Written by: Pzai, Foresight News
As a hot topic recently, RWA stablecoin has brought fresh water to the stablecoin field with the natural growth of off-chain assets, and opened up enough imagination space for investors. Among them, the representative project Usual has also won the favor of the market and quickly poured in more than 1.6 billion US dollars of TVL. However, the project has encountered certain tests recently.
On January 9, the liquidity pledge token USD0++ in its project was sold off after Usual’s announcement. In the RWA stablecoin camp, some players are also experiencing varying degrees of depegging, which also reflects the change in market sentiment. This article analyzes this phenomenon.
Mechanism changes
USD0++ is a liquid staking token (LST) with a staking period of 4 years, similar to a '4-year bond'. For every USD0 staked, Usual will mint new USUAL tokens in a deflationary manner and distribute these tokens as rewards to users. In Usual's latest announcement, USD0++ will transition to a lower limit redemption mechanism and provide conditional exit options:
Conditional exit: 1:1 redemption, requiring the forfeiture of part of the USUAL yield. This part is planned to be announced next week.
Unconditional exit: redeem at the bottom price (currently set at $0.87), gradually converging to $1 over time.
In the context of fluctuations in the cryptocurrency market, the volatility of market liquidity (for example, the underlying asset of RWA—US Treasury bonds—has also been discounted during recent fluctuations) combined with the implementation of mechanisms has dampened investor expectations. The USD0/USD0++ Curve pool was rapidly sold off by investors, with pool offsets reaching 91.27%/8.73%, and the APY of the USD0++/USD0 lending pool on Morpho soared to 78.82%. Before the announcement, USD0++ had long maintained a premium model over USD0, which may have been due to providing a 1:1 early exemption option during pre-trading hours on Binance, maximizing airdrop benefits for users before the protocol launch. After the mechanisms were clarified, investors began to flow back to the more liquid native currencies.
This event has had a certain impact on holders of USD0++, but most holders of USD0++ are attracted by USUAL incentives, have a long holding period, and the price fluctuations have not fallen below the bottom price, reflected in panic selling.
Possibly influenced by this event, as of the time of writing, USUAL has also fallen to $0.684, a 24-hour decline of 2.29%.
Fluctuations are gradually
From a mechanism perspective, USUAL may have a future process of re-anchoring returns to USD0++ through USUAL tokens (by burning USUAL to drive up token prices, increasing yields while attracting liquidity back). In the process of RWA stablecoins conducting liquidity 'new pulls', the role of token incentives is self-evident. The mechanism of USUAL is to reward the entire stablecoin holder ecosystem through USUAL tokens, anchoring while maintaining stable gains. In a volatile market, investors may need liquidity to support their positions, further exacerbating the fluctuations of USD0++.
In addition to Usual, another RWA stablecoin, Anzen USDz, has also long experienced a decoupling process. After October 16 of last year, possibly influenced by airdrops, the token has continuously experienced a wave of selling, once dipping below $0.9, weakening potential returns for investors. In fact, the Anzen protocol also has functions similar to USD0++, but the overall staking scale is less than 10%, limiting the impact of selling pressure, and its single pool liquidity is only $3.2 million, far less than USD0's nearly $100 million liquidity in Curve's single pool.
In terms of business models, RWA stablecoins also face many challenges, including how to balance the relationship between token issuance and liquidity growth, and how to ensure the growth of real returns aligns with on-chain activities. According to Bitwise analysis, most RWA assets are US Treasury bonds, and the singular asset distribution also makes stablecoins susceptible to impacts from US Treasury bonds. How to resist this through mechanisms or reserves becomes a direction worth considering.
For stablecoin projects, they seem to have fallen back into the 'mine-sell-withdraw' cycle seen during the DeFi Summer period. Although this model can attract a large number of users and funds in the short term through high token incentives, it essentially does not solve the problem of long-term value creation for the protocol, and instead easily leads to continuous price declines due to excessive selling pressure, ultimately damaging user confidence and the healthy development of the project ecosystem.
To break this cycle, the project team needs to focus on the long-term construction of the ecosystem by developing more innovative products, optimizing governance mechanisms, and strengthening community participation, gradually building a diversified and sustainable stablecoin ecosystem, rather than just relying on short-term incentives to attract users. Only through these efforts can stablecoin projects truly break the 'mine-sell-withdraw' cycle, bringing real benefits and strong liquidity backing to users, thereby standing out in a competitive market and achieving long-term development.
