Usual Labs’ USD0++ Falls to $0.92 as Ecosystem Questions New Redemption Model

by

Common Labs, known for its innovative stance in the cut-throat stablecoin market, is currently encountering criticism. The value of its staked token USD0++ has significantly dropped to approximately $0.92.

This development represents a significant alteration in its redemption mechanism, as detailed in a recent X post. This transformation has resulted in a change of investor sentiment, leading to apprehensions regarding the long-term resilience of the USD0 stablecoin system.

What Went Wrong with USD0++?

Typically, Usual Labs has significantly altered its USD0++ platform, transforming an initially stable investment option into a much more volatile one. Prior to the changes, investors could securely deposit their money and receive returns in the form of Usual’s own token, USUAL.

Users of this trading platform can easily withdraw their funds at a fixed 1:1 ratio with U.S. Dollars anytime they wish. Prior to these updates, the system was straightforward and dependable. However, the recent modifications have made it necessary for users to confront challenging choices. They now have the option to swap USD0++ for USD0 at the same rate in order to withdraw their funds.

⚡️ USUAL, Stronger Than Ever

4 years guaranteed revenues backing USUALx. Enhanced USD0++ yields.

Early unstaking as planned. Floor price updated for stability.

USUAL’s revenues are now secured & programmed.

🔗 Important details—read carefully👇

— Usual (@usualmoney) January 9, 2025

Alternatively, users may need to forgo some of their earnings or accept a lower cash-out value. Initially priced at $0.87, the price gradually rises to $1 over a four-year period. This arrangement leaves users in a quandary, as they contemplate whether to keep their funds tied up for several years or withdraw early and incur a loss.

Upon viewing the new regulations, numerous investors decided to withdraw their funds instead of risking them with USD0++. This action led to a widespread selling spree, causing instability in USD0++’s primary liquidity reservoir on Curve, a crucial exchange platform.

The uneven distribution in the pool led the token’s value to fall below $1, demonstrating a decline in faith in USD0++. This change has undermined trust within the system. The substantial decrease in the worth of USD0++ underscores the increased risk associated with the revamped setup.

Usual Labs’ Silence Adds to the Uncertainty

As a researcher studying the functioning of USD0++, I’ve come to understand that trust and liquidity are crucial elements for its success. However, recent modifications seem to have eroded these very foundations. Previously, users viewed USD0++ as a secure, high-return platform. Now, I find myself questioning its worth due to the growing doubts among its user base.

In simpler terms, it seems that the idea of tying up funds for four years to gain rewards loses its charm when one considers the poor exit prospects. Interestingly, Usual Labs hasn’t spoken about this issue openly yet.

As a researcher, I find it quite intriguing that despite Usual securing a substantial $10 million in funding and achieving a Total Value Locked (TVL) of $75 million for its ecosystem, there seems to be an unusual silence surrounding the company. This quietness is particularly noteworthy given the backing it has received from reputable firms like Kraken Ventures, Starkware, and IOSG Ventures, all of whom share confidence in Usual’s vision.

Nevertheless, the present instability casts doubts on its future sustainability. If Usual Labs doesn’t provide transparent updates and a strategy to rebuild trust, their pioneering project could face an early end.

According to Coinspeaker, various cryptocurrency initiatives have encountered hurdles following adjustments to their fundamental workings, much like the case of USD0++. Among these are TerraUSD (UST), Iron Finance, Balancer, and others.

Read More

2025-01-10 18:13