Usual Stability Loans (USL)
Last updated
Last updated
The Usual Stability Loans module is a DAO feature that will allow users to take decentralized loans at a low fixed rate when USD0++ is depegged. Users will be able to borrow USD0 against their USD0++ (and similar assets) when USD0++ trades below parity. Similar to DAI’s D3M or Frax’s AMOs, this feature also enables the creation of strategies for advanced users while contributing to the protocol’s stabilization.
This functionality offers numerous advantages:
Injection of billions in potential liquidity into USD0++
Highly attractive yields and dual gains through arbitrage and rewards
Pressure towards parity when USD0++ deviates
Increased DAO revenues and higher income per USUAL due to interest rates
No theoretical risk of collateralizing USD0 or circulating USD0++
No theoretical risk of revenue loss for the DAO over the four-year period
No theoretical solvency risk for the DAO
Perfect predictability for users, who can lock in a rate permanently and even know their potential liquidation date in advance
This feature addresses the concerns outlined earlier and opens up vast possibilities for Usual and USD0++.
The implementation of this measure in the next coming days will be subject to a veto right by holders and will be deployed on the Euler protocol due to its features that align perfectly with the flexibility required for this product.
A proposal for the mechanism is already available for the product, you can view it here.