The USD0 launched by Usual Protocol is marketed as the first living deposit token, meaning it is backed 1:1 by RWA (real-world assets) and issued by the protocol, rather than stablecoins issued by traditional institutions. Recently ending pre-market trading, it has officially been listed on Binance, and the token price has been soaring. Wondering whether to sell the airdropped tokens? Or is it still a good time to get in? This article will analyze everything from the team background, operational mechanism to token empowerment.
Usual founder: Advisor on cryptocurrency for French President Macron.
First, let me introduce the Usual team. The members of the Usual team mainly come from France. The founder Pierre Person, born in 1989, once served as a congressman representing the party La République En Marche! founded by French President Macron. He has also held policy advisory roles related to fintech and cryptocurrencies.
Analyzing the USD0 mechanism, RWA reserves on the entire chain.
When users mint USD0, USDC will be converted into USD0 in the Mint Engine. USDC will be used to exchange for tokenized U.S. Treasury bonds issued by Ondo, Fidelity, Midas, Backed, Blackrock, and Hashnote as collateral. Since it is a tokenized RWA asset, the entire process occurs on-chain, unlike traditional finance, which has settlement time constraints, and the process is transparent. Upon redemption, the protocol will sell the tokenized U.S. Treasury bonds or withdraw some liquidity to exchange for USDC.
Additionally, USD0++ has been launched, which is a liquidity staking token backed by USD0. It distributes earnings daily in the form of $USUAL tokens, with the yield being flexible and dependent on the $USUAL token price in the secondary market. The yield floor for USD0++ is equivalent to the interest on U.S. Treasury bonds, representing a risk-free return on-chain (though there is still protocol risk).
Aiming for the throne of on-chain Tether, banks are not as safe as imagined.
The goal of Usual Protocol is to become a Tether on the blockchain, which can be inferred from the protocol's homepage. Usual lists its income from various stablecoin issuers on the homepage, currently leading Ondo, Paypal, USDD, etc., with the next target being Sky Dollar. Further ahead are Ethena's USDE, FDUSD, DAI, USDC, and finally the ultimate competitor USDT.
Usual Protocol also mentioned the risks associated with stablecoin issuers like Tether. We assume that Tether's excess reserves are true, but the problem is that the banking system does not operate under excess reserves. The banking system has what is known as a reserve requirement issue; assuming Tether has 10% of its assets in cash reserves, under a reserve requirement of only 10-20%, there is an 8-9% gap in Tether's asset reserves, which was mentioned by Tether's CEO Paolo Ardoin in a previous interview.
(Tether enters AI! The CEO states they are cash-rich and will challenge Microsoft and Amazon.)
The issuance of tokens is proportional to cash flow, with inflation lower than the growth of TVL.
Usual believes that most governance tokens do not have significant differences and are merely minting air tokens without demand. This can only attract short-term speculators rather than long-term investors. Although Usual still has investors behind it, the team and VCs only account for 10%, while the remaining 90% of the tokens return to the community. Notably, the most distribution is at USD0++, which is intended to encourage USD0 holders to invest their stablecoins, allowing the protocol to buy back more assets and mint more stablecoins in a positive feedback loop.
The distribution rate of the USUAL token peaked during the initial airdrop phase and gradually decreased as the protocol's TVL increased. The issuance of USUAL is proportional to the future cash flow of the protocol, with cash flow primarily coming from the collateral assets of USD0. The inflation rate is designed to be lower than the economic growth rate of the protocol, ensuring that token issuance does not exceed the increase in the protocol's value. Like Bitcoin, the issuance model of USUAL adopts a deflationary structure, but its issuance rate is lower than Bitcoin's.
With the growth of TVL, the earnings per token (EPT) will also rise, further enhancing the token's attractiveness. To participate in governance, one must stake USUAL tokens, which also allows earning 10% of future USUAL issuance. Besides the 90% of tokens supplied to the community, governance token voting can also decide decisions such as income distribution. Additionally, if users want to unlock their USD0 staking early, they will need to spend USUAL tokens.
In summary, the USUAL token not only promises to return the income of stablecoin issuers to the community but also its friendly community token economics and token empowerment further enhance its ownership value. As a reference, before the cutoff, the FDV of the USUAL token was approximately 578 million USD, which is not too high. In a similar field, Ethena has a market cap of 17 billion USD, while the latecomer Anzen has 260 million USD.
This article went live after Binance's official launch, analyzing the token economy of the on-chain Tether USUAL protocol and its underlying logic, first appearing on Chain News ABMedia.
