Usual’s $10M Boost: Changing the Game for Stablecoins with RWAs

In a significant development, Binance Labs has thrown $10 million into Usual, a decentralized stablecoin protocol that’s making some serious waves in the crypto waters. What really sets Usual apart is its unique integration of Real-World Assets (RWAs) into its platform, which is all about boosting transparency and liquidity in decentralized finance. The way Usual tokenizes physical assets, like US Treasury Bills, is an interesting bridge connecting traditional finance to DeFi. This article dives into Usual’s governance model and its implications for the future of stablecoins. Join me as we explore the potential of Usual’s $USUAL token and its deflationary model that could spell a new era of financial inclusivity and stability.

Usual’s Stablecoin Revolution

Usual has quickly established itself as a standout player in the stablecoin market. With more than $1.4 billion in total value locked (TVL), it’s now ranked among the top five stablecoins worldwide. Unlike many of its counterparts that rely on fiat reserves held by traditional institutions, Usual’s model is innovative. It weaves in Real-World Assets (RWAs) like US Treasury Bills into its ecosystem. What this means is that Usual is able to tokenize real assets like real estate and commodities, pulling them into the decentralized finance space. This process generates a stablecoin called USD0, which is permissionless, on-chain verifiable, and fully backed by short-term bonds.

Bridging Traditional and Digital

Usual’s rise can largely be traced back to its focus on tokenizing real-world assets. By aggregating assets from well-regarded institutions like BlackRock and Ondo, Usual enhances the liquidity of what are typically illiquid assets. This innovation opens doors for a broader pool of investors and improves liquidity in DeFi. However, the team rightly points out that while RWAs are gaining prominence, their integration into DeFi has been a tricky puzzle. The introduction of on-chain US Treasury Bills hasn’t made this any easier, as under 5,000 holders currently boast RWA assets on the mainnet. Clearly, making these assets more accessible is a challenge.

Decentralized Governance: A New Model

In contrast to the centralized control seen in traditional stablecoins, Usual’s governance model is fully decentralized. It empowers users to engage in decision-making, offering a level of control rarely experienced by traditional stablecoin holders. Within the Usual ecosystem, $USUAL token holders influence governance decisions and benefit from the redistribution of profits generated within the protocol. Usual pools the yield produced within the system, contributing to the protocol’s treasury. In return, users receive governance tokens, ensuring that the protocol’s success is a shared endeavor. This system eliminates the risks typically associated with commercial bank reserves and fractional reserve banking.

Tokenizing Real-World Assets

Tokenizing real-world assets can significantly enhance liquidity in the DeFi space. Fractional ownership allows investors to buy or sell tokens representing partial ownership rapidly and efficiently. This process is far more convenient than the drawn-out and complex traditional real estate transactions. Blockchain technology and smart contracts simplify transactions, reducing the need for intermediaries and enabling a 24/7 global market for tokenized assets.

But make no mistake; there are challenges. Ensuring that digital tokens represent a valid claim to the underlying asset is crucial. This includes defining specific rights tied to the tokens and selecting an appropriate tokenization structure, whether it’s a Tokenized Special Purpose Vehicle (SPV) or Direct Asset Tokenization. Both structures come with their own regulatory hurdles, and the lack of clear regulations around DeFi protocols for RWAs adds another layer of complexity.

Usual’s $USUAL Token

Since launching just over a month ago, $USUAL has seen its market cap skyrocket to over $620 million, indicating strong demand. The price of $USUAL increased by 15%, from $1.05 to $1.20, right after the investment was revealed. A whopping 90% of $USUAL tokens are given to the community, with only 10% reserved for insiders and investors, which is a good way to keep things community-focused with incentives that align with long-term growth.

$USUAL tokens are generated based on the amount of USD0++ minted, tying token issuance closely to protocol expansion. The emission rate of $USUAL is intentionally designed to be deflationary, decreasing relative to the total value locked (TVL) as new deposits flow in, which enhances the token’s value over time.

Summary: The Future of Stablecoins

As Usual continues to expand, the team is busy working on amplifying its ecosystem and driving product adoption. One of the major upcoming events is the launch of the $USUAL governance token, featuring a pre-launch campaign called the Usual Pills campaign. Users can earn points (Pills) by actively participating in the protocol’s activities, which will determine their share of $USUAL during the airdrop.

With its pioneering approach to integrating RWAs into DeFi and a decentralized governance model, Usual is raising the bar for transparency and liquidity. The deflationary model of $USUAL tokens holds promise for those seeking long-term value. As Usual continues its quest to connect traditional finance with decentralized finance, it seems poised to play a notable role in the stablecoin landscape and the broader crypto market.