The Usual stablecoin protocol is the focus of discussion in the cryptocurrency community following the latest update, causing the price of USD0++ to depeg deeply from the $1 mark.
In the past few hours, the price of the Usual Protocol's USD0++ stablecoin has at times dropped by more than 8% from the $1 market capitalization as the DeFi community has rushed to reduce their positions following the project's recent changes.
The reason is that while Usual's flagship product, the USD0 stablecoin, is collateralized by US Treasury bills and guaranteed to maintain the $1 price point, the staking version of this currency, USD0++, allows users to lock up their assets for 4 years and receive interest in the form of the USUAL governance token.
Previously, users were still able to freely convert between USD0 and USD0++, but recently Usual has decided to change the exchange rate between the two assets, with 1 USD0++ now only able to be exchanged for 0.87 USD0.
Instead, in order to receive $1 worth of USD0, USD0++ holders must wait 4 years until the staking period expires.
Although the Usual team claims that the above changes have been prepared since October, it seems that not a few investors in the stablecoin protocol were completely surprised by this information and were unable to react in time, leading to a massive sell-off of USD0++ and causing this currency to depeg deeply.
Price fluctuations of the USD0++ token in the last 7 days, screenshot from CoinGecko at 07:30 AM on 01/11/2025
They let users mint/buy usd0++ at $1 (no discount, 1-1 programmed) and then magically implement a new hardcoded 0.87 floor, effectively locking (i.e., evaporating) 13% of the principal for 1,500,000,000 USD
— olimpio (@OlimpioCrypto) January 10, 2025
Old docs https://t.co/o7gFOV8cN0
New docs https://t.co/4u5D26OEFh pic.twitter.com/O9asW30X2o
"They let users mint/buy USDo++ at $1 (no discount) and now they've imposed a 0.87 USD floor, effectively evaporating 13% of the value of a $1.5 billion protocol."
So @usualmoney team has been claiming for a few weeks that USD0++ was redeemable for 1:1 USD0 so everything was chill.
— CBB (@Cbb0fe) January 10, 2025
Today, they stopped the 1:1 redeem function without any prior announcement to trap farmers and keep their TVL.
USD0++ is now trading at $0.92. Please send this… pic.twitter.com/aZNArIQoy0
"Usual has been consistently claiming for weeks that USD0++ can always be redeemed for USD0 at a 1:1 ratio, so everything was fine.And now they've suddenly made changes without any further announcement to trap liquidity providers and keep the TVL they've accumulated.USD0++ is now trading at 0.92 USD. Please just bring this Ponzi scheme to 0 already."
The situation has become even more serious as major DeFi projects like Pendle have also been defaulting to the assumption that USD0 and USD0++ have equivalent value, now having to update to reflect the actual value of USD0++, causing many users to be shocked when the value of their assets suddenly plummeted without clear reason, further exacerbating the panic.
In response to the community's fierce reaction, Usual has said it will impose an "exit position" mechanism for users, including:
- Conditional exit: exchange USD0++ for USD0 at a 1:1 ratio, but must forgo the profit earned from staking (may have to burn USUAL tokens).
- Unconditional exit: exchange USD0++ for USD0 at a 0.87 USD rate, wait 4 years for this amount to increase back to the $1 mark.
Stani Kulechov, the founder of the leading Ethereum lending protocol Aave, commented on the situation as follows:
"The situation now will be quite awkward, as USD0++ will be traded like a zero-coupon bond, meaning it only pays interest once at maturity instead of periodically. This is essentially an "off-shore" investment from the start - no different from bad debt. Even by the time of maturity in 4 years, borrowers may have incurred so much borrowing cost that they accept taking a loss on their position and not repaying the loan."
Usual is a stablecoin project that has gained attention in recent times for its integration of crypto with Real World Assets (RWA), as well as receiving $10 million in funding from major industry funds including Binance Labs, Kraken, Ethena, etc. However, the protocol also drew attention earlier this year when USD0 depeg due to a "whale" dump.
TVL growth of Usual since its launch in mid-2024. Source: DefiLlama (01/11/2025)
Compiled by Coin68
