Author: 1912212.eth, Foresight News
The holy grail of the cryptocurrency industry has always been to achieve currency status. Since the birth of Bitcoin, the dream of achieving currency attributes has been constantly pursued. Interestingly, it is not the BTC that was born at the beginning that truly realizes the large-scale payment attributes of encryption, but stablecoins. Stablecoins are the first use case of RWA. Whether it is a stablecoin backed by a fiat currency or an algorithmic stablecoin regarded as the crown jewel, they are all competing for the holy grail. USDT is the leader in terms of its total market value, USDC has made a name for itself with compliance, and the rising star algorithmic stablecoin USDe has carved out a niche with the blessing of celebrity halo and continuous brand cooperation and integration.
Stablecoins are also profit-making money-printing machines. The profit of USDT issuer Tether alone in the first quarter of this year exceeded 4.52 billion US dollars, setting a record high. In comparison, Tether's net profit in the whole of 2023 was only 6.2 billion US dollars. It can be imagined how exaggerated its profit margin growth is.
There is no shortage of new players in the money-making track. Stablecoin startup Usual Labs completed a $7 million financing in April this year, led by IOSG and Kraken Ventures, with participation from GSR, Mantle, StarkWare, etc. Usual Labs then launched the stablecoin USD0 at the end of May.
What is Usual Labs?
Usual Labs is a stablecoin startup that is building the DeFi protocol Usual Protocol, whose core product is the stablecoin USD0. In Usual's view, the problem with the traditional financial system is that the profits from customers' deposits flow into the pockets of the banks themselves, while transferring the risks to the public. Fiat-backed stablecoins are not perfect either, and the centralized participants behind them have the same structural problems as the traditional banking industry.
How does Usual Protocol work?
When users deposit assets, they receive a synthetic asset called Liquid Deposit Token (LDT), which represents the initial value of their deposit in the Usual protocol. LDT can be freely traded in a permissionless manner and is backed 1:1 by the original asset deposited into the protocol. LDT provides holders with permanent withdrawal rights, allowing them to redeem the underlying asset at any time under normal circumstances.
In this way, users can use LDT to pry open the door to profit leverage, such as providing liquidity or issuing Liquidity Bond Tokens (LBT). LBT is to lock LDT for a period of time. LBT provides liquidity, transferability and composability, and promotes seamless integration and transactions within DeFi. Users who participate in the interaction will also receive Usual's governance tokens.
What are the characteristics of the stablecoin USD0?
The stablecoin USD0 is the most important product on the Usual protocol and also the first LDT on the protocol. Its name comes from the equivalent of central bank currency (M0) on Usual, hence the name USD0. Unlike stablecoins such as USDT and USDC, USD0 is backed by ultra-short-term physical assets (RWA) 1:1.
Due to the reserve system of some banks, stablecoins backed by fiat currencies are also at risk. The Silicon Valley Bank incident last year showed the systemic risk of DeFi caused by insufficient collateral of traditional commercial banks.
USD0 considers this from multiple aspects. First, government bonds are chosen as the best choice because of their high liquidity and security. Secondly, in order to ensure the stability of the assets, the issuer must use assets with very short maturities to provide collateral for stablecoins to ensure that holders receive a high level of security. This strategy can prevent forced liquidation at a discount in the event of a large redemption, while also preventing volatility events that may reduce the value of the collateral.
Usual has already integrated Hashnote, and those awaiting confirmation include Ondo, Backed, M^0, Blackrock, Adapt3r, and Spiko. It can be foreseen that its liquidity will be greatly enhanced after the integration is completed.
Usual token distribution: 90% belongs to the community
The official token economics details have not yet been released, but the uses of the Usual tokens have been clarified, mainly including governance and utility. Usual is designed with a deflationary mechanism, and early adopters can get more tokens. As TVL increases, fewer Usual tokens are distributed.
In addition, Usual holders have control over the treasury, and when acting as a governance token, holders can participate in the decision-making process. Staking tokens can also earn returns while supporting the security of the protocol, etc.
Unlike other protocols that allocate 50% of the total tokens to VCs and consultants, Usual allocates 90% of the total tokens to the community, and members of its internal team will not be allocated more than 10% of the circulating supply. This further demonstrates the "decentralized" spirit of the community amid the growing calls for "fairness".
summary
Usual chose RWA support to redesign the stablecoin USD0 in the stablecoin track supported by fiat currency and algorithm. The stablecoin market has huge room for imagination. It is worth patiently observing how USD0 will perform in the future.