# 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 made soulbound (and will remain in existence until June 2028). Insiders received approximately 348.57M USUAL in compensation (360M × 0.97). 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 10 bps protocol fee (immutable)**). * **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, M0, Spiko USTBL & USDC**) 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: 1. **Proposal submission** — eligible token holders submit a **Usual Improvement Proposal (UIP)**. 2. **Discussion period** — the community evaluates the proposal, refines parameters, and debates tradeoffs. 3. **Voting period** — on-chain voting occurs, with votes weighted per the active voting-power framework. 4. **Execution** — approved proposals are implemented through smart contracts and/or coordinated protocol upgrades. ### Notable Governance Proposals
ProposalDateImpact
UIP-1Early 2025Established the preliminary voting structure.
UIP-6April 2025Modified early redemption parameters for bUSD0
UIP-7Mid-2025Distributed over 70M USUAL (as USUALx) from collected early redemption fees
UIP-11November 2025Implemented the disinflation shock: reduced supply cap from 4B to 3B, cut daily emissions by ~50.7%, eliminated USL farming rewards
UIP-122025Rebranded 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:
PeriodRevenue Distribution
January–June 2025Up to 100% of revenue distributed to USUALx stakers (emergency measure post-depeg)
June–November 2025Reformed: 70% retained in treasury, 30% distributed to locked USUALx holders
November 2025 onwardMaintained 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:
PhaseGovernance Model
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 November 2025, 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. | Stakeholder Group | Voting Power | | ----------------- | ------------ | | USUALx holders | 80% | | bUSD0 holders | 20% | > Following the Nov 2025 **USUAL\*** retirement, governance uses a single-token model where voting power flows primarily through **USUAL / USUALx**, with bUSD0 holders contributing 20% of total voting power.