With the end of the USD0-USD0++ fixed parity introduced by surprise on January 9, a floor price of $0.87 was set. As a result, those who had bought USD0++ in the expectation of being able to exchange it at any time for USD0 at a fixed rate of 1:1 saw the value of their asset plummet. Is this implementation a communication error?
We recognise that this is a complex situation, but we would describe it more as a sequencing error. It has created misunderstandings about how the protocol works, which is where we should have been clearer from the start.
At Usual, we offer two main options. The first is the use of the decentralised stablecoin USD0. This is a stablecoin backed by stable assets (tokenised US Treasuries, etc.) and benefiting from prudent management, which guarantees greater stability. Since its creation six months ago, the USD0 peg has withstood all market movements, which is a key indicator of its reliability.
The second option is staking USD0 to obtain USD0++. Users looking to make a long-term commitment can stake their USD0 for 4 years and receive USD0++ in exchange, a liquid version of that commitment. In return, they earn USUAL tokens on a daily basis. They are free to sell these USD0++ or their USUAL on the secondary market at any time.
To ensure controlled volatility of USD0++ and align the interests of our users - whether they are long-term investors, farmers or holders of the USUAL governance token - we have introduced two key mechanisms from the outset. Firstly, a floor price to buy back USD0++ in the event of high volatility, thereby protecting holders. Secondly, a redemption period of up to 6 months via 'Early Unstaking', allowing users to exit their staking in a supervised manner (by paying a contribution with USUALs, editor's note).
The mistake was to implement these two features with a slight time lag, which may have sown doubts about the robustness of the protocol, despite its robustness, and the raison d'être of the floor price. This doubt was then amplified by certain players spreading unfounded rumours about USD0++'s underlying assets.
These mechanisms were designed with a dual objective: to protect users against excessive volatility in the secondary market, and to redistribute the income generated by early exits to USUAL's stakers. This redistribution strengthens governance and the interest of long-term holders while avoiding unhealthy farming and dumping mechanisms.
With hindsight, we should have activated these features simultaneously to avoid any confusion. That said, Usual's integrity and solidity are not in question, and these adjustments reinforce our mission to create a stable, balanced protocol aligned with the interests of all its users.
Do you understand the anger of some investors?
Absolutely. Contestation is an essential element in a community like ours, and it's our responsibility to anticipate these frustrations or respond to them effectively. We're taking this feedback very seriously and incorporating it into our 2025 roadmap by adopting an increasingly open and collaborative approach, particularly with an open source operational logic.
That said, it's also crucial to remember what makes Usual a genuine community project, and to put certain debates into context in the face of the 'FUD' (a technique that consists of trying to influence others by spreading negative information, editor's note) conveyed on social networks. It's worth noting that 90% of the supply of governance tokens goes to the community - very few crypto projects funded by private investors (VCs) can claim this level of commitment to their users.
Also, 100% of the value generated is redistributed to USUAL's staking programmes. This principle of fairness is at the heart of the model. We have also opted for total transparency: the USD0 collateral is entirely transparent, as is the distribution of tokens, which can be verified on-chain. In addition, the whitepaper, detailing the mechanisms recently put in place, has been online since November.
We therefore understand the concerns, but we firmly believe that a discussion based on facts and total transparency is the key to getting through these difficult times and continuing to build a solid and sustainable protocol, at the service of its community.
In addition, we firmly condemn all the hateful and defamatory comments that have been published with regard to the protocol or the members of the Lab team behind it. As well as being uncivil, it's perfectly illegal, and ultimately penalises certain users by pushing them to make decisions that do them a disservice, while amplifying the phenomenon. It's clear that some influencers wanted to sow panic in order to take advantage of the chaos and make money, and we'll be taking action against them.
Among the critics, you've been criticised for maintaining deliberately vague communication about how the USD0 and USD0++ work...
No, absolutely not. It's important to stress that Usual's products and features are transparent by nature. All information is clearly displayed on our website and communicated to users upon deposit.
With regards to USD0, this is our decentralised stablecoin, fully collateralised with real assets (RWA). The stability of USD0 is the protocol's top priority.
For USD0++, we are talking about a Liquid Staking Token (LST), comparable to staked tokens like stETH, where the underlying is locked. Accessing and using it requires a number of precise actions, all of which are made explicit via disclaimers displayed directly on the application.
In fact, every user is clearly and explicitly informed of the characteristics of these products. A mandatory disclaimer is presented each time a wallet is connected for USD0 staking. This disclaimer specifies in particular that USD0++ is an LST, that it is locked for a period of 4 years, and that it can be unstaked by burning your rewards received over a maximum period of 6 months or sold on the secondary market.
