USD0 is a USD-pegged stablecoin designed for secure and seamless use across the DeFi ecosystem. It is fully backed by US Treasury Bill tokens, offering enhanced security without reliance on traditional banks. The coin is permissionless and easily integrable, with real-time reserve transparency provided by fund administrators. USD0 consolidates liquidity from diverse sources and utilizes an innovative mint engine for efficient collateralization, ensuring peg stability and compliance with US and EU regulations, making it a reliable alternative to USDC and USDT.
How to Mint USD0
USD0 tokens can be minted through Usual's counter in two ways:
Direct Mint: By depositing an eligible RWA into the protocol to receive an equivalent amount of USD0 on a 1:1 basis.
Indirect Mint: By depositing USDC into the protocol to receive USD0 on a 1:1 basis. In this method, a third party known as the Collateral Provider (CP) supplies the necessary RWA collateral, enabling users to obtain USD0 without directly holding RWAs.
How to Redeem USD0
USD0 tokens can be redeemed in two ways:
Withdrawal of Underlying Assets: Users can withdraw the Real World Asset (RWA) underlying the USD0 token directly at Usual’s counter.
Secondary Market Transactions: Users can sell USD0 for USDC/T on the secondary market. As USD0 is fully redeemable at Usual’s counter, the 1:1 peg is expected to be maintained through arbitrage, similar to other fiat backed stablecoins.
How to Provide RWA collateral
1. Facilitating Primary Market Access
USD0 is a stablecoin backed 100% by Real World Assets (RWA). Users who wish to mint USD0 must deposit RWAs directly into the protocol.
However, to enable DeFi users to mint USD0 1:1 on the primary market and ensure access without slippage, Usual Protocol features a Primary Stability Module. This module allows collateral providers (CPs) to supply RWAs, ensuring smooth and efficient minting processes.
2. Collateral Provision Mechanism
Providing collateral involves the following steps:
Depositing RWAs: Collateral providers deposit RWAs into the mint engine, making them available for future minting.
Minting Trigger: When a user deposits USDC to mint USD0, the transaction triggers the use of the deposited RWAs.
Settlement and Rewards: Upon settlement, the collateral provider receives an equivalent amount of USDC (1:1) for the RWAs provided, along with a reward in the form of USUAL tokens.
Collateral providers have the option to rebuy USYC and redeposit it as collateral, maintaining the cycle and contributing to the protocol's liquidity and stability. See Three-Way Intent-based matching system.
