Article Source: Chain Source Technology PandaLY

From November 11 to 19, Usual's governance token $USUAL saw an astonishing increase from $0.2 to $1.3, growing over 500% in just nine days.

Tether and Circle earned over $10 billion in 2023, with valuations exceeding $200 billion, but this wealth has nothing to do with users - their model privatizes the profits from user deposits while shifting the risks onto society. This mechanism mirrors the issues in traditional banking, completely deviating from the original intention of decentralized finance.

Usual provides a completely new stablecoin approach: redistributing value and power, allowing users to truly become the masters of the system. By using governance tokens, Usual returns all profits and decision-making power generated by the protocol back to the community, enabling every participant to share in the ecological growth dividends.

In a market dominated by centralized giants, Usual attempts to break the status quo by creating a fairer and more transparent financial system for users through DeFi.

What is Usual?

USUALLY is a fiat-backed stablecoin issuer, unlike Tether and Circle, it is a decentralized issuer rather than a highly centralized one. The recently popular $USUAL is their token for redistributing ownership and governance.

USUAL first came into public view earlier this year. In April, it completed a $7 million financing led by IOSG Ventures; in June, it launched its own protocol, Usual Protocol; in July, Usual went live on the mainnet; on November 19, the $USUAL token was officially launched, and on December 23, Usual completed a $10 million Series A financing.

Why choose decentralization?

Currently, the stablecoin market has surpassed $100 billion, but its value is primarily concentrated in centralized giants like Tether and Circle, leaving ordinary users with little to gain. This centralized model not only deprives users of their rights to profits but also limits the development of stablecoins to the control of a few institutions.

Usual addresses this market pain point with a brand-new solution: empowering users through decentralization, making them key participants in the protocol's infrastructure, funding, and governance, thereby breaking the monopoly of traditional stablecoins.

Usual's governance token $USUAL achieves a 100% redistribution of value and control, ensuring that community users have the dominant power. By distributing governance tokens, the protocol returns profits to users and third parties who contribute value, optimizing the financial incentive mechanism while empowering ecosystem participants with greater authority and voice. Compared to traditional models, Usual's decentralized design rewards early contributors and aligns the interests of all stakeholders, making the protocol more dynamic and inclusive.

Currently, issuers of stablecoins in the market can be roughly divided into three categories:

  • Traditional Model: For example, Tether allocates all revenue to its shareholders. Users can only obtain a stablecoin compatible with DeFi, without enjoying the benefits or dividends from protocol growth.

  • Yield-Focused Stablecoins: Issued by institutions like Ondo or Mountain, allowing users to share the underlying returns through a permissioned mechanism. However, users can only gain returns without benefiting from protocol growth. For instance, regardless of whether USDM's TVL is $100 million or $10 billion, the user's yield remains fixed at 5%.

  • Usual Model: Usual combines returns with growth. By redistributing value through the $USUAL governance token, users not only receive stablecoin returns but also possess ownership and growth potential of the protocol. Usual's decentralized philosophy injects fresh ideas into the stablecoin market, making it stand out.

Three Core Products of USUAL

Usual's core products include: USD0, USD0++, and the USUAL governance token. Together, these three form the core ecosystem of Usual.

USD0

USD0 is the first liquidity deposit token (LDT) launched by Usual Protocol. It is backed 1:1 by real-world assets (RWA) such as U.S. Treasury bonds, ensuring its high stability and security. USD0 is not only a stablecoin pegged to the U.S. dollar but also a permissionless, composable asset that can be seamlessly integrated into the DeFi ecosystem. Through USD0, Usual enables users to conduct payments, transactions, and collateral operations more securely while ensuring safety unrelated to traditional bank deposits.

USD0++

USD0++ is a staking version of USD0 and can also be viewed as a liquidity deposit token (LST). Users can stake USD0++ as a 4-year bond in exchange for $USUAL tokens as yield rewards. USD0++ maintains the stability of USD0 while enabling users to gain protocol returns through a decentralized profit distribution mechanism. Moreover, USD0++ also offers high liquidity and composability, making it widely applicable in DeFi protocols and providing holders with higher yield potential.

USUAL Governance Token

The USUAL governance token is the core of the entire Usual Protocol, granting holders decision-making and governance rights within the protocol. The USUAL token allows users to participate in the management of the protocol and gain actual benefits from its growth and revenue through a decentralized governance mechanism. 90% of the USUAL tokens will be allocated to the community, leaving only 10% for the protocol team and investors, ensuring the dominance of the community and incentivizing more users to participate in the construction and development of the protocol.

Through these three core products, Usual not only provides stability and returns but also ensures users' control and value distribution within the protocol through a decentralized mechanism.

USUAL Token Economics

Currently, many governance token designs on the market have issues. Most token models are essentially copied and fail to effectively balance the interests of short-term speculators and long-term investors, resulting in token prices being easily influenced by speculation, leading to selling pressure. At the same time, there is often no close connection between these tokens' value, governance, and income potential, relying more on market hype to drive prices while ignoring the creation of actual value for users. Founders and teams typically hold large amounts of tokens, while ordinary users' holding values are constantly eroded by inflation, ultimately leading to token devaluation.

