Usual Governance
Usual Protocol is designed to progressively decentralize—redistributing decision-making authority from a managed launch framework to a community-led DAO as the ecosystem matures. Governance starts with structured safeguards to ensure operational stability in early phases, then transitions toward broader community control to support long-term neutrality and resilience.
Governance Philosophy
Usual governance is anchored in a simple principle:
Those who create value should own and direct the protocol.
Rather than concentrating control in a corporate entity, governance authority is placed with token holders who have a direct economic stake in the protocol’s success. Over time, the protocol moves from a guided launch phase toward a fully decentralized model in which the community sets policy across protocol parameters, treasury, and strategic direction.
The Usual DAO
Ultimate governance authority resides in the Usual DAO, driven primarily by staked USUAL (USUALx) holders. These stakeholders have proposal and voting rights and can shape DAO operations, strategic direction, and investment policies.
Historical Governance Tokens
Before November 2025, governance rights were shared across two token classes:
USUALx — staked USUAL representing the community’s governance voice.
USUAL* — a separate seigniorage token distributed to insiders (team, investors, advisors), carrying governance weight equal to USUALx.
In November 2025, USUAL* was retired and converted into liquid USUAL at a 0.97:1 ratio. This removed the dual-token governance structure and simplified governance into a single-token model, where voting power flows through USUAL/USUALx. Holders of USUAL* will retain their governance rights (50%) until June 2028. After that, only holders of USUALx will control the protocol.
Insiders retained significant influence via their USUAL holdings, but now participate under the same token mechanics as all other holders, improving transparency and perceived legitimacy.
Governable Aspects
The DAO governs the protocol’s most important policy surfaces. Holders of USUAL and USUALx can propose and vote on changes across the areas below.
1. Protocol Parameters
The DAO can update parameters that directly affect the protocol’s economic mechanisms, including:
USUAL supply, allocation, and distribution
Adjusting emission rates, bucket allocations, and the growth control variable (γ) that accelerates or decelerates token distribution.
Fees
Setting fees for actions such as USD0 redemption, bUSD0 early unstaking, USUALx unstaking (currently 10%), and lending (e.g., the Fira 50 bps base borrowing fee).
Collateral provider rewards
Adjusting incentive rates for collateral providers via the Multi Collateral Controller, including reward scaling factors and rebalancing thresholds.
bUSD0 floor price
Setting the minimum primary-market redemption value for early exit (currently 0.92 USD0).
Insurance fund parameters
Configuring the insurance accrual rate (about ~20%) and the maximum fund cap (0.33%–5.33% of all USD0).
2. Onboarding of New Collateral and Assets
The DAO determines which collateral is eligible and which assets can be converted into Liquid Deposit Tokens (LDTs) within Usual. This includes:
New RWA collateral providers
Approving tokenized Treasury Bill providers (e.g., Hashnote USYC, BlackRock BUIDL, Ondo USDY, M0, Spiko) after due diligence covering structuring, regulation, risk policy, security, and transparency.
New Stablecoin or Synthetic asset classes
Expanding beyond USD0 into additional asset types such as:
ETH0 (backed by LST/LRT collateral)
EUR0 (backed by Eurozone assets)
Exposure limits
Setting maximum allocation per collateral provider to support diversification.
Removal of collateral
Delisting collateral that no longer meets eligibility requirements (e.g., full collateralization, low risk, transparency, liquidity, and duration below 0.33 years).
In practice, the DAO sets the direction for protocol expansion: each new collateral provider or asset class requires community approval.
3. DAO Treasury Management
The DAO manages treasury policy, including:
Investment strategies
How treasury assets (about ~$30.75M as of September 2025) are allocated across stablecoin exposure, ETH exposure, yield strategies, and protocol tokens.
Allocations
Setting the insurance fund size, buyback budgets (historically ~$100k/week), and strategic investment budgets.
