Stacks (stx) 
Stablecoin Developer Under Scrutiny for Changing Redemption Mechanism
Usual, a stablecoin developer, is facing scrutiny after altering the 1:1 redemption mechanism for USD0++, its yield-bearing staked token tied to the USD0 stablecoin. The changes have triggered a sell-off and disrupted its largest Curve pool, causing the price of USD0++ to drop to $0.92 – 8% below its previous redemption value.
Understanding USD0++ and its Changes
USD0++ is not a stablecoin but a staked version of USD0, designed to lock funds for four years while earning USUAL tokens as rewards. Previously, USD0++ could be redeemed 1:1 with USD0. However, the new system now offers two exit options: a conditional exit, redeeming 1:1 but forfeiting part of accrued rewards, or an unconditional exit at a floor price starting at $0.87 and gradually increasing to $1 over four years.
This change has turned USD0++ into a mix of a bond and a yield farming tool. High-risk users can stake USD0 into USD0++ to farm USUAL tokens with high yields, while more conservative holders can lock funds for four years to earn a fixed 4% annual yield.
Implications of the Changes
The updated system creates trade-offs for users. USD0 holders sacrifice yield for stability, while USD0++ holders lock funds and hope USUAL rewards offset their lost yield. USUAL stakers capture yields from others while betting on the token’s price appreciation.
These changes have made USD0++ riskier and less appealing, with long lock-up periods and changing redemption rules making it less attractive than more liquid options. This has led to a wave of selling as traders and yield farmers tried to exit, causing the largest Curve pool to become unbalanced and pushing the price of USD0++ below $1.
Key factors to consider when evaluating USD0++ include:
- Long lock-up periods
- Changing redemption rules
- Risk of lost yield
- Potential for high yields through USUAL token rewards
No Public Statement from Usual Labs
As of press time, Usual Labs, the company behind the Usual protocol, has made no public statements on USD0++’s price changes. In 2024, the company raised $7 million and secured a $75 million commitment in total value locked for USD0 from investors.
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