Usual Project Analysis: USD0++ De-pegging and the Hidden Truth Behind Cycle Loan Get Liquidated

Recently, the USD0++ stablecoin issued by Usual has experienced a de-pegging phenomenon, causing heated discussions in the market and panic among users. This article will systematically analyze the product logic, economic model of Usual, and the causal relationship of the de-pegging of USD0++ from the perspective of DeFi product design.

Usual Project Overview

The Usual project mainly includes 4 types of tokens:

1. USD0: Stablecoin issued based on RWA assets
2. USD0++: Bond tokens, which can obtain underlying RWA yields and USUAL incentives
3. USUAL: Project Token
4. USUALx: Governance Token

The overall product logic is divided into three layers:

1. First Layer: USD0 Stablecoin
2. Layer Two: USD0++ Bond Tokens
3. Layer Three: USUAL and USUALx tokens

Analysis of the USD0++ Depegging Incident

On January 10th, Usual announced a modification to the USD0++ redemption rules:

1. Conditional Redemption: 1:1 exchange, but need to pay a portion of USUAL earnings
2. Unconditional Redemption: Minimum 87% exchange rate, no need to pay earnings.

This move triggered a significant sell-off of USD0++, causing the USD0/USD0++ ratio on Curve to become unbalanced at 9:91.

Analysis of the Hidden Reasons

1. Precise Get Liquidated Loop Loan:

• Morpho lending platform USD0++/USDC liquidation line is 86%
• The unconditional redemption ratio of 87% is just above the liquidation line.
• Can get liquidated on the revolving loan position to achieve deleveraging

2. Save USUAL Coin Price:

• USUAL falls into a death spiral
• The conditional redemption mechanism aims to reduce the circulation of USUAL.
• But the effectiveness is questionable, and users may choose unconditional redemption.

Exposed Issues

1. Users have not fully understood the project documentation.
2. The project's decision-making is too centralized
3. The DeFi industry is still continuously developing and improving.

Overall, Usual's operation this time aims to address the issues of circular lending and the decline in currency prices, but the effectiveness remains to be observed. This also reflects that DeFi projects still have room for improvement in terms of decentralization and asset security.