Key Takeaways
The Usual Protocol is a decentralized finance (DeFi) project that aims to make real-world assets (RWAs) more accessible to everyday users.
It addresses issues with existing stablecoins, including profit centralization and lack of transparency.
The Usual ecosystem has three main tokens: USD0, a stablecoin backed by real-world assets, USUAL, a governance token, and bUSD0, a liquid staking token that represents staked USD0, allowing users to earn rewards while keeping liquidity.
Introduction
Stablecoins are one of the most widely used tools in crypto. They let users hold value without worrying about large price swings, and they help connect traditional finance with decentralized finance. But most popular stablecoins have a hidden problem: the companies that issue them keep most of the revenue.
The Usual Protocol was created to change this dynamic. It introduces a stablecoin ecosystem where users share in the value they help create. This article explains how Usual works, what its tokens do, and why it was built.
What Is the Usual Protocol?
The Usual Protocol is a blockchain-based project that uses real-world assets (RWAs) as collateral to back its stablecoin. Instead of keeping all the revenue from this model, Usual redistributes value back to the people who use the protocol.
At its core, Usual has three tokens working together: USD0 (the stablecoin), bUSD0 (a liquid staking token), and USUAL (the governance and reward token). Together, these create a system where users are not just customers but actual stakeholders in the protocol.
The protocol is designed to be transparent and verifiable. Collateral details can be checked on-chain and through regular public audits, giving users greater confidence in what backs their stablecoins.
Core Components of the Usual Protocol
USD0: the stablecoin
USD0 is Usual's native stablecoin. It is backed 1:1 by short-term, low-risk assets like U.S. Treasury bills, which makes it fully collateralized.
Users can mint USD0 by depositing approved collateral directly. For those who cannot hold certain asset types, the protocol's DAO can assist with minting and then redistribute USD0 back to them.
To keep USD0 secure, the protocol only accepts collateral that meets strict standards. This includes full backing without leverage, high liquidity so assets can be sold quickly if needed, and regular transparent audits.
bUSD0: the liquid staking token
bUSD0 is Usual's liquid staking token. It represents USD0 that has been locked into the protocol for a four-year period.
When users stake their USD0, they receive bUSD0 in return. This token can still be traded on secondary markets, so users do not lose full access to their funds while they earn staking rewards.
USUAL: the governance token
USUAL is the governance and reward token of the Usual Protocol. It is used to vote on protocol decisions and to reward users who contribute to the ecosystem.
USUAL tokens are minted based on the protocol's revenue, not a fixed schedule. This ties the token supply to actual activity and growth, which can help with long-term sustainability.
Holders can stake USUAL to earn additional USUAL tokens. They can also vote on important protocol decisions, such as which assets to accept as collateral and how rewards are distributed.
Why Was Usual Created?
Traditional stablecoin providers generate billions of dollars from the yield on their collateral assets. This revenue rarely flows back to users. Usual was built to address this imbalance.
The protocol also aims to fix limited access to RWAs and improve transparency. By putting collateral information on-chain and making it publicly auditable, users can verify for themselves what backs the stablecoins they hold.
Looking ahead, Usual plans to expand its product range with a yield optimizer, fixed-rate products, and fixed-term instruments. These are intended to give users more ways to interact with the protocol.
Governance and Decentralization
When Usual first launched, the protocol was overseen by Usual Labs to ensure a smooth rollout. Over time, governance has been transitioning to the Usual DAO, where USUAL holders collectively make decisions.
Governable aspects include which assets are accepted as collateral, how the treasury is allocated, and how reward structures are adjusted. This gives the community direct input into the direction of the protocol.
FAQ
What makes USD0 different from other stablecoins?
USD0 is backed by real-world assets like U.S. Treasury bills rather than cash held at a bank. It is permissionlessly mintable, meaning anyone with approved collateral can create it, and its collateral details are publicly auditable.
Is bUSD0 the same as USD0++?
bUSD0 is the current name for the liquid staking version of USD0, previously known as USD0++. It represents staked USD0 locked for a four-year period and can be traded on secondary markets while earning staking rewards.
How does the Usual Protocol redistribute value to users?
The protocol redistributes value primarily through USUAL tokens, which are minted based on revenue and distributed to users who provide liquidity or stake their assets. This means users share in the economic upside of the protocol rather than having it captured by a central issuer.
Can I lose my funds if collateral values drop?
The Usual Protocol uses strict collateral standards, including low-risk, fully backed assets with high liquidity. It also maintains an insurance fund to address potential collateral losses. However, all DeFi protocols carry risk, and users should research thoroughly before participating.
Closing Thoughts
The Usual Protocol offers a different approach to the stablecoin model. By combining real-world assets with a multi-token system and a community governance model, it aims to give users more transparency, access, and a share of the value they generate.
Its three-token system (USD0, bUSD0, and USUAL) works together to support stability, reward long-term participation, and enable community-driven decision-making. Whether the model succeeds at scale will depend on how the protocol evolves and how users engage with it over time.
Further Reading
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