Binance Labs is betting on stablecoins again, can Usual become the next “big hit”?

Author: Frank, PANews

The stablecoin track is very lively. According to incomplete statistics from PANews, there have been 30 stablecoin projects officially announced for financing since the second half of this year alone. As a decentralized stablecoin project collateralized by U.S. Treasury bonds, Usual also officially announced its Series A financing on December 23, led by two major exchanges, Binance Labs and Kraken Ventures. The market structure has been dominated by DAI, USDe, etc. With the established giants taking over, is there still room for newcomers to stablecoins to survive? Does the rising TVL indicate that it will become another popular stablecoin? In this article, PANews will explore Usual’s core potential and risks based on its underlying operating logic, revenue distribution design and other perspectives.

Short-term treasury bonds are used as collateral, and all proceeds are

shared with the community.

From the perspective of operational logic, Usual is no longer operated by a centralized organization, but is governed through the community on the chain. In addition, in terms of revenue distribution, Usual will remit 100% of the revenue generated to the protocol treasury to feedback to the community. In terms of token distribution, 90% of the tokens will be allocated to the community, and 10% of the tokens will be allocated to the team and investors. .

The core issuance mechanism of stablecoins is the mortgage mechanism. Especially for legal currency stablecoins, mortgage assets are the most critical factor in ensuring asset security and stablecoin stability. The stablecoin product currently issued by Usual is USD0. What is special about this stablecoin is that it does not use traditional collateral such as cash and gold. Instead, it chooses the U.S. Super Us with a term of only a few weeks to a few months and extremely high liquidity and stability. Short-term Treasury bills (T-Bills) serve as collateral assets because they are backed by the country's credit and are considered a "risk-free return" category, thereby reducing dependence on commercial banks. Ultra-short-term treasury bonds have more advantages in terms of credit and liquidity, which is why Usual calls itself the issuer of RWA stablecoins.

However, there is a very critical point here. If you directly purchase low-risk products such as ultra-short-term government bonds, you can indeed achieve lower risks. However, PANews learned from Usual’s official documents that Usual itself does not directly purchase U.S. Treasury bonds, but invests mortgage funds in an already “packaged” Treasury bond/reverse repurchase product (USYC) through cooperation with Hashnote.

In other words, Usual does not personally buy government bonds or operate reverse repurchases. Instead, it hands over the mortgage assets to Hashnote, a partner that has undergone due diligence for management. Although Hashnote is also a regulated partner, with registered entities in the Cayman Islands and the United States, and the asset type cooperated by both parties is almost risk-free ultra-short-term treasury bonds. However, under this model, cooperation with Tether and other commercial banks may not necessarily result in lower risks. However, Usual’s goal is to let the community vote together to decide the future mortgage asset provider, and it may not always only use Hashnote. Recently, Usual announced a partnership with Ethena and BlackRock's tokenization platform Securitize to use BUIDL and USDtb as collateral. After that, USD0's collateral assets will no longer be limited to USYC.

“USD0++” creates a new LST gameplay of lock-up + negotiable instruments +

withdrawal from the game

In order to promote users to mint and use USD0, Usual launched USD0++ for incentives and designed a launch game mechanism. USD0++ is the pledged version of USD0. Users can earn income by staking USD0 and the official governance token USUAL. As of December 25, the annualized return rate of USD0++ exceeded 64%, which had previously exceeded 80%. This high rate of return has also attracted a large amount of funds to participate in the minting of USD0.

However, the design of USD0++ is also different from other LSTs. The unified expiration date of USD0++ is June 30, 2028, a lock-up time of four years. During this period, users can continue to receive USUAL token rewards, but this does not mean that users must deposit funds regularly for four years. USD0++ itself is a transferable token that can be bought and sold in the secondary market, which makes the holder Even when it has not expired, it can be "liquidated" or changed hands through trading.

In addition, Usual has also designed three sets of exit mechanisms, namely USUAL Burning Redemption; Price Floor Redemption; Parity Arbitrage Right;

One of the more special ones is USUAL Burning Redemption. When the user wants to burn and redeem, he needs to return part of the USUAL rewards to redeem (the refund amount is dynamically adjusted).

In addition, it is mentioned in the Usual white paper that the USD0++ model can be copied to other assets (such as ETH0++, dUSD0++, etc.), which means that this unique LST mechanism is not only limited to legal currency stablecoins, but can also be extended to other collateral or cross-border assets. Chain ecology.

