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.
This mechanism ensures that all participants can access USD0 efficiently, promoting a fair and balanced ecosystem within the Usual Protocol.
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