Usual Vaults

Vaults: Enhancing USD0++ Utility and Yield

Why Vaults? The Evolution of USD0++

USD0++ is a dynamic financial layer designed to seamlessly navigate DeFi’s best opportunities. With Usual Vaults, USD0++ holders no longer need to sell tokens to seek diversified yields externally; instead, they can deposit USD0++ directly into Vaults and benefit from integrated external strategies alongside ongoing USUAL token rewards. This strategic integration strengthens demand for USD0++, ensures sustainable revenue flows for the USUAL DAO, and keeps tokens actively engaged within high-yield decentralized finance (DeFi) strategies, ultimately promoting long-term ecosystem growth and stability.

How Usual Vaults Work

Vaults leverage partnerships, notably with Lagoon Finance, to offer seamless composability. Each Vault is managed by a curator responsible for selecting optimal investment strategies, including Real-World Asset (RWA) opportunities with T+1 settlement, ensuring fair valuation of Vault shares, and safeguarding against front-running.

Deposit Process

When depositing into a Vault, users convert USD0++ tokens at a 1:1 ratio into USD0 tokens. Deposits follow an epoch-based mechanism:

1. Epoch Initialization: Begins at contract initialization.

2. Deposit Request: Users submit deposit requests (e.g., 300 USD0++) and transfer assets to a secure silo.

3. Settlement: The curator calls settleDeposit, securing deposited tokens and minting Vault shares at a fair valuation determined by the current oracle pricing.

4. Cancellation Option: Users retain the right to cancel their deposits before final settlement, recovering their tokens from the silo.

Withdrawal Process

Users wishing to redeem Vault shares initiate withdrawals as follows:

1. Withdrawal Request: Users submit redemption requests, placing their Vault shares into a silo.

2. Epoch Transition: The curator updates total assets, concluding one epoch and initiating another.

3. Redemption Settlement: The curator executes settleRedeem, burning Vault shares and transferring the equivalent USD0++ plus accrued interest back into the Vault.

4. Claiming Funds: Users execute the redeem function to transfer redeemed assets back to their wallets. While optional, timely redemption is encouraged for financial optimization.

Vault Rewards Mechanism

Usual Vaults provide dual-income streams:

1. USD0++ Base Rewards

• Deposited USD0++ tokens earn USUAL staking rewards daily.

• APR mirrors standard staking rates for USD0++.

2. Strategy Returns

Vault deposits are allocated to underlying DeFi strategies (e.g., sUSDe, USR), generating yield. Earnings are divided as follows:

• Reference Rate: Yield up to a predetermined benchmark (e.g., 4% APR) is retained by the DAO as a management fee.

• Excess Returns: Yields exceeding the reference rate are split between users and the DAO, after deducting a defined performance fee (typically 20%).

Vault APR Calculation:

$$APR_{Vault} = APR_{USD0++} + \max(0, APR_{Strategy} - APR_{reference}) \times (1 - performance_{fee})$$

Example Calculation:

Parameter	Value
USD0++ APR	15%
Strategy APR (sUSDe)	9%
Reference Rate	4%
Performance Fee	20%

In this scenario, Vault holders earn an additional 4% APR beyond the standard staking rewards.

Vault Fees

Vault curators charge performance fees on returns above a base yield set by the DAO (e.g., 4% APY). For example, the stUSR Vault charges a 20% fee on yields exceeding this reference APR.

Associated Risks

Vaults carry additional risks beyond holding USD0++ directly:

• Smart Contract Risks: Reliance on the Lagoon vault infrastructure and underlying protocol introduces smart contract risks.

• Strategy Risks: Investment strategies, such as stUSR, are exposed to market risks including negative perpetual funding rates influenced by long/short position imbalances.

• Counterparty Risks: Dependence on external trading platforms exposes users to risks from platform vulnerabilities, exemplified by incidents like the ByBit hack.

Vault users are encouraged to assess these risks relative to potential returns.