Written by: Liu Honglin
Blockchain, as a general term for a package of technologies derived from Bitcoin, is inherently strong in financial attributes and the spirit of libertarianism. However, people have to bow their heads under the eaves. In order to avoid being targeted by mainstream regulatory authorities, most Web3 projects are trying to prove that their tokens are utility tokens rather than security tokens.
However, the troubles of different projects are not the same. In the world of Web3, there is another kind of token that is afraid that users will not spend it as money, that is, stablecoin. After all, as a payment medium, the most difficult problem is stability (Russian ruble says you click on me...)
The narrative logic of stablecoins is actually very simple. If I have 1 USD in my bank account, I will issue 1 coin on the blockchain. The main point is the stability of sentiment and price. To some extent, stablecoins combine the stability of traditional currencies with the decentralized advantages of blockchain technology, becoming a bridge connecting the real world and the world on the chain, and deservedly becoming the first large-scale application of blockchain technology to ordinary people.
But as stablecoins such as USDT gradually dominate the market, we suddenly find that the dragon slayer finally becomes a dragon.
Tether, as the issuer of USDT Tether, is the core hub of the global Web3 industry, accounting for more than 65% of the global stablecoin market share and earning hundreds of thousands of US dollars from stablecoin business every year. However, it is the most traditional centralized Web2 commercial company.
The issuance and freezing of USDT completely rely on a centralized issuer, and its information transparency is low, its profits have almost no connection with users, and its governance power is highly concentrated. These three points are no problem for traditional Internet companies, but they are fatal for a mainstay company in the Web3 industry, because this is not Web3 at all!
You know, the core concept of Web3 is just a few words: openness, transparency, trustworthiness, and value sharing. And these words seem to have nothing to do with Tether, a centralized stablecoin company.
So the question is: Can stablecoins, an important application of Web3, be made more Web3-friendly? Perhaps this is the key to the development of the next generation of stablecoins.
In this article, Honglin Lawyer would like to share with you a recent research project to further explore how to achieve an innovative model combining decentralization and stablecoins. Naturally, the content of this article is for learning and communication only and does not constitute any investment advice.
Stablecoin Usual Project Introduction
Usual is a decentralized legal stablecoin issuance platform dedicated to breaking down the barriers between traditional finance and decentralized finance (DeFi) and connecting traditional finance with decentralized finance (DeFi).
Usual is centered around three core products:
Commonly used stablecoins: designed for payments, counterparty, and collateral use.
Usual LST: A product that generates revenue.
Usual Governance Token: Gives holders decision-making power within the protocol.
Usual aggregates tokenized real-world assets (RWA) from well-known institutions such as BlackRock, Ondo, Mountain Protocol, M0 or Hashnote, transforming them into permissionless, on-chain verifiable, composable stablecoins, thereby enhancing the liquidity of traditionally illiquid assets and making them more accessible to more investors.
More importantly, it redistributes ownership and governance rights through $USUAL tokens, allowing community members to become owners of the platform's infrastructure, funds, and governance, promoting the integration of the Web3 world with the real world. Through Usual's design, the issuance of stablecoins is not only the digitization of assets, but also a reconstruction of the traditional financial system.
Usual's founder is Pierre Person, who was born on January 22, 1989. He was a member of the 6th constituency of the French National Assembly and has long been active in politics as an election advisor and political ally of French President Macron. Pierre Person's political background and understanding of blockchain technology enable him to lead the Usual team with a unique perspective and promote the integration of Web3 and traditional finance. As a member of the French Socialist Party, Pierre participated in important legislative projects such as LGBT healthcare and marijuana legalization during his tenure, demonstrating his cross-border thinking and innovation capabilities.
In terms of project financing, Usual has attracted the attention and financial support of many well-known investment institutions. In April 2024, Usual completed a $7 million financing, led by IOSG Ventures, with participation from GSR, Mantle, Starkware and other institutions. In November, Usual completed a new round of financing of $1.5 million, with Comfy Capital and early crypto project investor echo also injecting funds into the project. In December, Usual announced the completion of a $1.5 million round led by BinanceLabs.
and KrakenVentures. These investments not only brought necessary capital support to Usual, but also provided rich industry resources and strategic guidance for project development.
