Stablecoin developer Usual is under scrutiny after exchanging a 1:1 redemption tool for USD0++, the stablecoin token with a yield linked to the stablecoin USD0.
USD0++, the staked version of the USD0 stable with Normal, has fallen to $0.92 – 8% below its previous release value – after new early exit options fueled selling and disrupted its all-time high. Loop pool
USD0++ is not stable. It is a staked version of USD0, designed to lock money for four years while earning USUAL tokens as rewards. Previously, USD0++ could be redeemed 1:1 with USD0, but now users have to choose between two exit options: unconditional exit, 1:1 redemption but forcing forfeit part of accrued rewards, or leave unconditionally at a floor price starting at $0.87 and gradually increasing to $1 over four years.
The changes on the USD0++ conversion are a combination of a link and a product farming tool. While high-risk users can invest USD0 to USD0++ to cultivate USUAL tokens with high returns, more holders can lock money for four years to earn a fixed annual return of 4% .
As a result, the system design creates trade-offs. USD0 holders sacrifice yield for stability, while USD0++ holders lock up funds and hope that USUAL rewards will offset their lost yield, while USUAL stakeholders capture yield from others while betting on the value of the token price.
The recent upgrades have made USD0++ riskier and more attractive, with long lock-up periods and changing redemption rules making it more attractive than more liquid options, which led to a wave of selling as investors trade and produce farmers try to leave, causing the largest pool Curve to become unbalanced and pushing the price of USD0 ++ below $1.
At press time, Usual Labs, the company behind the Usual protocol, has not made any public statements on USD0++ price changes. In 2024, normal Labs raised $7 million and received a commitment of $75 million in total value locked for USD0 from investors including IOSG Ventures, Kraken Ventures, GSR, Mantle, Starkware, and Flowdesk, among others.
