# USD0

USD0 is the first stablecoin issued by Usual Protocol. It is a permissionless, fully collateralized stablecoin backed by **tokenized US Treasury Bills** and **repurchase agreements (repos)**. USD0 is the foundational asset of the Usual ecosystem, connecting institutional‑grade real‑world assets (RWAs) with the composability of DeFi.

***

## Why USD0?

The stablecoin market is largely controlled by centralized issuers. In 2023, **Tether and Circle generated over $10B in revenue** from user deposits while sharing none of that value with the users who enabled it. In addition, their reserve strategies typically include **commercial bank deposits** and other opaque structures, exposing users to counterparty risk—highlighted by the March 2023 Silicon Valley Bank event, when **USDC briefly depegged to \~$0.95**.

USD0 is designed to address these structural issues:

* **Limited bank risk**: Collateral is invested exclusively in **US Treasury Bills** and **overnight repos**, eliminating fractional reserve exposure and commercial bank counterparty risk.
* **Revenue redistribution**: Instead of directing 100% of yield to the issuer, Usual redistributes **100% of protocol value** to the community via the **USUAL** token.
* **On‑chain verifiable reserves**: No dependence on periodic accounting attestations, anyone can audit USD0’s backing **in real time on-chain**.

<table><thead><tr><th>Feature</th><th width="171.60675048828125">USD0</th><th>USDC</th><th>USDT</th></tr></thead><tbody><tr><td><strong>Collateral</strong></td><td>US Treasury Bills (on‑chain)</td><td>Bank deposits + Treasuries</td><td>Mixed reserves</td></tr><tr><td><strong>Transparency</strong></td><td>Real‑time on‑chain verification</td><td>Monthly attestations</td><td>Quarterly reports</td></tr><tr><td><strong>Revenue sharing</strong></td><td>100% to locked USUALx holders + DAO treasury</td><td>None</td><td>None</td></tr><tr><td><strong>Bank risk</strong></td><td>Limited</td><td>Yes (SVB event)</td><td>Partial</td></tr><tr><td><strong>Governance</strong></td><td>Community‑driven (DAO)</td><td>Corporate</td><td>Corporate</td></tr></tbody></table>

***

## USD0 as a Fiat Backed Stablecoin

USD0 follows an **Fiat Backed Stablecoin** model. Rather than relying on opaque bank deposits, USD0 aggregates **tokenized US Treasury Bill** assets from multiple institutional providers **directly on-chain**.

This system is implemented through the **Usual Collateral Bridge Infrastructure (UCBI)**, the protocol layer responsible for:

* collateral onboarding
* minting and redemption
* reserve management integrations

### Participant model

UCBI connects two participant types:

* **Permissioned users** (institutional participants, accredited investors) can directly **deposit** and **redeem** the underlying RWA collateral.
* **Permissionless users** (retail, DeFi participants) interact via an **indirect matching system** that pairs permissioned **Collateral Providers (CPs)** with permissionless minters.

This architecture enables **1:1 on-chain minting and redemption** for all users, regardless of direct access to the underlying tokenized securities.

> **Scalability note:** USD0 is the first USD‑denominated LDT. The same architecture is designed to extend to additional asset classes, including **ETH0** (LST/LRT-backed), **EUR0** (Eurozone-backed).

***

## Key Features

### Permissionless and composable

USD0 is a standard **ERC‑20** token and is fully transferable. It is designed to integrate across DeFi:

* collateral on lending markets (e.g., **Morpho**, **Aave**)
* trading pairs on DEXs (e.g., **Curve**, **Uniswap**)
* base asset for Usual products (**bUSD0**, **sUSD0**, **USD0a**)

### Enhanced security model

Circulating USD0 supply is fully collateralized by **US Treasury Bills and repos**, with:

* **no leverage**
* **no fractional reserves**
* **limited commercial banking exposure**

Risk constraints include:

* portfolio duration below **0.33 years** (to reduce interest rate risk)
* **zero tolerance** for FX risk and credit risk

### Real‑time transparency

Reserve composition and value are visible **on-chain at all times**. Fund administrators publish reserve data in real time, removing reliance on periodic third‑party attestations.

### Unified, deconcentrated liquidity

USD0 aggregates RWA deposits across multiple issuers (e.g., **Hashnote**, **M0, Spiko**, and others). This creates a **deconcentrated collateral base** that reduces dependence on any single provider.

### Peg protection

Peg stability is enforced by the **Multi Collateral Controller**, which includes:

* **Programmatic 1:1 backing** enforced by smart contracts
* **Arbitrage support**: USD0 is redeemable at par via the protocol, creating natural price floors and ceilings
* **Insurance fund**: a dedicated reserve (**0.33%–5.33% of USD0 supply**) that can burn tokens to restore per‑unit backing in stress scenarios
* **Intelligent mint routing**: mint orders can route through Curve pools when secondary market pricing is more favorable, helping maintain a tight peg.

***

## RWA Collateral

USD0 is backed exclusively by tokenized RWAs that meet strict eligibility criteria:

* **Fully collateralized** (no leverage or fractional reserve exposure)
* **Low risk** (only sovereign bonds—US Treasuries—accepted)
* **Transparent** (on-chain verifiable; frequent off-chain audits)
* **Liquid** (portfolio duration below **0.33 years**; assets redeemable within **5 days**)

### Primary collateral: Hashnote USYC

| Property       | Detail                                       |
| -------------- | -------------------------------------------- |
| **Contract**   | `0x136471a34f6ef19fE571EFFC1CA711fdb8E49f2b` |
| **Strategy**   | Reverse repos and US Government securities   |
| **Custody**    | BNY Mellon                                   |
| **Auditor**    | Cohen and Co                                 |
| **Settlement** | T+0 to T+1 (USDC or PYUSD)                   |
| **Regulation** | CIMA Licensed, CFTC Registered               |

USYC’s underlying reverse repos are executed with the **Depository Trust & Clearing Corporation (DTCC)**, which carries an **AA‑ credit rating**.