All this information is also available in our FAQ and whitepaper, published since the launch of the protocol. The conditions for using the dApp are clear and explain the risk factors. Remember that these risks are limited by the fact that it is possible to exit 1:1 before 6 months (subject to the burn of USUAL tokens, editor's note).
These elements show that we have always been transparent about how USD0 and USD0++ work. That said, we recognise that in a complex context, we could have been even more pedagogical in helping users to understand. We are learning from this and will continue to improve our communication.
The precise date of the price floor change was decided at the team's discretion, why not have a community discussion/vote for something so important?
The decision on the date was made based on our technical capabilities to develop and deploy the necessary mechanisms, within the time window we had announced for the start of Q1. It is important to remember that without this mechanism, the Usual protocol could not function properly.
Without a redemption period, the system would have been exposed to abuse, allowing farmers to profit from the system at the expense of token holders. If the USUAL token has value on the secondary market and enables USD0++ to remain attractive, it is precisely because of the protocol's ability to stabilise the ecosystem. This balance, from the outset, has been at the heart of our model to allow each user to adopt the strategy that suits them while preserving the integrity of the system.
We understand that any substantial changes to the parameters after launch, including adjustments not provided for in the whitepaper, must be subject to community approval in a structure that aspires to decentralisation. However, the initial implementation of the mechanism is not a modification but a direct application of the founding principles set out in the whitepaper. Organising a deliberation on this subject would therefore have been tantamount to calling the whole project into question after certain users had already benefited from its mechanisms, to the detriment of token holders.
We remain committed to ever more participative and transparent governance, while ensuring that the fundamental foundations of the protocol remain intact to protect all users and maintain the project's sustainability. Next week we will be announcing a series of measures to ensure greater liquidity through a number of institutional and DeFi players.
So why didn't you give users advance notice of the precise date on which fixed parity would end? Was there a desire to hold back investors?
No, absolutely not. Before the introduction of the early unstaking mechanism, users were able to withdraw their funds freely, in accordance with the disclaimer. To ensure the long-term future of the protocol, we announced back in October that Early Unstaking would be introduced in the first quarter of 2025, with a transitional period. This information was available to everyone.
The floor price follows naturally from this mechanism. Its purpose is twofold: to protect users from excessive volatility and to align the long-term interests of the community. We recognise that we could have communicated this change better and this is a lesson for the future.
Our commitment remains the same: more education and clarity. Everything has been done in compliance with the initial rules. Transparency is our priority and we will continue to improve our processes to maintain the confidence of our community.
Were some partners or investors informed of the floor price before others?
Absolutely not. We were absolutely vigilant on this point. All the players - curators, investors and users - received the information at the same time, when the contracts were finally updated.
The proof of this is that several curators have publicly expressed their frustration at not having been warned in advance. This is the best demonstration of our commitment to fair communication.
In addition, we acted responsibly by protecting the loan markets, thus avoiding any bad debt among curators. Our objective was twofold: to ensure the security of lenders and to maintain the stability of the ecosystem. The balance and integrity of the protocol have always been our priorities, in strict compliance with the principles of transparency and fairness.
Will this episode change the way you operate? If so, in what way?
As a contributor to the fifth largest stablecoin protocol in the world ($1.4 billion in capitalised value, TVL), our standard must be one of excellence and continuous improvement. The fact that part of the community did not understand certain mechanisms of the project is a warning signal for us. We designed Usual to operate differently from many crypto projects, in particular by adopting principles of transparency and fairness in the allocation of resources and the total distribution of the wealth generated. If this intention was not clearly perceived, it means that our communication needs to be improved.
This episode does not call into question Usual's solid foundations, but it does push us to redouble our efforts to continue building a project that combines innovation, transparency and community involvement.
If you had to do it all over again, what would you do differently?
With hindsight, we would have rolled out the whole mechanism at once, including the announcement of early unstaking at the same time as the introduction of the floor price.
This would have enabled users to understand the complete and coherent logic of the protocol from the outset, avoiding any unnecessary confusion or panic. We would thus have reduced the opportunities for certain players to spread erroneous or alarmist information.
This type of situation teaches us the importance of coordinating each stage of our announcements with even greater rigour, and of stepping up our efforts to support the community in understanding the protocol's strategic decisions. If we had to do it again, we would have implemented all the elements simultaneously to guarantee greater transparency and avoid any misunderstandings.
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