According to Odaily, the Usual protocol experienced a significant USD0 sell-off triggered by a whale transaction in the secondary market at 5 PM UTC+8 yesterday. This event raised concerns about USD0's ability to maintain its peg. USD0 briefly dropped to $0.99 but quickly returned to $1 within seconds. Although there was an initial deviation of a few basis points due to ongoing sell-offs, the peg was fully restored within hours.
The official statement assured that USD0 can always be redeemed at a 1:1 ratio with its underlying collateral, ensuring the solvency of the Usual protocol. This redemption process is managed through smart contracts and is currently accessible to any whitelisted entity. The ultimate goal is to make it fully permissionless, but extensive audits will be conducted before granting open collateral access.
Currently, all USD0 can be redeemed on a T+0 basis and are supported by high daily liquidity short-term money market instruments. Despite the pressure, the underlying infrastructure and model of Usual have proven robust, with the peg now stabilized and ample immediate liquidity available for arbitrage.
Overall, this event served as the first major stress test of USD0's pegging capability, with redemption amounts exceeding the total value locked (TVL) of GHO within a few hours, yet operations continued as usual. The team plans to continue refining processes, enhancing efficiency, and is set to release a series of updates soon.