Understanding Usual Money: RWA Decentralized Stablecoin

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usual money

Why Usual?

Stablecoins are arguably the backbone of the cryptocurrency industry. People need stablecoins for large-scale payment use cases, and they play a crucial role in the mass adoption of the industry. As of July 30, 2024, the total market capitalization of stablecoins is $168 billion.

From the market cap overview of stablecoins below, it is evident that the two centralized stablecoins, USDT and USDC, together account for about 90% of the total market capitalization.

Stablecoins are the money printers of crypto. The two giants, Tether and Circle, generated over $10 billion in revenue in 2023, with valuations exceeding $200 billion. In Q1 2024, Tether alone made a record profit of $4.52 billion. Such massive profit monopolies are clearly at odds with the spirit of decentralization, hence the continuous emergence of various decentralized stablecoin projects.

Decentralized stablecoins can be categorized by collateral type into over-collateralized (represented by MakerDAO’s DAI), equally collateralized (represented by Ethena’s USDe), and under-collateralized (no major projects have emerged in this category yet).

Several decentralized stablecoin projects have achieved success; however, their collateral is predominantly crypto assets, necessitating the design of intricate mechanisms to counteract price volatility. Introducing RWAs (Real World Assets) could solve this problem. RWAs are growing and emerging; in 2023, RWAs on the blockchain grew by over 800%.

Usual.money introduces U.S. Treasury bonds as collateral, providing transparency and security through Ethereum smart contracts, while returning profits to the community and contributors. This design can be described as “tether-on-chain,” combining the 1:1 RWA characteristics of centralized stablecoin protocols with on-chain security and transparency.

Background

On April 17, 2024, Usual Labs completed a $7 million financing round, led by IOSG and Kraken Ventures, with participation from GSR, Mantle, Starkware, Flowdesk, Avid 3, Bing Ventures, Breed, Hypersphere, Kima Ventures, Psalion, Public Works, and X Ventures.

Founder Pierre Person was a French politician, Member of Parliament, and recently served as Vice President of the Presidential Party, spearheading the country’s cryptocurrency legislation.
On July 10, Usual announced the launch of its mainnet. As of August 6, the project’s TVL (Total Value Locked) was $146 million.

According to Coinmarketcap data on August 6, nearly 95% of USD 0’s trading volume is in the Curve USD 0/USDC pool, with $11.33 million in liquidity. Meanwhile, on Maverick Protocol, there is an LP (liquidity pool) for Aave’s stablecoin GHO and USD 0, with a TVL of $100k.

Currently, USD 0 has a vault curated by MEV Capital on the lending project Morpho, with USD 0/USD 0++/USDC and USD 0++/USDC liquidity pools, with a total of nearly $30 million in collateral at an 86% LLTV (Liquidation Loan-to-Value). Through this pool, users can simultaneously earn Usual’s Pills rewards (see the interaction section at the end) and Morpho token rewards.

The $USUAL TGE (Token Generation Event) is expected in Q4 2024, with 90% of USUAL tokens allocated to the community.

Mechanism Analysis

Collateralization and Minting

$USD 0 is the first RWA stablecoin aggregating various U.S. Treasury bond tokens, which can be minted on Usual in two ways:

  1. Direct RWA Deposit: Users deposit eligible RWAs into the protocol and receive an equivalent amount of USD 0 on a 1:1 basis.
  2. Indirect USDC/USDT Deposit: Users deposit USDC/USDT into the protocol and receive USD 0 on a 1:1 basis. This indirect method involves third-party collateral providers who provide the necessary RWA collateral, allowing users to obtain USD 0 without directly handling RWAs.

RWAs are growing significantly but still represent a small portion of the foundational assets in the crypto market. The primary challenge lies in liquidity issues, including difficulties for institutions in liquidating RWA holdings in the secondary market and retail investors’ inability to access RWA returns within the core DeFi ecosystem. With USD 0, Usual can seamlessly integrate RWA token liquidity from platforms like Hashnote.

Yield

$USD 0++ is an enhanced Treasury bond, a wrapped and locked version of USD 0.
$USUAL is the governance and reward token of the Usual protocol.
Yields come from staking: Users lock their USD 0 into the USD 0 Liquid Bond (USD 0++) for a period. The yield can be chosen from one of the following options:

It’s important to note that regardless of whether USD 0++ is obtained through primary issuance or the secondary market, holders are automatically entitled to claim USUAL tokens.

Interaction

Pills Event Overview

Detailed Interaction Guide

1. Open the Usual Money dApp: https://app.usual.money/#6RKUS or visit the website and enter the early access code: 6RKUS

2. Deposit USDC, USDT, or ETH to mint USD 0 (Ethereum mainnet). Click the link to mint: https://app.usual.money/counter/deposit

3. Ways to earn Pills:

Additionally, there’s a time multiplier, starting at 1 and increasing by 2% daily. If a user exits their position, it resets to 1.

4. Add liquidity to earn Pills: Choose the USD 0/USD 0++ option, enter the amount of USD 0. Link: https://app.usual.money/desk/liquidity

Pills Event Phase 2

On August 4, Usual launched the second phase of the event, allowing users to earn Pills by completing tasks on Galxe.

Event link: https://app.galxe.com/quest/usual/GCsgvtvTNA

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