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The stablecoin usual usd (USD0) has experienced a $340 million contraction in its supply over the past four days. This decrease coincides with an 8% decline in the value of the project’s USD0++ token, the staking derivative of USD0.
Redemption Policy Shift Sparks Decline in USD0++ Value
Throughout this past week, notable developments have emerged surrounding usual usd (USD0), its governance token USUAL, and USD0++. These events follow USD0’s ascent into the ranks of the top ten stablecoins by market capitalization. In a recent protocol update, the team modified the redemption pricing for USD0++. Previously, the token’s unstaking mechanism offered a 1:1 redemption ratio, but this changed with the latest adjustments.
This revision spurred debate, triggering subsequent market activity. On Jan. 9, USD0++ declined by over 8%, falling below the anticipated $1 mark. According to Coingecko data, its value dipped to $0.905 per coin, and as of Jan. 11, 2025, it stands at $0.939. Meanwhile, the non-staked USD0 has maintained its $1 peg but has seen its market capitalization recede from a Jan. 7 peak of $1.88 billion to $1.54 billion—a $340 million reduction.
Additionally, the governance token USUAL has experienced declines, dropping 3.7% in the past 24 hours and 33.1% over the week. At $0.63 per token, with a circulating supply of 514 million, USUAL’s market valuation now rests at $328 million. These dynamics highlight the delicate interplay between stablecoins and their derivatives, as USD0++ functions as a staked variant of USD0 itself.
Such fluctuations underscore how protocol changes can rapidly influence market sentiment and valuations within the crypto and decentralized finance (defi) realms. Despite the turbulence, USD0 retains its status as a top-ten stablecoin, holding a competitive position alongside First Digital’s FDUSD, which boasts a similar-sized market cap.