Temporary USD0 Decline Triggered by Whale Trading, Usual Agreement: Stability Restored
Whale Sells Challenges USD0 Stablecoin
According to Usual Protocol, at 7:00 UTC on January 1st, an unexpected pressure test occurred. A whale’s large-scale transaction on the secondary market triggered a significant sell-off of USD0, causing concerns about its stable anchor of $1. The price of USD0 briefly dropped to $0.99, but quickly recovered within seconds, despite a slight deviation in basis points during the ongoing sell-off. A few hours later, USD0 fully restored its anchor price of $1.
USD0: A Long-Term Stable Market Anchor
Compared to other stablecoins such as FDUSD, PYUSD, and USDe, Usual Protocol stated that USD0 is more reliable, as the latter often trades at slightly below $1. Although today’s event was a rare pressure test, it once again verifies the resilience of USD0’s design.
1:1 Collateral Exchange Mechanism Ensures Stability
Usual Protocol reaffirms that the stability of USD0 lies in its ability to be exchanged on a 1:1 basis for underlying collateral. This process is driven by smart contracts and is currently only available to whitelisted users. However, the Usual team is committed to achieving a permissionless collateral exchange function and is undergoing rigorous audits to ensure this transition without compromising security and solvency.
Diversification Enhances Secondary Market Liquidity
Usual Protocol states that the robustness of USD0’s secondary market liquidity is due to its collaboration with tokenized real-world asset (RWA) issuers. Usual Protocol carefully selects highly liquid collateral, such as USYC, and further diversifies its asset choices, including M by M^0, USDTB from Ethena, BlackRock BUIDL launched by Securitize, and OUSG issued by Ondo. This diversification strategy ensures that USD0 can be redeemed within the same day (T+0) and relies on highly liquid short-term currency market instruments for support.
First Major Pressure Test Demonstrates Resilience
Despite the pressure from the whale transaction, USD0’s anchor quickly recovered and was accompanied by abundant real-time liquidity for arbitrage opportunities. It is worth noting that the redemption volume during this pressure test exceeded the total locked value (TVL) of other stablecoins, such as GHO, within a few hours, but the system continued to operate efficiently.
Risk Warning
Cryptocurrency investments are highly risky, and prices may fluctuate dramatically, resulting in potential loss of the entire principal. Please carefully assess the risks.
