Introduction
In the ever-evolving world of decentralized finance (DeFi), a new player is making waves with its innovative approach to real-world asset (RWA) backed stablecoins. Usual Money, with its $USD0 token and $USUAL governance token, is challenging the status quo by introducing a unique tokenomic model that promises to revolutionize how we think about yield and governance in the stablecoin space. This analysis, based on multiple sources, delves into the intricacies of Usual Money’s approach and its potential impact on the cryptocurrency market.
Table of Contents
Overview of Usual Money
Usual Money enters the cryptocurrency market as another RWA stablecoin backed by T-bills. However, it distinguishes itself through its innovative tokenomic model and approach to yield distribution. Unlike many of its competitors, Usual Money directs 100% of the protocol’s revenues to its governance token, $USUAL, creating a unique value proposition for token holders.
Tokenomics and User Flow
The $USD0 Stablecoin
Users can mint $USD0 with other stablecoins. This $USD0 can then be staked into $USD0++, which earns 90% of the $USUAL token rewards. The emission rate of $USUAL is dynamically adjusted based on the amount of $USD0++ minted and the yield generated by the T-bills backing the stablecoin.
The $USUAL Governance Token
$USUAL token holders can stake their tokens into $USUALx to earn the remaining 10% of $USUAL rewards. This staking also grants voting rights for gauge voting and other governance decisions, including adjusting the emission rate.
Revenue Distribution
A key feature of Usual Money’s model is that 100% of the T-bill yield earned by USD0++ goes into the protocol treasury, which is controlled by $USUAL token holders. This direct link between protocol revenue and governance token value creates a strong alignment of interests between the protocol and token holders.
Key Innovations
Dynamic Emission Adjustment
Usual Money implements a dynamic supply-adjusted emission model for $USUAL:
- When TVL is growing, $USUAL emission is lower
- When TVL is decreasing, $USUAL emission increases
This mechanism aims to balance incentives and maintain token value as the protocol grows.
Inflation Control
To prevent excessive inflation of $USUAL:
- The emission rate is adjusted based on the interest rate
- There is a capped maximum emission threshold (subject to DAO decision)
These measures ensure that the token’s growth rate does not exceed the treasury’s growth rate, maintaining the value proposition that “Project growth = Token value growth.”
Community-Centric Token Allocation
Usual Money’s token allocation demonstrates a strong focus on community involvement:
- 73% of tokens for Public & LPing
- 13.5% for MM / Team and Investors
- 13.5% for DAO / Bribing / Gauge etc.
This allocation prioritizes community participation and aligns with DeFi principles of decentralization.
Potential Concerns
Liquidity and Depeg Risk
With over $320M USD0 staked in USD0++ and only about $29M USD0 liquidity available on Curve, there’s a potential risk of depeg during large exit events. This imbalance could lead to price instability, especially during the token generation event (TGE) window.
Yield Competitiveness in Bull Markets
During cryptocurrency bull markets, yields from crypto assets often outperform those from stable real-world assets like T-bills. This could potentially limit Usual Money’s growth compared to more volatile but higher-yielding alternatives.
DAO Participation and Decision-Making
As a DAO-focused project, Usual Money may face challenges related to low participation rates and ensuring that decisions made by the DAO are in the best interest of the protocol and its users.
Market Impact and Future Outlook
Usual Money’s approach to RWA stablecoins introduces a fresh perspective to the market. By directly linking protocol revenues to governance token value, it creates a compelling value proposition for long-term holders and active participants in the ecosystem. The project’s focus on controlling inflation while maintaining yield competitiveness positions it as a potentially more resilient option in the stablecoin market. However, its success will largely depend on its ability to attract and retain liquidity, especially during bullish market conditions when higher-yielding alternatives may appear more attractive.
As the DeFi landscape continues to evolve, Usual Money’s innovative tokenomics could set a new standard for how stablecoin protocols balance yield, governance, and long-term value creation.
Conclusion
Usual Money represents a significant innovation in the RWA stablecoin space, offering a unique blend of yield generation, governance, and inflation control. While it faces challenges, particularly in terms of liquidity management and market competitiveness, its approach to aligning protocol revenues with token holder interests could prove to be a game-changer in the DeFi ecosystem. As the project develops, it will be crucial to monitor how it adapts to market conditions and addresses potential risks. What do you think about Usual Money’s approach to RWA stablecoins? Could this model become the new standard for DeFi protocols seeking to balance yield and governance? Share your thoughts in the comments below!
