First, this depegging comes from an announcement made by Usualmoney today, stating that the previously mentioned exit for USD0++ will incur a cost (Usual), officially starting from February 1. The official also proposed a specific figure, providing a guaranteed price of 0.87:1 for USD0++ exits.
After seeing the announcement, the rapid response and panic interpretation led to the sudden depegging.
To summarize the process briefly:
Previously, USD0++ set a relatively long free-riding period for everyone's convenience. It started with blind mining, and before listing on Binance, the team provided an unconditional 1:1 exit guarantee. Essentially, you were holding a stablecoin while enjoying a 50%+ annualized yield on mining, so a large amount of funds converted to USD0++, even using Morpho to amplify funding efficiency.
However, as the project progressed, the project party announced the cancellation of free-riding benefits, starting to charge from February 1, although the specific amount has not been announced yet. As a result, miners began to withdraw; those who exited early incurred smaller losses than those who exited late, and many people had significant leverage. If they did not sell in time to increase collateral, they could face liquidation, leading to a wave of selling USD0++ down to USD0.
In fact, the charging for this exit is not sudden; the project party had already mentioned it long ago, but everyone was simply betting on taking the last bite.
In addition, the official announcement mentioned a support rate of 0.87, which might have been intended to be positive, indicating a bottom at 0.87, just above Morpho's liquidation line of 0.86. As a bond redeemable in 4 years, even if it fluctuates to 0.1 in the meantime, it cannot be considered a default (although it would greatly harm the user base). However, the market interpreted it as the official might allow the exchange rate to drop by 13 points, triggering further panic selling.
Furthermore, media reports and influential figures reminding people of the depegging risks have caused many to sell at a loss. It is important to highlight risks, as the lessons from LUNA are there; who can claim there is absolutely no risk? But I feel that Usual has not reached that level yet.
Currently, there are large players in the market buying at the bottom of the exchange rate, with 0.93 being a critical point of contention. Once those in panic have exited, the situation should improve.
Reason:
1. The project has not yet announced the cost of conditional exit, that is, how much $Usual needs to be burned for a 1:1 exchange, which will be announced early next week. If the final result shows that only 1% needs to be burned, then the current 7% depegging will immediately be corrected to 99%.
2. After the burning starts, the price of $Usual will receive direct empowerment, which is a real benefit for both UsualX and $Usual holders.
3. As free riders exit, the returns for USD0++ holders will increase. As long as the USD0++ yield reaches or exceeds the standard risk-free rate, holding it until maturity will still be more profitable than selling it at a price below $1. Simply put, even if you treat it as a 4-year investment, the returns at maturity will still be considerable (if the project does not rug pull after 4 years).
Summary:
Today's depegging is an inevitable test during the project's phase transition, but it appears to still be within the project party's planning and control. I personally did not sell at a loss, and the leverage ratio in Morpho is quite low, so I am not too worried. Selling at a loss during peak market FUD often proves to be a mistake.