CoinClear

Usual / USD0

5.0/10

RWA-backed stablecoin with innovative yield redistribution — marred by the USD0++ depegging controversy that shook user confidence.

Updated: February 16, 2026AI Model: claude-4-opusVersion 1

Overview

Usual is a decentralized stablecoin protocol that issues USD0, a stablecoin backed by real-world assets — primarily short-term U.S. Treasury bills held through regulated custodians. The project positions itself as redistributing the yield from these RWAs to token holders through the USUAL governance token, rather than capturing it as issuer profit (as USDT and USDC do). This "ownership redistribution" model was the core value proposition.

USD0 itself functions as a standard 1:1 fiat-backed stablecoin, minted and redeemed against Treasury bill deposits. The innovation was in USD0++, a bonded version of USD0 where users lock their stablecoins for a fixed period (typically 4 years) in exchange for USUAL token rewards. This bond-like mechanism was designed to create a yield-bearing stablecoin product backed by real-world yields.

The project gained rapid traction in late 2024, with USD0 supply growing to over $1 billion within months of launch. However, the USD0++ controversy in early 2025 severely damaged the project's credibility. When Usual modified the redemption terms for USD0++ — effectively changing the floor price mechanism — USD0++ depegged significantly, trading at $0.90 or below. The incident sparked accusations of broken promises and raised fundamental questions about the protocol's governance and risk management.

Peg Stability

USD0 vs USD0++ Distinction

It is crucial to distinguish between USD0 (the base stablecoin) and USD0++ (the bonded product). USD0 itself has maintained a relatively stable peg, generally trading within $0.99-$1.01, as it is directly redeemable for the underlying Treasury assets. The peg instability centered on USD0++.

The USD0++ Controversy

USD0++ was marketed as a yield-enhanced version of USD0 with an implied redemption floor at $1.00. In January 2025, Usual announced changes to the USD0++ redemption mechanism, introducing a floor price below $1.00 and a conditional exit fee for early redemption. USD0++ immediately depegged, trading at $0.90-$0.92. Users who had deposited USD0 expecting a $1.00 floor felt betrayed. The incident drew comparisons to Terra/Luna's UST depeg, though the mechanisms are fundamentally different.

Recovery and Current State

USD0++ has partially recovered but continues to trade at a discount, reflecting the lock-up period and modified redemption terms. USD0 itself has maintained closer to peg, but the controversy has undermined overall confidence in the Usual ecosystem. The low peg stability score reflects the USD0++ debacle's impact on the broader protocol's credibility.

Collateralization

Reserve Composition

USD0 is backed by short-term U.S. Treasury bills held through regulated custodians and tokenized Treasury products. The backing is conservative from an asset quality perspective — U.S. Treasuries are the lowest-risk collateral available. The protocol uses partners like Hashnote and other tokenized Treasury providers for RWA custody.

Transparency

Usual publishes reserve data, and the on-chain component of the Treasury backing is verifiable through tokenized Treasury protocols. However, the off-chain custody chain introduces trust assumptions typical of RWA-backed systems. The rapid growth period raised questions about whether reserve verification kept pace with expansion.

USD0++ Mechanism Risk

The USD0++ controversy revealed that the bonded product's "collateralization" was effectively the locked USD0 plus future USUAL token rewards. When the floor price was changed, users realized the effective backing of USD0++ depended on governance decisions rather than hard guarantees. This introduced mechanism design risk that was not adequately communicated.

Security

Smart Contract Risk

Usual's smart contracts are relatively new and have not been battle-tested through multiple market cycles. While audits have been conducted, the protocol's rapid growth and complex bonding mechanisms create a larger attack surface than simple stablecoin designs. The USD0++ mechanism in particular involves complex lock-up, redemption, and reward distribution logic.

Governance Risk

The USD0++ floor price change was executed through a governance process that many users felt was unfair. The ability for governance to retroactively modify redemption terms for locked positions is a significant security concern for depositors. This governance power makes USD0++ more akin to a structured product with discretionary terms than a deterministic smart contract position.

Operational Risk

Usual's rapid growth created operational strain. The protocol scaled from zero to over $1 billion in months, adding multiple collateral types and redemption mechanisms. Rapid scaling in DeFi has historically preceded operational failures.

Decentralization

Governance Model

Usual uses the USUAL token for governance, with token holders voting on protocol parameters, collateral types, and (controversially) redemption terms. The governance process is more decentralized than centralized stablecoin issuers but was criticized during the USD0++ controversy for allowing parameter changes that harmed existing depositors.

Yield Redistribution

The core thesis — redistributing RWA yield to token holders rather than capturing it as issuer profit — is genuinely interesting from a decentralization perspective. If executed fairly, this model aligns protocol ownership with users. However, the USD0++ controversy demonstrated that governance power can be used to change terms in ways that benefit some stakeholders over others.

Token Distribution

USUAL token distribution and vesting schedules affect governance power concentration. Early investors and team allocations hold significant governance influence, typical of early-stage DeFi protocols.

Adoption

Rapid Growth

USD0 achieved over $1 billion in supply within months of launch, driven by attractive USUAL token rewards for USD0++ depositors. This growth rate was impressive but partly artificial — incentive-driven growth often reverses when rewards diminish.

Post-Controversy Impact

The USD0++ controversy caused significant outflows and reputation damage. TVL declined as users redeemed USD0 and exited USD0++ positions at a loss. The long-term adoption trajectory depends on whether Usual can rebuild trust and demonstrate fair governance.

DeFi Integration

USD0 has been integrated into several DeFi protocols including Curve, Morpho, and Pendle. The Pendle integration was particularly notable, as USD0++ was used in fixed-yield strategies. The depeg created cascading effects through these integrations, demonstrating contagion risk.

Risk Factors

  • USD0++ precedent: Governance changed redemption terms for locked positions, setting a dangerous precedent for depositor trust.
  • Incentive-driven growth: Much of USD0's adoption was driven by USUAL token rewards rather than organic demand.
  • Mechanism complexity: USD0++ bonding, redemption floors, and USUAL reward dynamics are complex and poorly understood by many users.
  • RWA custody risk: Off-chain Treasury custody introduces counterparty risk inherent to all RWA-backed stablecoins.
  • Governance concentration: Early-stage token distribution means governance power is concentrated among insiders.
  • Reputation damage: The USD0++ controversy will follow the project and affect future adoption.

Conclusion

Usual presents an interesting thesis — democratizing the yield that stablecoin issuers typically capture — but the execution has been marred by the USD0++ controversy. The base USD0 stablecoin is reasonably well-designed: Treasury-backed, redeemable, and transparent. The problems arose from the USD0++ bonded product and the governance decisions surrounding it.

The USD0++ floor price change was a defining moment that exposed the tension between governance flexibility and depositor protection. Users who locked funds expecting certain terms had those terms changed retroactively — a violation of the implicit social contract in DeFi. Whether this was a necessary adjustment or a broken promise depends on perspective, but the market's reaction was unambiguous: trust was damaged.

The 5.0 score reflects USD0's adequate base stablecoin design weighed against the severe trust issues from the USD0++ controversy, incentive-dependent adoption, and the early stage of the protocol. Usual needs to demonstrate sustained fair governance and organic growth to recover credibility.

Sources