless and Composable: USD0++ is integrated with numerous DeFi protocols, making it composable with various products.
• No Minimum Holding Requirement: There is no minimum holding requirement for USD0++.
• Higher Returns via USUAL Tokens: The innovation of USD0++ lies in its ability to distribute ownership of the Usual protocol to users through $USUAL tokens. This governance token ensures that USD0++ holders share in the current and future income of the protocol, providing additional value to the earnings distributed through this model.
• Guaranteed Risk-Free Returns: Thanks to the Basic Interest Guarantee (BIG) mechanism, USD0++ liquid bonds ensure that holders’ returns are at least equal to the yield generated by the USD0 collateral, driven by the floating liquidity of non-locked USD0.
• Bull and Bear Market Product: The returns distributed by the protocol, whether in $USUAL or $USD0, are designed to perform well in both bull and bear markets.

However, longer maturity periods in bond markets usually require higher risk premiums. In contrast, the potential returns of USD0++ are at the level of short-term U.S. Treasury bonds. The risk-return balance is unequal, and there are no additional governance advantages. Some view this as a form of “honey pot” model, where retail investors bear the liquidity risks.

Utility of the $USUAL Token

$USUAL is a governance token that provides ownership of the protocol’s actual income, future revenue, and infrastructure. $USUAL is designed for long-term value and offers a range of benefits to its holders. By staking your $USUAL, you can earn additional $USUAL tokens, while unlocking access to exclusive services and utilities. $USUAL has already been listed on Binance’s pre-market, with the official Token Generation Event (TGE) scheduled for December.

• Staking
  Staking $USUAL tokens allows holders to earn additional rewards, promoting the overall stability of the protocol. Stakers will receive rewards in the form of additional $USUAL tokens, proportional to the current circulating supply, thereby incentivizing long-term participation and alignment with the protocol’s goals.

• Liquidity Incentives
  $USUAL tokens can be used for voting on the distribution of LP (Liquidity Provider) rewards. This mechanism ensures effective incentives for liquidity providers, allowing stakeholders to direct rewards to specific pools they support, enhancing the protocol’s liquidity and efficiency, while providing additional utility to the token.

• Further Utility
  Additional utility for the $USUAL token will be announced in the future, potentially covering various use cases within the protocol to expand its functionality and integrate it further into the ecosystem.

• Token Economics Model

Detailed Distribution of $USUAL

Buckets represent different modules or reserves within the $USUAL ecosystem for various purposes. Different categories of buckets serve different functions. Of note, USUAL* refers to the $USUAL token, while USUALx represents staking receipts.

Airdrop Points

Pills Airdrop Points Program

Pills is Usual’s loyalty points program, designed as the standard for subsequent airdrop distributions. These points determine the amount of $USUAL tokens you will receive during the airdrop, accounting for 7.5% of the total $USUAL supply at the Token Generation Event (TGE). The Pills program aims to reward users who contribute liquidity during the early stages of the protocol, before the USD0++ yield is generated and Usual’s full functionality is launched.

Pills Earning Proportion

By collecting Pills, you will receive a proportion of the airdrop based on the number of Pills accumulated during the pre-launch phase. The airdrop event is scheduled for December 2024. The Pills you earn will vary depending on the products, and the earlier users participate in the Pills program, the larger the multiplier they will receive to amplify their Pills rewards.

Conclusion

Usual enhances its risk resistance by aggregating tokenized real-world assets (RWAs) from various growing entities. With the increasing relaxation of cryptocurrency regulations in the U.S. and large institutions gradually entering the crypto market, RWAs, including Usual’s, are expected to become popular choices, given their consideration of risk and compliance. Both USD0 and USD0++ present attractive options for large institutions.