Generally speaking, USD0++ is designed to encourage users to hold for a long time, accumulate USUAL tokens during the lock-up period, and share growth dividends with the protocol. The unified expiration date reduces users' short-term speculation tendency. At the same time, USD0++ is a negotiable "note" and retains a certain degree of liquidity. Finally, an exit game is adopted. If you exit early, you need to burn USUAL or repurchase it through the arbitration mechanism. An "exit cost" is set to protect the agreement from the impact of runs and protect the rights and interests of those who stay behind.

USUAL dynamic casting mechanism, early incentives are higher

In addition to adopting decentralized operations and introducing RWA assets as collateral. Usual’s governance token USUAL’s token economic model is also quite unique. Unlike other fixed issuance or one-time issuance methods, USUAL adopts a dynamic casting model for token issuance.

USUAL tokens are not minted all at once, but are dynamically minted every day according to a series of formulas and parameters, and distributed to different "deposits, loans, liquidity, rewards" pools.

This dynamic formula consists of multiple factors, namely: d: global allocation rate (0.25), which is equivalent to the reciprocal of the 4-year target issuance cycle. Supplyt++: The current total supply of USD0++ (locked scale). Pt: The main market price of USD0++ (1 when anchored at 1 USD). Mt: Dynamic minting rate, determined by several factors (supply, interest rates, growth, etc.).

Each factor is calculated based on several other formulas, and the specific calculation process will not be explained too much here. Generally speaking, the characteristics of this issuance mechanism are as follows: 1. Gradually "reducing production" as the scale of USD0++ increases. 2. Adjusted with changes in market interest rates. When FED or market interest rates rise and the actual income obtained by the project is higher, the system will moderately increase the amount of token issuance, allowing participants to receive more USUAL rewards; otherwise, the system will reduce production. 3. The DAO can be manually intervened, and "manual corrections" can be made for extreme market conditions or inflationary pressures, thereby ensuring the long-term stability of the protocol. 4. Early incentives and later scarcity. In the startup stage, the supply of USD0++ is relatively low. At the same time, if the market interest rate or reward mechanism is set high, the "early casting rate" will be high, attracting pioneers to participate. As time goes by, TVL and interest rates change dynamically, and the casting rate will gradually stabilize or decrease, forming a process similar to "halving" or "production reduction."

In short, USUAL's issuance mechanism attempts to find a self-adjustable balance between "stablecoin scale expansion, real income improvement" and "token holder value appreciation", thereby motivating early users and ensuring that later generations Scarcity and fairness, this issuance model is similar to the former Terra, except that Usual only put this design on the governance token and did not adopt this model for the issuance of stable coins.

TVL tripled within the month and ranked among the top five in the

industry

Currently, there are already multiple projects on the decentralized stablecoin track. What other opportunities does Usual have in this track? PANews conducted a data comparison on the current mainstream decentralized stablecoins.

In terms of circulation, the decentralized stablecoin with the largest circulation is Ethena USDe at US$5.91 billion, followed by USDS and DAI. However, these projects have been running for a long time. Judging from the development speed, the current TVL of USD0 has reached 1.56 billion US dollars (data as of December 25). On December 1, Usual’s TVL volume was only 490 million US dollars, which has tripled in less than a month. The current market value of USD0 has ranked among the top five decentralized stablecoins.

This rapid growth may be due to the high-yield flywheel model. Usual’s annualized return is 64%, which is the highest among several stablecoin income comparisons. If this rate of return can continue to be maintained, it will most likely grow into the next decentralized stablecoin giant.

In addition, Usual's biggest advantage may also come from the minimal risk of mortgage assets. The mortgage assets of other decentralized stablecoins generally use fiat currency stablecoins and mainstream crypto assets. The U.S. ultra-short-term treasury bonds used by Usual have a significantly lower risk factor in comparison.

On Usual’s homepage, “Becoming bigger than BlackRock” is displayed at the top as the vision, which also shows Usual’s ambition. Compared with the industry leader Tether, Usual and other decentralized stablecoins still have a long way to go. There are 473 million USUAL tokens in circulation, with a market value of approximately US$676 million. Calculated based on the current income level, the average distribution profit per token is approximately US$0.125. From the perspective of the design of the token economic model, this is similar to the recently popular Hyperliquid. What the two have in common is that they have a certain degree of profitability, and they claimed at the beginning of the design that most of the income would be fed back to the community in the form of tokens.

Recently, there have been frequent reports of Usual and Binance joining hands, including currency listings and airdrops. On December 23, Binance Labs announced that it would lead Usual’s US$10 million Series A financing. This excitement is reminiscent of Binance Labs’ early investment and support for Terraform Labs, although that investment was ultimately destined to fail. And can today's Usual become another future star of Binance Labs in stablecoin betting?