Unlike traditional tokens, Usual ensures the long-term alignment of interests among users, contributors, and investors through a unique token economic model, achieving sustainable value growth and actual utility. This design avoids short-term speculation, focusing on the creation of stable and long-term value, genuinely allowing every participant to benefit.

USUAL tokens are the core of the Usual Protocol ecosystem, primarily used for governance while providing economic benefits to holders. The value of the tokens comes from the economic rights they represent and the actual returns generated from stablecoin collateral. In simple terms, when the protocol generates income, the value of USUAL increases, allowing holders to share in the protocol's growth.

In terms of token distribution, Usual aims to avoid excessive dilution by distributing 90% of USUAL tokens through the total value locked (TVL) of USD0 to those who contribute value and income to the protocol. The total token holdings of the team, investors, and advisors will not exceed 10% of the total supply. This distribution method ensures that users' interests are not diluted by over-issuance.

The issuance mechanism of USUAL is directly linked to the cash flow generated by stablecoin collateral. Whenever a user stakes USD0, the protocol mints new USUAL tokens. As the protocol's revenue increases, the token supply will also increase. This design ensures that the issuance rate of the tokens does not exceed the economic growth rate of the protocol, avoiding excessive inflation.

Usual's token issuance follows a deflationary model with a carefully calibrated issuance rate that remains below the growth rate of protocol revenue. This means that as the protocol develops, USUAL tokens will become increasingly scarce, ensuring the long-term stability of token value.

Additionally, USUAL holders will participate in decision-making regarding the protocol's financial management, determining how to use the protocol's revenue, such as through token burn or revenue distribution. This way, holders can not only govern the protocol but also influence its financial strategy and long-term development.

Finally, USUAL holders can earn rewards by staking their tokens. When you stake USUAL tokens, they transform into USUAL+, allowing users holding USUAL+ to receive up to 10% of newly minted USUAL tokens, with the specific ratio determined by issuance rules. This not only provides additional income but also incentivizes users to participate in the long-term development of the protocol and ecosystem.

Is participating in the USUAL project risk-free and guaranteed profit?

The emergence of USUAL inevitably reminds one of The DAO and Luna, which were initially favored projects in the cryptocurrency space but ultimately collapsed due to contract vulnerabilities or token economics. Although USUAL seems to have great potential with its innovative token economics and strong security mechanisms, blockchain projects inherently carry certain risks. No matter how meticulously designed, it is impossible to completely eliminate the possibility of vulnerabilities and attacks.

USUAL's Security Audit

Currently, USUAL has undergone 5 security audits, conducted by Cantina, with the main audit tasks being:

Permissionless smart contract audit initiation, L2 token contract, OFT MintAndBurnAdapter and L1 OFT Adapter, USD0++ and DAO collateral contracts, SwapperEngine and USUAL token contracts, USUAL distribution and airdrop contracts, Blackthorne audit, etc.

Although security audits have been thorough, the methods for key management have not been disclosed. Given the precedents of DEXX and Radiant, this does not guarantee that USUAL is safe.

Does USUAL's security monitoring have flaws?

The monitoring framework provided by USUAL's official documentation is already quite comprehensive, but there are still a few minor issues:

Limitations of Monitoring Coverage:

The current monitoring framework primarily focuses on monitoring key operations within the protocol, but may lack sufficient real-time monitoring for external interfaces, third-party integrations, or interactions with other chains (such as cross-chain operations). If there are vulnerabilities or attacks during the interaction between the protocol and external systems, the existing monitoring may not be able to promptly identify the issues.

Threshold Settings:

In the threshold alert system, unusual trading volumes, significant token volatility, or price fluctuations may trigger alerts. However, market volatility and certain special events (such as large transactions or market adjustments) may be misinterpreted as abnormal behavior. If the threshold settings are not intelligent enough or fail to adapt to market changes, it may lead to excessive alerts or missed alerts, resulting in delayed responses or misleading information.

Potential Risks of Multi-signature:

Just like the case of Radiant being hacked, despite the multi-signature wallet activities being monitored in real-time, the multi-signature itself may carry risks of mismanagement. If any of the signing members make mistakes, get hacked, or engage in malicious behavior, the monitoring system may not be able to detect abnormal authorization operations in advance.

Last

The USUAL protocol excels in innovation, adopting a token issuance model linked to actual income, ensuring long-term value growth. Additionally, its security mechanisms are robust, with features like automatic circuit breakers that can immediately halt operations upon detecting risks, protecting user assets. However, there are also potential risks, such as the possibility of false positives or missed alerts in the automatic defense mechanisms, and ongoing attention is needed for the security of multi-signatures and external interfaces.

Overall, the design of USUAL offers promising solutions to the speculation problem of blockchain protocols and enhances security.