Usual Protocol Withstands Significant Stress Test, Showcasing the Resilience of the USD0 Peg

A large whale trade on the secondary market triggered a significant USD0 sell-off on December 31. This event caused the USD0 peg to briefly dip to $0.99 before quickly re-pegging to $1. Despite the massive sell-off, which exceeded the total TVL of GHO within hours, the Usual infrastructure held strong, and the protocol restored the peg rapidly.

This sell-off highlights the strength of the USD0 peg, which has been one of the strongest in the market. Unlike other stablecoins that often trade slightly below their $1 peg, USD0 has maintained exceptional stability over time. This fact is easily verifiable through market data.

Furthermore, USD0 is fully redeemable on a 1:1 basis for its underlying collateral, ensuring the protocol’s solvency. These redemptions are handled through a smart contract, which is currently limited to whitelisted entities. However, plans are in motion to make this process permissionless, pending extensive audits to guarantee security and reliability.

To ensure stability, the protocol relies on robust secondary liquidity supported by tokenized real-world assets (RWA). The collateral includes USYC, M by M^0, USDTB from Ethena, BlackRock BUIDL by Securitize, and OUSG by Ondo, providing diverse and highly liquid options.

All USD0 redemptions are processed on a T+0 basis, backed by short-term money market instruments with high daily liquidity. This allows for efficient and timely redemptions, meeting the needs of traders and investors.

The team remains committed to improving processes and welcomes proposals to enhance liquidity and stability. As we move forward, expect more exciting updates and features to reinforce Usual's position as a reliable stablecoin protocol.

This morning (07:00 AM UTC), the Usual protocol experienced a massive USD0 sell-off triggered by a single whale’s trade on the secondary market, which raised doubts about the USD0 peg. USD0 briefly dipped to $0.99 before re-pegging to $1 within a few seconds, initially with some…

— Usual (@usualmoney) December 31, 2024

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