Distribution of proceeds
Deciding how revenue is split between USUALx staker distributions (currently 30%) and treasury retention (currently 70%).
Buyback and burning
Directing treasury funds toward USUAL buybacks and/or burning mechanisms, as approved by governance.
Strategic positions
Funding grants, co-development, and ecosystem bootstrapping (including external protocols) to fill infrastructure gaps in the Usual ecosystem.
Voting Power Distribution
Post-USUAL* Retirement (November 2025 onward)
After USUAL* was retired and converted to USUAL, governance simplified:
There is no longer a separate insider governance token.
Voting power flows through USUAL/USUALx as the primary governance asset in 2028.
Insiders participate through their USUAL holdings on the same basis as other holders.
Initial Insider Governance Safeguards
During early phases, USUAL* holders held majority voting power to support coordinated execution and roadmap adherence. This was an explicit design choice: launching complex DeFi systems often requires faster, more aligned decision-making than a fully decentralized process can reliably provide at inception. As the protocol matured, governance moved toward greater decentralization centered around USUAL holders.
Governance Process
Proposal Lifecycle
Governance proposals follow a standard lifecycle:
Proposal submission — eligible token holders submit a Usual Improvement Proposal (UIP).
Discussion period — the community evaluates the proposal, refines parameters, and debates tradeoffs.
Voting period — on-chain voting occurs, with votes weighted per the active voting-power framework.
Execution — approved proposals are implemented through smart contracts and/or coordinated protocol upgrades.
Notable Governance Proposals
UIP-1
Early 2025
Established the preliminary voting structure (40/40/20 split)
UIP-6
April 2025
Modified early redemption parameters for bUSD0
UIP-7
Mid-2025
Distributed over 70M USUAL (as USUALx) from collected early redemption fees
UIP-11
November 2025
Implemented the disinflation shock: reduced supply cap from 4B to 3B, cut daily emissions by ~50.7%, eliminated USL farming rewards
UIP-12
2025
Rebranded USD0++ to bUSD0 and introduced the rt-bUSD0 early-exit right token
Revenue Governance
The DAO controls how protocol revenue is allocated. This model has evolved over time through governance decisions:
January–June 2025
Up to 100% of revenue distributed to USUALx stakers (emergency measure post-depeg)
June–November 2025
Reformed: 70% retained in treasury, 30% distributed to locked USUALx holders
November 2025 onward
Maintained 70/30 split; disinflation reduced total revenue while improving token economics
The Revenue Switch (activated January 13, 2025) distributes the community’s share of protocol revenue weekly in USD0 to locked USUALx holders, creating a direct link between governance participation and economic returns.
Progressive Decentralization Roadmap
Usual follows a staged decentralization strategy aligned with long-term sustainability:
Launch (2024)
Lab-managed with community input; USUAL* holds majority voting power
Growth (2025)
Preliminary voting structure (UIP-1); community increasingly drives major proposals
Maturity (2025–2026)
USUAL* retired; single-token governance; community holds majority economic and voting power
Full decentralization (2027+)
DAO-led operations with community governance over protocol parameters, treasury, and strategic direction
Key Takeaways
Usual governance follows progressive decentralization, moving from a managed launch to community-led control via the Usual DAO.
The DAO governs protocol parameters, collateral onboarding, treasury management, and revenue distribution.
Voting power initially followed a 50% USUALx / 50% USUAL* model (UIP-1). After USUAL* retirement in 2028, governance moved toward a single-token USUAL/USUALx model.
The DAO holds emergency authorities including Counter Bank Run Mechanism for extreme scenarios.
Governance processes and voting-weight mechanics can continue to evolve as the protocol matures.
Governance
Voting Power
USUAL holders participate in on-chain governance for key protocol decisions.
USUALx holders
50%
USUAL* holders
50%
After the Nov 2025 USUAL* retirement, governance simplified to a single-token model where voting power flows through USUAL / USUALx.
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