Usual Project Stablecoin Features
Unlike traditional centralized stablecoins, Usual's USD0 stablecoin demonstrates unique advantages in stability, transparency, revenue distribution and decentralized governance.
Collateral asset selection and transparency
Unlike traditional stablecoins that are backed by short-term assets such as cash and commercial paper, USD0 uses ultra-short-term real-world assets (RWA) as collateral, including U.S. Treasuries, overnight reverse repo bonds, etc. Holders can earn returns by converting USD0 to USD0++, in the form of $USUAL tokens or risk-free USD0. Moreover, the collateral assets of USD0 are transparent and verifiable on the chain, and users can view and verify the assets supporting USD0 on the chain at any time. This approach not only improves transparency, but also helps build user trust in the protocol.
Innovative profit distribution mechanism
Most of the revenue from traditional stablecoins belongs to the issuer, and users cannot directly benefit from it. USD0 is designed with a more fair and transparent distribution mechanism in mind. 100% of USD0's revenue is remitted to the protocol treasury, and 90% of $USUAL tokens are distributed to community members. Community members include not only users, but also liquidity providers and contributors. Through this design, USD0 ensures that users can share the growth dividend brought by the protocol, rather than concentrating all profits in the hands of the issuer.
What’s more interesting is that users holding USD0 can get more benefits by converting it to USD0++. This not only enhances the user’s sense of participation, but also allows users to benefit from the growth of the protocol, truly realizing the concept of decentralization and revenue sharing.
In contrast, traditional stablecoins such as USDT, although backed by a large amount of U.S. Treasury bonds, most of their profits belong to Tether, and there is almost no way for ordinary users to participate in the profit distribution. For example, in the first half of 2024, Tether's net profit reached US$5.2 billion, and almost all of the profits belonged to the company, and users did not share this dividend.
Decentralized governance and transparent management
USD0’s decentralized governance is one of its highlights. In the Usual protocol, community members are not only users, but can also participate in the governance of the protocol by staking $USUAL tokens. Users have a certain say in the treasury and protocol decisions, which means that the issuance and management process of USD0 is not controlled by a centralized organization, but is jointly decided by the community.
The advantages of this decentralized governance are obvious. It ensures that the decision-making of the protocol will not be manipulated by a single interest party and can better serve all participants. Traditional stablecoins such as USDT are almost completely controlled by Tether, and the space for users to participate in governance is very limited.
Unique advantages of risk management
As mentioned earlier, USD0 chooses highly liquid and safe government bonds as collateral, which reduces the impact of bank systemic risk compared to commercial bank reserves. The short-term maturity assets used by USD0 can effectively avoid discounted liquidation during large-scale redemptions. If the asset maturity is too long, it may be forced to sell at a low price to cope with redemption, but the maturity of short-term assets can reduce this risk.
In addition, all assets are tokenized and on-chain, and users can verify their liquidity and security at any time. This transparency greatly enhances users' trust in the protocol. Smart contracts automatically execute the issuance and management process of USD0 and ensure its price stability through arbitrage mechanisms. When the market price of USD0 deviates from its anchor value, arbitrageurs can restore its stability by buying and selling USD0. Through these measures, USD0 is able to minimize price volatility and reduce systemic risks in the event of large-scale redemptions.
Conclusion
With the continuous development of the Web3 industry, decentralized finance (DeFi) and cross-border payments have become the most promising application scenarios of blockchain. As an important tool to connect traditional finance and on-chain assets, the decentralized, transparent and fair profit distribution mechanism of stablecoins will be the key to the future development of stablecoins.
One of the core concepts of Web3 is decentralization and sharing value with users. Based on this concept, the Usual project innovatively combines the advantages of traditional finance with the decentralized spirit of Web3, and creates a new stablecoin model through a more transparent, fair and decentralized mechanism. It not only provides users with higher returns, but also allows more community members to participate in protocol governance and share network value and business dividends.
This model may be the true future of Web3.0 stablecoin.