### Additional accepted collateral

<table><thead><tr><th>Asset</th><th width="382.09027099609375">Contract address</th><th>Backing</th></tr></thead><tbody><tr><td>M by M0</td><td><code>0x866A2BF4E572CbcF37D5071A7a58503Bfb36be1b</code></td><td>US Treasury Bills</td></tr><tr><td>USDC (limited)</td><td><code>0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48</code></td><td>US Treasury Bills</td></tr><tr><td>USTBL by SPIKO</td><td><code>0xe4880249745eAc5F1eD9d8F7DF844792D560e750</code></td><td>US Treasury Bills</td></tr></tbody></table>

For internal operations, the protocol maintains wrapped versions:

* **UsualM**: `0x4Cbc25559DbBD1272EC5B64c7b5F48a2405e6470`
* **UsualUSDC**: `0xb672B3976bAa3952bFb2eCE8eeFB784f8daB1424`

### Collateral governance

Collateral onboarding and risk parameters are governed by the community via **USUAL token governance**, including:

* adding/removing collateral types
* setting exposure limits
* adjusting risk parameters

***

## Flow and Architecture

### Minting USD0

USD0 can be minted through two primary paths.

#### Direct minting (RWA deposit)

Users deposit eligible tokenized RWAs (e.g., **USYC**, **M**, **USTBL**) into the protocol and receive USD0 **1:1**.

```
RWA Token → DaoCollateral → USD0
```

* **Contract (Ethereum):** `0xde6e1F680C4816446C8D515989E2358636A38b04` (DaoCollateral)
* Best suited for institutional users and holders of tokenized RWAs.

#### Indirect minting (via USDC)

Users deposit **USDC**; a **Collateral Provider (CP)** supplies the underlying RWA collateral on the user’s behalf. CPs receive an **instant reward in USUAL** once the cycle completes. Reward rates are dynamically adjusted by the **Multi Collateral Controller** to incentivize balanced collateral composition.

```
USDC → SwapperEngine → CP supplies RWA → USD0
```

* **Contract (Ethereum):** `0xB969B0d14F7682bAF37ba7c364b351B830a812B2` (SwapperEngine)
* Designed for permissionless access (users do not need to hold tokenized RWAs).
* Orders below **100,000 USD0** are routed to secondary markets (DEXs).

#### Mint routing optimization

The protocol supports intelligent routing to reduce slippage and support peg discipline:

* Small mint orders may route through the **Curve or Uniswap v3 USD0/USDC** pool when more efficient. A maximum trade size is computed to prevent significant USD0 over‑pegging.

***

### Redeeming USD0

USD0 redemption can occur via:

#### - Direct redemption

Present USD0 to the **DaoCollateral** contract and receive underlying tokenized Treasury collateral at par (**1:1**).

#### - Secondary market sale

Sell USD0 for USDC/USDT on Curve, Uniswap, or other supported venues. Peg dynamics are supported by arbitrage:

* **USD0 < $1**: arbitrageurs buy USD0 on DEXs and redeem at par → buying pressure supports the peg
* **USD0 > $1**: arbitrageurs mint at par and sell at a premium → selling pressure tightens the peg<br>

***

### Flow summary

```
Direct Mint:     RWA Token  → DaoCollateral  → USD0
Indirect Mint:   USDC       → SwapperEngine  → CP supplies RWA → USD0
Routed Mint:     USDC       → Curve (if favorable) → USD0
Direct Redeem:   USD0       → DaoCollateral  → RWA Token
Market Redeem:   USD0       → DEX (Curve/Uniswap) → USDC/USDT
Routed Deposit:  USD0       → Curve (if bUSD0 depegged) → bUSD0
```

***

## Contract Addresses

### USD0 token

<table><thead><tr><th width="271.85589599609375">Chain</th><th>Address</th></tr></thead><tbody><tr><td><strong>Ethereum</strong></td><td><code>0x73A15FeD60Bf67631dC6cd7Bc5B6e8da8190aCF5</code></td></tr><tr><td><strong>Arbitrum</strong></td><td><code>0x35f1C5cB7Fb977E669fD244C567Da99d8a3a6850</code></td></tr><tr><td><strong>Base</strong></td><td><code>0x758a3e0b1F842C9306B783f8A4078C6C8C03a270</code></td></tr><tr><td><strong>BNB Chain</strong></td><td><code>0x758a3e0b1f842c9306b783f8a4078c6c8c03a270</code></td></tr></tbody></table>

### Infrastructure contracts (Ethereum)

<table><thead><tr><th width="226.00518798828125">Contract</th><th width="286.6796875">Address</th><th>Function</th></tr></thead><tbody><tr><td><strong>DaoCollateral</strong></td><td><code>0xde6e1F680C4816446C8D515989E2358636A38b04</code></td><td>Direct minting and redemption</td></tr><tr><td><strong>SwapperEngine</strong></td><td><code>0xB969B0d14F7682bAF37ba7c364b351B830a812B2</code></td><td>Indirect minting via USDC</td></tr><tr><td><strong>ClassicalOracle</strong></td><td><code>0xb97e163cE6A8296F36112b042891CFe1E23C35BF</code></td><td>Collateral price feeds</td></tr><tr><td><strong>Chainlink USD0 Oracle</strong></td><td><code>0x7e891DEbD8FA0A4Cf6BE58Ddff5a8ca174FebDCB</code></td><td>External USD0 pricing</td></tr></tbody></table>