What Is Usual Protocol?
Usual Protocol is a pioneering blockchain initiative aimed at transforming how users interact with real-world assets (RWAs) in the decentralized Web3 ecosystem.
Focusing on transparency, fairness, and stability, the protocol seeks to address limitations in the stablecoin market while unlocking new opportunities for DeFi participants.
An Overview of Usual Protocol
At its core, Usual Protocol is a decentralized financial platform designed to democratize access to RWAs. Its foundation rests on two primary tokens:
USD0: A stablecoin backed by tangible, real-world collateral and accessible through permissionless minting.
USUAL: A governance token that rewards users and empowers them to influence the protocol's evolution.
Why Usual Protocol Was Created
Stablecoins play a critical role in DeFi by providing a price-stable medium of exchange, bridging the gap between traditional finance (TradFi) and decentralized finance. However, existing stablecoin solutions face several challenges:
Centralized profits: Major stablecoin providers generate substantial revenue without redistributing benefits to users.
Limited accessibility: Many stablecoins restrict access to RWAs, leaving a significant portion of users without opportunities to earn from yield-generating assets.
Opaque operations: Users often lack insight into stablecoin collateralization, making it difficult to assess security and reliability.
Usual Protocol addresses these issues by redistributing economic value, enhancing operational transparency, and granting fair access to RWAs for all participants.
Key Components of Usual Protocol
1. USD0: The Stablecoin
USD0 serves as the foundation of the Usual ecosystem, offering unique features that differentiate it from traditional stablecoins:
Simple minting process: Users can create USD0 by depositing approved collateral assets.
Asset-backed stability: USD0 is backed by fully collateralized, low-risk investments like U.S. Treasury bonds.
Transparent operations: Both on-chain and off-chain audits provide clear insights into USD0’s collateral and security.
Minting and Redemption Mechanisms
Direct Method: Users deposit eligible collateral directly to mint USD0.
Indirect Method: The protocol’s DAO facilitates minting for users unable to hold specific assets, redistributing USD0 back to them.
Collateral Standards
To ensure security, the protocol maintains strict criteria for acceptable collateral:
It must be fully collateralized and free from leverage.
It should be liquid and low-risk, allowing for quick liquidation if necessary.
Transparency is ensured through regular audits and public records.
Additionally, an insurance fund mitigates potential risks, adding another layer of stability.
2. USD0++: The Liquid Staking Token (LST)
USD0++ represents locked USD0 tokens, maturing on June 30, 2028. This token incentivizes long-term engagement by rewarding users with USUAL tokens proportional to their locked assets.
Despite being locked, USD0++ remains tradable in secondary markets, offering flexibility to users.
Early Redemption Options
Users can unlock USD0++ before maturity under specific conditions:
Burning USUAL tokens: Redeem USD0++ for USD0 on a 1:1 basis.
Floor price redemption: Exchange USD0++ at a discounted price set by the DAO.
Parity Arbitrage Right (PAR): The DAO may unlock USD0 early in volatile market conditions to stabilize USD0++’s value.
3. USUAL: The Governance Token
USUAL plays a dual role as a governance tool and reward mechanism, aligning user incentives with protocol growth.
Key Attributes of USUAL
Revenue-driven minting: USUAL token issuance is tied to the protocol’s revenue, ensuring sustainability.
Staking rewards: Users can stake USUAL to earn additional tokens.
Governance rights: Holders influence key decisions, such as collateral eligibility and reward distribution policies.
Adaptive Minting Model
The protocol adjusts USUAL’s minting rate based on market conditions, taking into account:
USD0++ supply, ensuring scarcity as demand increases.
Interest rate dynamics, reflecting protocol revenue.
DAO-controlled variables for balanced ecosystem growth.
Governance and Decentralization
Initially, Usual Protocol will be overseen by Usual Labs to ensure a smooth rollout. Over time, governance will transition to the Usual DAO, granting USUAL holders and early adopters control over key decisions, including:
Managing collateral assets.
Allocating treasury funds.
Modifying reward structures.
Incentives for Liquidity Providers
To maintain sufficient market liquidity, the protocol rewards users who provide liquidity for USD0 and USUAL tokens in designated pools. These participants earn additional USUAL tokens as an incentive.
Conclusion
Usual Protocol reimagines decentralized finance by addressing common pain points in the stablecoin ecosystem. Through its innovative token structure—USD0, USD0++, and USUAL—it enables users to access RWAs while fostering transparency and fairness. With mechanisms designed to bridge TradFi and DeFi, Usual Protocol sets the stage for a more inclusive and resilient financial future.
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