How to understand the pump logic of USUAL?

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$USUAL is one of the most important releases of this cycle, and its initial performance is very promising. So, should you buy it or ignore it?

A few months ago, when I was researching new stablecoins, I started paying attention to USUAL. What sets USUAL apart is its clear story: on-chain Tether that distributes profits to token holders. Tether has earned over $7.7 billion in profit so far this year, almost more than Blackstone.

If USUAL can achieve this goal, even just 10% of it would mean a profit of $770 million. And the best part is, 90% of the revenue will be distributed to token holders and stakers in the form of $USUAL.

Earnings are paid in $USUAL, so whenever someone deposits USDO (their stablecoin), $USUAL tokens will be continuously issued.

USDO is a stablecoin backed by US Treasury bonds, which generate returns distributed in the form of $USUAL and USDO.

USUAL Money mentioned that when the cash flow of $USUAL reaches a certain target, they plan to control the issuance of $USUAL to ensure that the continuous issuance rate is lower than the income growth rate. Initially, the issuance will be higher, but over time, the issuance will gradually decrease.

In addition to governing and staking token $USUAL, USUAL also provides two other tokens.

USDO++: This is the liquidity token you receive after staking USDO. USDO holders need to stake USDO for 4 years to mint USDO++. USDO++ holders will receive 45% share of the $USUAL supply.

Whenever a new USDO++ is minted, USUAL will issue new $USUAL tokens. This is a core part of their flywheel mechanism. The protocol's TVL (Total Value Locked) also tracks the value of USDO++ minted in the protocol.

The higher the TVL, the more income the protocol generates, and these income will be paid to USDO++ holders in the form of $USUAL tokens.

$USUAL's issuance rate will decrease as more users adopt it, reducing the number of tokens issued per $1 lock-up.

This reduction will increase the yield of each token, thereby naturally driving up the price of $USUAL.

A higher USDO++ annualized yield (APY) will attract more people to pledge USDO. The current annualized yield is about 80%, so we may see TVL rise in the coming days. The current TVL is about $9 billion, with 87.47% of USDO pledged to USDO++.

There is another type of staking token called USUALx, which provides three forms of rewards: USDO rewards from revenue, 10% of $USUAL issuance, and 50% fee sharing from the unlock module.

When USDO++ holders decide to unlock before expiration, the protocol will also initiate the destruction mechanism of $USUAL.

They need to destroy a portion of $USUAL supply in order to unlock.

As mentioned in the USUAL Money white paper, we do indeed face two serious product risks:

The market price of $USUAL (the main reward token) directly affects the earnings in the ecosystem, including rewards and liquidity incentives related to USDO++. A significant price drop may damage the competitiveness and user attractiveness of the ecosystem. Due to its inflationary nature, there is also a risk of hyperinflation.

To this end, DAO can adjust the coin minting rate to regulate the issuance, thereby mitigating this risk and ensuring economic stability and sustainability.

USDO++: These locked tokens lack a cost-free arbitrage mechanism to maintain their peg, which may lead to price fluctuations. However, this risk has been minimized by the strong liquidity of the secondary market, as well as liquidity provision incentives and an early redemption mechanism. In addition, the price floor redemption mechanism limits extreme fluctuations, ensuring stability and market efficiency.

Generally speaking, as long as the price of $USUAL is attractive, the protocol can attract more people's demand for USDO and USDO++. The greater the demand for their stablecoins, the more income will be generated, which will be distributed to USDO++ holders, USUALx holders, and other participants.

Currently, the annual interest rate of USUALx is about 28,000%, which may attract early demand and create early market heat.

However, in the long run, the key lies in how stable the USDO anchoring mechanism is, and how long $USUAL can continue to attract demand.

In terms of token economics: about 90% of the tokens are allocated to the community, of which around 64% are used for inflation rewards, and these rewards will be adjusted and distributed according to dynamic demand. Currently, about 12.4% of the tokens have entered circulation.

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