From November 11 to 19, Usual's governance token $USUAL achieved 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 is unrelated to users— their model privatizes the profits from user deposits while passing the risks onto society. This mechanism mirrors traditional banking issues, completely deviating from the original intention of decentralized finance.

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

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 the token they issue for redistributing ownership and governance.

USUAL first came into public view early this year, completing a $7 million financing led by IOSG Ventures in April; 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 mainly concentrated in centralized giants such as Tether and Circle, making it nearly impossible for ordinary users to benefit. This centralized model not only deprives users of their rights to profits but also limits the development of stablecoins to a few institutions' control.

Usual addresses this market pain point by proposing a completely new solution: empowering users through decentralization, making them core participants in the protocol's infrastructure, funding, and governance, thus breaking the monopoly of traditional stablecoins.

The governance token $USUAL of Usual has achieved 100% redistribution of value and control, ensuring that community users have the upper hand. The protocol returns value to users and third parties who contribute through the distribution of governance tokens, not only optimizing the financial incentive mechanism but also empowering ecosystem participants with greater authority and voice. Compared to traditional models, Usual's decentralized design rewards early contributors and coordinates the interests of all stakeholders, making the protocol more dynamic and inclusive.

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

  • Traditional Model: For example, Tether allocates all income to its shareholders. Users can only obtain a stablecoin compatible with DeFi but cannot enjoy the profits or dividends of protocol growth.

  • Yield-bearing stablecoins: Issued by institutions such as Ondo or Mountain, allowing users to share base yields through a permissioned mechanism. However, users can only earn yields and do not benefit from protocol growth. For example, regardless of whether USDM's TVL is $100 million or $10 billion, users' yields remain fixed at 5%.

  • Usual Model: Usual combines yield and growth into one. Through the $USUAL governance token, value is redistributed, allowing users to not only earn stablecoin yields but also own and benefit from the protocol's growth potential. Usual's decentralized philosophy injects fresh ideas into the stablecoin market, making it stand out.

The 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, trading, and collateral operations more securely, while ensuring safety unrelated to traditional bank deposits.

USD0++

USD0++ is a staked version of USD0 and can also be viewed as a liquidity deposit token (LST). Users can stake USD0++ as a 4-year bond to receive $USUAL tokens as a yield reward. USD0++ maintains the stability of USD0 while enabling users to earn protocol yields through a decentralized distribution mechanism. Additionally, USD0++ also has high liquidity and composability, making it widely applicable in DeFi protocols, providing holders with greater yield potential.

USUAL Governance Token

The USUAL governance token is the core of the entire Usual Protocol, granting holders decision-making and governance power within the protocol. The USUAL token employs a decentralized governance mechanism, allowing users to not only participate in the management of the protocol but also to benefit from the protocol's growth and earnings. 90% of USUAL tokens will be allocated to the community, with only 10% reserved for the protocol team and investors, ensuring the community's dominant position 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 yields but also ensures user control and value distribution within the protocol through decentralized mechanisms.

USUAL Token Economics

Currently, many governance token designs on the market have some issues. Most token models are essentially copied, failing to effectively balance the interests of short-term speculators and long-term investors, resulting in token prices being easily influenced by speculation, causing sell pressure. At the same time, there is not much close connection between the value of these tokens, governance, and income potential, relying more on market hype to drive prices up, neglecting the creation of actual value for users. Founders and teams typically hold large amounts of tokens, while ordinary users' holding values are continuously eroded by inflation, ultimately leading to token depreciation.

Unlike these traditional tokens, Usual ensures that the interests of users, contributors, and investors can be combined in the long term through a unique token economic model, achieving sustainable value growth and real utility. This design avoids short-term speculation, focusing on stability and long-term value creation, allowing every participant to genuinely benefit.

The USUAL token is the core of the Usual Protocol ecosystem, primarily used for governance while also providing economic benefits to holders. The value of the token comes from the economic rights it represents and the actual yields generated by the 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 token distribution, Usual aims to avoid excessive dilution by primarily distributing 90% of USUAL tokens to users who contribute value and income to the protocol through the total value locked (TVL) of USD0. The combined 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 will mint new USUAL tokens. As the protocol's income increases, the supply of tokens will also increase. This design ensures that the rate of token issuance does not exceed the economic growth rate of the protocol, avoiding rapid inflation.

Usual's token issuance follows a deflationary model, with the issuance rate carefully calibrated to remain below the growth rate of protocol income. 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 also participate in decision-making regarding the protocol's financial management, determining how to utilize the protocol's income, such as through token burn or income distribution. In this way, holders can not only govern the protocol but also influence the protocol's financial strategy and long-term development.

Lastly, USUAL holders can earn rewards by staking tokens. When you stake USUAL tokens, they convert into USUAL+, and users holding USUAL+ can earn up to 10% of newly minted USUAL tokens, with the specific ratio determined by issuance rules. This not only provides additional yields but also incentivizes users to participate in the protocol's construction and ecological development over the long term.

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

The emergence of USUAL inevitably reminds people of The DAO and Luna, which were initially highly regarded projects in the crypto space but ultimately collapsed due to contract vulnerabilities or token economics. Although USUAL appears to have great potential, utilizing innovative token economics and strong security mechanisms, blockchain projects inherently carry certain risks, and no matter how carefully designed, it is impossible to completely eliminate the possibility of vulnerabilities and attacks.

USUAL's Security Audit

USUAL currently has undergone 5 security audits conducted by Cantina, whose audit work mainly includes:

Permissioned initiation of smart contract audits, permissionless initiation of smart contract audits, L2 token contracts, OFT MintAndBurnAdapter and L1 OFT Adapter, USD0++ and DAO collateral contracts, SwapperEngine and USUAL token contracts, USUAL distribution and airdrop contracts, Blackthorne audits, etc.

Although the security audits were thorough, there has been no disclosure of how private keys are managed. After all, there are precedents like DEXX and Radiant, so it cannot be said that USUAL is completely safe.

Are there flaws in USUAL's security monitoring?

The monitoring framework provided in the USUAL official documentation is already quite comprehensive, but there are still some minor issues:

Limitations of monitoring coverage:

The current monitoring framework mainly 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 if attackers exploit interactions with external systems, the existing monitoring may not detect issues in a timely manner.

Threshold Settings:

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

Potential risks of multi-signature:

Similar to the case of Radiant being hacked, although the activities of multi-signature wallets are monitored in real-time, the multi-signature itself may carry a risk of mismanagement. If any of the signing members make a mistake, are hacked, or engage in malicious behavior, the monitoring system may not be able to detect abnormal authorization operations in advance.

Finally

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, such as an automatic 'circuit breaker' that can immediately pause operations upon detecting risks, protecting user assets. However, there are also potential risks, such as misjudgments or false alarms from automatic defense mechanisms, as well as ongoing concerns regarding the security of multi-signature and external interfaces.

Overall, the design of USUAL offers promising solutions to address speculation issues in blockchain protocols and enhance security.