Why does USUAL still need a stablecoin?
First, clarify the two positions: Usual is a stablecoin protocol, and its USD0 is a permissionless and fully compliant stablecoin supported 1:1 by real-world assets (RWA);
The USUAL token itself is the governance token of the project, allowing the community to guide the future development of the network.
Following these two positions, quickly understand what Usual is doing.
Everyone knows that the current stablecoin market is already relatively mature, with Tether and Circle holding an unshakeable position. What is the necessity of a new stablecoin?
Or rather, what is the narrative of a credible new stablecoin? The answer starts from three real observations.
First, in 2023, Tether and Circle generated over $10 billion in revenue, with valuations exceeding $200 billion. However, the users who provide liquidity for them have not been able to share in these substantial profits. This model of centralizing profits while socializing risks contradicts the intention of decentralized finance.
Secondly, although real-world assets (RWA) are attracting attention in the crypto market, even products like on-chain U.S. Treasury bonds have fewer than 5,000 holders on the mainnet. This indicates that the deep integration of RWA and DeFi still faces numerous challenges.
Thirdly, DeFi users generally hope to share in the success of the projects they support. However, existing profit distribution models often overlook the greater risks borne by early users and fail to adequately incentivize those contributors to the project's success.
Thus, this narrative points towards democracy and equal rights.
Based on these observations, Usual has proposed three of its own selling points:
First, it completely brings stablecoins on-chain. Unlike traditional stablecoins, Usual's issuance is entirely controlled by the community holding governance tokens, including important decisions such as risk policies, collateral nature, and liquidity incentive strategies. This decentralized control ensures the neutrality and transparency of the protocol.
Secondly, it addresses the issue of bankruptcy isolation. Traditional stablecoins often hold reserves in commercial banks, exposing them to partial reserve risks within the banking system. As revealed by the collapse of Silicon Valley Bank, this model carries systemic risks. Usual takes a different approach, directly linking to ultra-short-term bonds, supplemented by strict risk policies and insurance funds, ensuring 100% collateralization of assets.
Finally, it redefines the ownership and profit distribution mechanisms of stablecoins. Users not only gain the profits generated by the stablecoin's collateral but, more importantly, obtain full control over the protocol, treasury, and future income through governance tokens.
Essentially, the emergence of Usual is not simply to compete with existing stablecoins; it attempts to address a more fundamental issue: how to make stablecoins truly become the user's own financial infrastructure, rather than a profit tool for some centralized institution.
Instantly understand Usual's USD0, a stablecoin backed by RWA.
The ecosystem of Usual Protocol mainly consists of three core products: USD0, USD0++, and the USUAL governance token. Each product has its unique functions and value propositions, collectively forming a complete financial ecosystem.
USD0: A safe and stable foundation
USD0 is the cornerstone of the Usual ecosystem, being the world's first RWA stablecoin aggregating various U.S. Treasury tokens. This design makes USD0 a safe and bankruptcy-isolated solution that does not rely on traditional bank deposits, thus avoiding the systemic risks that the traditional financial system may bring.
The reason USD0 has a zero is that it aims to be the equivalent of central bank money (M0) in the monetary protocol.
The main features of USD0 include:
Fully transferable and permissionless: Ensures seamless integration and widespread accessibility within the DeFi ecosystem.
Multifunctionality: Can be used as a payment tool, counterparty, and collateral.
Transparency: Real-time provision of the latest collateral information enhances user trust.
Scalability: With the deeply liquid U.S. Treasury market behind it, it theoretically can scale to trillions of dollars.
USD0++: An innovative product that doubles government bond yields
USD0++ is an innovative product within the Usual ecosystem, essentially an enhanced government bond. Through enhanced 4-year DeFi Treasury bonds, backed by principal guaranteed to be locked in at USD0 for 4 years, it ensures that the principal can be recovered. It allows users to benefit from the agreement's growth and success. Unlike traditional models, USD0++ not only provides income from the agreement but also distributes ownership of the agreement through its innovative reward mechanism.
This innovative design contains profound financial wisdom. When users convert USD0 to USD0++, they actually enter a carefully designed dual-layer yield structure. The first layer is the base yield from U.S. Treasury bonds, guaranteed by the Base Interest Guarantee (BIG) mechanism, ensuring that investors can receive returns equivalent to ordinary government bonds even in the worst cases. The second layer comes from the enhanced yields generated by the protocol's development, distributed in the form of USUAL tokens.
It is worth noting that the lock-in period for USD0++ has been set at 4 years, and this choice of time span is not arbitrary. It aligns with the maturity of U.S. Treasury bonds and provides enough time for the agreement to develop and create value. During this 4-year period, USD0++ holders effectively become long-term partners of the agreement, with their interests closely tied to the growth of the agreement.
