The change in the Usual USD0++ floor price has affected users' profits, leading to a boycott and accusations of the protocol being a scam.
Usual's change in the USD0++ floor price has impacted users
As previously reported by BeInCrypto, the community has raised concerns about Usual's unilateral change in the USD0++ floor price to $0.87. This has led to a negative reaction from the community. What is the root cause of this issue?
First, the Usual stablecoin developer has set up a mechanism for USD0 and USD0++. USD0++ is not a stablecoin. It is a staked version of USD0, designed to lock up funds for 4 years while users still earn USUAL tokens as a reward. High-risk investors can stake USD0 into USD0++ to mine USUAL tokens with high returns. Conversely, regular investors can lock up USD0 for 4 years to earn a fixed annual return of 4%.
The system design creates a trade-off. USD0 holders sacrifice profits for stability, while USD0++ holders lock up their funds and hope that the value of the USUAL token can compensate for their lost profits, and USUAL stakers earn profits from other participants while betting on the token's price appreciation.
Previously, USD0++ could be exchanged 1:1 for USD0. However, after Usual changed the USD0++ floor price to $0.87, this is no longer the case. Now users have to choose between two options: conditional exit, exchanging 1:1 but losing a portion of the accumulated rewards, or unconditional exit at a starting floor price of $0.87, gradually increasing to $1 over 4 years.
Thus, Usual's recent change to the USD0++ floor price has made it riskier and less attractive. This has led to a wave of sell-offs as participants try to exit. This has caused the largest Curve pool to become unbalanced and pushed the USD0++ price below $1 as it is currently.
According to BlockBeats, on January 10th, data from Curve showed a significant change in the USD0/USD0++ liquidity pool, with USD0++ now accounting for 90.46% of the pool's composition. At the time of writing, Usual Labs has not yet made any public statement about the changes to the USD0++ floor price. The price of USUAL is currently trading at $0.67, with no significant movement after this news.
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