How Does Usual Protocol Work?
A stablecoin protocol where USD0 is backed by US Treasury bills, and USD0++ is a bond version that locks your stablecoins for extra yield. It manages $400M in deposits. Its C grade reflects the January 2025 crisis when the team unilaterally changed redemption rules, crashing the bond token to $0.89 and triggering mass liquidations.
TVL
$111M
Sector
Stablecoin
Risk Grade
C-
Value Grade
C+
Core Mechanisms
Stablecoin/RWA-Backed
USD0 stablecoin backed 1:1 by US Treasury bill RWA tokens via Hashnote custody
USD0 is a liquid deposit token backed by short-duration US T-bills. Collateral management outsourced to Hashnote, a regulated entity.
Stablecoin/Bond-Token
NovelUSD0++ bond token representing locked USD0 with yield accrual and maturity mechanics
USD0++ functions as a bond instrument — users lock USD0 for a fixed period to earn yield. Novel hybrid of stablecoin and fixed-income DeFi primitive.
Governance/Revenue-Redistribution
NovelUSUAL governance token backed by protocol revenue redistribution from RWA yield
USUAL token captures protocol revenue from T-bill yields. Novel attempt to create a governance token with intrinsic yield backing rather than speculative value.
Redemption/Floor-Price
NovelDual redemption paths: 1:1 early exit (with conditions) or floor-price guaranteed minimum
Post-depeg restructuring introduced a $0.87 floor price for USD0++ redemption. The unilateral change from 1:1 to floor-price triggered the January 2025 crisis.
Custody/Off-Chain-RWA
Hashnote-managed ultra-short-term T-bill custody with Cayman and US entities
Off-chain collateral management by a regulated custodian. Users must trust Hashnote's solvency and operational integrity.
Governance/Revenue-Switch
Revenue switch mechanism activated post-crisis to share protocol earnings with community
Emergency-activated revenue sharing to stabilise USUAL token price post-depeg. Demonstrates governance flexibility but also unilateral control.
Admin/Multi-Sig
Team-controlled multi-sig with full authority over protocol parameters
Despite DAO branding, the Usual team controls multi-sig wallets that govern all critical protocol parameters. No on-chain governance vote occurred before the USD0++ redemption change.
How the Pieces Interact
Unilateral floor-price change triggered panic selling on Curve and mass liquidations on Pendle, cascading well beyond the Usual protocol itself.
Full team control over redemption rules means critical economic parameters can change without notice or user consent, violating implicit social contracts.
If Hashnote faces regulatory action or operational failure, USD0 backing becomes inaccessible, potentially breaking the peg with no on-chain recourse.
USD0++ instability directly impacts USUAL token value (18.7% drop in Jan 2025), creating a reflexive loop where governance token weakness reduces protocol credibility.
Simultaneous bond maturities could trigger mass USD0 redemptions, potentially exceeding available T-bill liquidity and causing temporary depeg.
What Could Go Wrong
- USD0++ depegged to $0.89 in Jan 2025 after unilateral governance decision changed redemption floor to $0.87, breaking user expectations
- No functional DAO — protocol team controls multi-sigs and can unilaterally change critical parameters despite decentralisation claims
- Collateral custodied by Hashnote (off-chain) introduces counterparty risk and opaque real-time collateral verification
USD0++ Floor Price Cascade Contagion
ElevatedTrigger: Team multi-sig unilaterally changes USD0++ redemption parameters again, or floor price drops below $0.85 while >$100M in USD0++ is locked in Curve and Pendle positions
- 1.Another unilateral floor-price adjustment announced without governance vote — Market trust collapses; USD0++ sells off immediately on Curve pools
- 2.Curve USD0++/USD0 pool becomes severely imbalanced (>90% USD0++) — USD0++ trades at 10-20% discount to floor price as liquidity evaporates
- 3.Pendle PT-USD0++ positions face mass liquidations — Cascading liquidations across Pendle markets amplify selling pressure
- 4.USUAL governance token drops 40%+ as protocol credibility destroyed — Revenue redistribution mechanism loses value; stakers exit
- 5.Contagion spreads to protocols holding USD0 as collateral — Lending protocols with USD0 exposure face bad debt accumulation
Risk Profile at a Glance
Overall: C- (53/100)
Lower score = safer