From a technical implementation perspective, USD0++ adopts a smart contract automated management approach. When users deposit USD0, the contract automatically allocates the funds to the optimal government bond portfolio while initiating a token issuance plan. This process is completely transparent and tamper-proof, allowing users to check their investment status and expected returns at any time. More importantly, the entire system is designed modularly, meaning parameters can be flexibly adjusted or new functions added based on market demands and regulatory requirements in the future.
Compared to traditional financial markets, the innovation of USD0++ lies in its successful transformation of passive government bond investments into active protocol participation. Investors are no longer just waiting for interest to mature; instead, they can participate in protocol governance through USUAL tokens, share in growth dividends, and even trade these rights in the secondary market. This design essentially creates a new category of financial products that retains the safety of government bonds while granting the growth potential of the crypto economy.
From a risk management perspective, USD0++ offers a unique risk hedging solution. In the highly volatile crypto market, investors can benefit from the stable cash flow provided by government bonds while also sharing in industry growth through USUAL tokens. This combination strategy effectively balances risk and reward. Especially during market downturns, the underlying interest protection mechanism can provide significant downside protection, while during market upswings, USUAL tokens offer considerable upside potential.
USUAL: The core of governance and incentives
As the governance token of Usual Protocol, USUAL's design concept goes far beyond a simple voting rights token. It is the core of value capture and distribution within the entire ecosystem, ensuring the sustainable development of the protocol and maximizing user benefits through a carefully designed token economics model.
In terms of governance, USUAL adopts an innovative 'value-oriented governance' model. Holders not only participate in important decisions of the protocol, such as adjusting risk parameters and launching new products, but more importantly, their voting weight is directly linked to their contributions to the protocol. This mechanism ensures that those who hold long-term and actively participate in ecological construction can gain greater influence.
USUAL's value capture mechanism is established on multiple levels. First, all income generated by the protocol, including minting fees, redemption fees, etc., will be used to support USUAL's value. Secondly, through a staking mechanism, USUAL holders can receive ongoing revenue sharing. More importantly, as the scale of assets managed by the protocol grows, the issuance rate of USUAL will gradually decrease, ensuring the long-term growth potential of the token's value through this deflationary design.
In practical applications, USUAL's functions have extended beyond governance to multiple areas. It can be used as a reward token for liquidity mining, participate in the pricing of various financial products in the ecosystem, and even serve as a medium for cross-chain bridging. This multidimensional utility not only increases demand for the token but also strengthens the network effects of the entire ecosystem.
Through this comprehensive design, USUAL has successfully linked all components of the protocol organically, forming a self-reinforcing positive cycle system. As more users participate and assets accumulate, USUAL's value proposition will become increasingly clear and powerful.
Outlook
From the current market environment, Usual's launch timing can be said to be fortuitous. As the crypto market gradually recovers from the bear market, the demand for high-quality projects is on the rise. Unlike Meme coins that purely pursue short-term speculation, Usual provides a complete financial infrastructure solution, and this differentiated positioning may actually become its unique advantage.
From a valuation perspective, we need to pay attention to several key dimensions:
First, the overall space of the stablecoin sector. Currently, the combined market capitalization of USDT and USDC exceeds $100 billion, with annualized earnings exceeding $10 billion. If Usual could capture just 5% of that market share, its stablecoin business alone could support a considerable valuation.
Secondly, there is the growth potential of the RWA sector. As traditional financial institutions gradually enter the crypto market, the demand for compliant on-chain government bond products will significantly increase. As the first protocol to tokenize government bond yields, Usual is likely to become a key player in this emerging market.
Looking at the market performance after listing on Binance, recent cases show that market enthusiasm for high-quality projects remains strong (regardless of whether they are Memes, high-quality projects with unique narratives). Usual possesses a complete product matrix, a clear value capture model, and a broad market space, traits that align closely with the characteristics of successful listing projects.
However, investors also need to pay attention to several key risk points:
The first risk is regulatory risk. Although Usual uses compliant government bonds as backing, any innovative financial product may face policy uncertainty in the context of tightening global financial regulation.
The second is the market education cost. Although the model combining stablecoins, government bond yields, and governance tokens is innovative, it also increases the difficulty for users to understand. The project team needs to invest significant resources in market education.
Thirdly, there is competition risk. Once Usual proves this model to be viable, it will inevitably attract more teams, and maintaining a first-mover advantage will be an ongoing challenge.
Overall, Usual represents an important exploratory direction in the DeFi 2.0 era. It does not simply replicate existing models but attempts to solve practical problems through technological innovation. For investors seeking long-term value, this is undoubtedly a project worth paying attention to. However, investors also need to reasonably allocate their positions based on their risk tolerance and investment cycles to manage risks effectively.
