USD0 is a RWA stablecoin, collateralized by short-term Treasury bills. USD0 offers a safer stablecoin than fiat backed stablecoin, all with a mechanism for redistributing the value generated by the user, In an exclusive interview with BitcoinWorld , We will explore what is concept of USD0 all about & What all opportunities are there for retail investors,
Could you explain the concept of USD0 and how it differs from other stablecoins currently on the market?
USD0 is a RWA stablecoin, collateralized by short-term Treasury bills. USD0 offers a safer stablecoin than fiat backed stablecoin, all with a mechanism for redistributing the value generated by the user. Building on the observation that Tether and Circle privatize the profits generated by user liquidity, Usual proposes a system for redistributing value. This mechanism differs from other stablecoins which distribute their income in the form of yield. Usual distributes governance over the issuer, allowing the user to have speculative exposure to the growth of the protocol. Usual distributes a risk-free ownership through its governance token Usual.
What types of real-world assets back USD0, and why were these particular assets chosen?
USD0 is collateralized 1:1 by short-term bills or overnight repos. The collateral of USD0 is USYC, issued by Hashnote, a regulated Money Market fund. This system guarantees capital security for USD0 users at all times.
How does USD0 redistribute profits to the community, and what mechanisms are in place to ensure this is done fairly?
Usual does not directly redistribute the profits. The profits go into the protocol’s treasury. The holders of USD0, especially those who provide or lock their liquidity, receive USUAL as a reward. These USUAL are distributed at 90% for the community to avoid any form of dilution of the users by the insiders (team, advisor, investors). The USUAL token is issued in a disinflationary manner based on the TVL of the protocol. Thus, fewer and fewer USUAL tokens are issued when a user provides liquidity in the protocol. This mechanism allows to align the interests and especially reward the early entrants who bring value to the Usual protocol.
Can you provide more details on how yields are generated for USD0 holders? What kind of returns can holders expect?
The users of the protocol will receive a token that should beat the risk-free yield based on the speculation around USUAL price.
How does the USUAL token function within the ecosystem? What powers do token holders have regarding the governance of the network?
Usual is not only a token that reflects the income generated by the protocol, but also represents governance rights. It serves as the utility token of the Usual protocol through strategic incentive mechanisms.
What does the proposal and voting process look like for USUAL token holders? How do you ensure that it remains democratic?
The democratic nature of the protocol is evident from the beginning, particularly in the distribution of tokens. Typically, 90% of the tokens are distributed to $USD0 users and liquidity providers. To protect the community from potential dilution, investors and the team are restricted to owning no more than 10% of the circulating supply.
What are the main challenges you foresee in maintaining a stablecoin backed by real-world assets, and how do you plan to address them?
Maintaining a real-world asset-backed stablecoin like USD0 faces two primary challenges: ensuring stability and fostering adoption. USD0’s stability is an inherent consequence of its collateral – US Treasury bills, which are the most liquid assets in traditional finance and represent the shortest-term debt. We address stability risks by using this high-quality collateral, implementing 100% asset segregation with regulated entities, and maintaining a zero-risk policy with carefully selected tokenizers. Importantly, USD0 is not exposed to the fractional reserve banking system and protects against counterparty risk. The main stability risk would be a global economic crisis affecting US Treasuries themselves. For user adoption, we’re focusing on education and accessibility, developing an intuitive dApp, creating comprehensive resources to explain RWA backing and our ecosystem, and streamlining the onboarding process. Our goal is to bridge traditional finance and blockchain technology with a stable, transparent product that users can easily understand and utilize.
Are there any upcoming features or expansions in the roadmap for Usual Labs that you can share with us?
Usual has just reached $50M in TVL and plans to launch the pre-launch period at the end of June, which will allow everyone to mint USD0 and earn points in anticipation of the future $USUAL airdrop scheduled for Q4 2024.
How does Usual’s approach to stablecoins compare to that of competitors like Ethena Labs with their USDe token?
We are not competitors to Ethena. We are competitors of Tether and Circle because we decentralize the USDC and USDT model. We propose a model radically opposed to Ethena where our stablecoin is secured by T-Bills and where rewards are distributed in the form of governance tokens to the holders of the stablecoin. We aim to provide a speculative yield while limiting the risks for the holder of the stablecoin.
How do you see the role of stablecoins evolving in the blockchain ecosystem, and what part will Usual Labs play in this evolution?
Beyond the major role that stablecoins are going to play in the coming years, DeFi needs to benefit from a stablecoin that can be neutral, decentralized and redistributive with shared governance. This is a major challenge in order to allow DeFi to be truly decentralized.
For such insightful post, Visit BitcoinWorld.co.in