TL;DR
- The USD0++ stablecoin introduces a dual exit system, causing volatility and uncertainty in the market.
- Users face the choice between a conditional exit with penalties or an unconditional exit with a minimum price of $0.87, which will increase to $1 over four years.
- The modification of redemption mechanisms leads to price drops and disruptions in DeFi platforms, which could cause multimillion-dollar liquidations and increase risks.
On January 9, Usual, a decentralized stablecoin issuer, released an update to its USD0++ protocol, introducing a dual exit system designed to improve the stablecoin’s long-term sustainability and financial stability. This update aims to transform USD0++ into a financial instrument similar to a bond backed by real-world income flows. However, the changes caused a swift disruption in the market, causing USD0++’s price to drop to $0.89, stabilizing around $0.91, representing an 8.7% decline from its $1 reference value.
The New Exit System Generates Uncertainty
The main novelty is the dual exit system, offering two options to users: the “conditional exit” and the “unconditional exit.” The conditional exit allows for a 1:1 redemption at the $1 value, but users must forfeit a portion of their accumulated rewards, penalizing early withdrawals. The unconditional exit offers an immediate refund at a minimum price of $0.87, which will progressively increase to $1 over four years, raising concerns about liquidity. This change puts users in an uncomfortable position, as they must choose between accessing their funds quickly at a lower price or waiting to receive full value over time.
The implementation of these mechanisms was accompanied by an update to the official protocol documentation, which created more uncertainty among users. Although several community members voiced their concerns, Usual has not responded to requests for comments. This lack of communication has intensified the negative sentiment in the community, which now faces a tough decision on how to proceed with their funds, further complicating the situation.
What Makes USD0++ Different from USD0?
USD0++ is the “staked” version of USD0, a stablecoin backed by real assets like U.S. Treasury bonds. It is primarily designed to be used as a dollar-backed token, but unlike USD0, USD0++ functions as a financial instrument similar to a bond. Users must lock their USD0 in USD0++ to earn interest through the issuance of the protocol’s native token, USUAL, over a four-year lockup period. This feature makes it attractive to those seeking passive returns, but it also means funds are not readily available without facing penalties.
