USD0 Bond (bUSD0)

Bond USD0 (bUSD0) is the bonded, yield-bearing form of the USD0 stablecoin. It functions as a liquid bond: USD0 is locked until a fixed maturity date, while daily USUAL token rewards (“coupons”) are distributed to bUSD0 holders. bUSD0 is the first Bond Token in the Usual Protocol ecosystem.

On the primary market, each bUSD0 is minted alongside a separate Redemption Token, rt-bUSD0, which represents the right to exit bUSD0 early at par. This two-token design isolates and tokenizes the early-exit right, allowing users to choose how they balance yield (bUSD0) and liquidity/optional exit (rt-bUSD0).

UIP-12 migration: Following UIP-12, legacy USD0++ holders were automatically migrated to bUSD0. They continue to earn USUAL rewards. Because rt-bUSD0 was not issued retroactively, migrated users can purchase rt-bUSD0 on the secondary market if they want early-exit optionality.

---

Key Facts

• Underlying collateralization: bUSD0 is backed 1:1 by USD0, which is locked until maturity.

  • The current bUSD0 series matures on 11 June 2028.

• Token design (bUSD0): Non-rebasing, fixed-notional ERC-20.

  • Redeemable 1:1 into USD0 at maturity.

• Token design (rt-bUSD0): ERC-20 representing a pure redemption right on bUSD0.

  • No yield, no governance, fully tradable.

• Access: Permissionless minting and redemption via the dApp.

• Yield source (bUSD0): Daily USUAL coupons distributed to bUSD0 holders, funded by protocol revenue generated from the T-Bill collateral backing USD0.

• Primary minting:

  • 1 USD0 → 1 bUSD0 + 1 rt-bUSD0

  • Legacy USD0++ → bUSD0 rename only (no rt-bUSD0 issued retroactively).

• Early redemption (before maturity):

  • 1 bUSD0 + 1 rt-bUSD0 → 1 USD0

  • Both tokens are burned upon redemption.

• Maturity redemption:

  • At maturity: 1 bUSD0 → 1 USD0 (rt-bUSD0 not required).

• Redemption cycle: Instant on-chain redemption, subject to protocol and liquidity conditions.

---

Contract Addresses

Token	Chain	Address
bUSD0	Ethereum	0x35D8949372D46B7a3D5A56006AE77B215fc69bC0
rt-bUSD0	Ethereum	0x82DCA22b48B14DE38ccf83B03330120c4b8acFe9
bUSD0	Arbitrum	0x2B65F9d2e4B84a2dF6ff0525741b75d1276a9C2F

---

Why bUSD0 Uses Two Tokens (bUSD0 + rt-bUSD0)

This structure separates two distinct economic components:

• bUSD0 = yield + principal at maturity Holds the bonded position and receives daily USUAL coupons.

• rt-bUSD0 = early-exit right Holds the right to “unlock” early at par by recombining with bUSD0.

Benefits

• Separation of yield and liquidity: bUSD0 captures USUAL rewards and long-term carry; rt-bUSD0 isolates the early-exit option.

• Market-based liquidity: users who need flexibility can buy rt-bUSD0; users comfortable with lock-up can sell rt-bUSD0 and potentially capture a premium.

• Composability: both tokens are standard ERC-20s, enabling DEX pools, structured products, and DeFi integrations (e.g., Pendle for yield/principal separation, Morpho for lending collateral, Euler for USL leverage, Curve for liquidity provision).

• Simple on-chain mechanics:

  • 1 USD0 → 1 bUSD0 + 1 rt-bUSD0 (primary mint)

  • 1 bUSD0 + 1 rt-bUSD0 → 1 USD0 (early redemption)

  • 1 bUSD0 → 1 USD0 at maturity

• User choice:

  • Max yield: sell rt-bUSD0

  • Max flexibility: hold rt-bUSD0

  • Mixed exposure: hold/sell partially depending on liquidity needs

---

Minting bUSD0 (Primary Market)

Step 1 — Mint bUSD0 + rt-bUSD0

Convert USD0 into bUSD0 via the dApp. For each 1 USD0 deposited, the protocol mints:

• 1 bUSD0 (bonded position earning USUAL), and

• 1 rt-bUSD0 (early-exit right).

Step 2 — Choose your exposure

You can then manage liquidity/yield by deciding what to do with rt-bUSD0:

1. Flexible: hold both bUSD0 and rt-bUSD0 to retain early-exit optionality.

2. Bonded: sell rt-bUSD0 on secondary markets to enhance effective yield while committing to the lock until maturity.

Step 3 — Accrue yield

While bUSD0 is outstanding, holders receive daily USUAL coupons, reflecting the protocol’s incentive schedule and the yield design described below.

Mint routing optimization: If bUSD0 trades below parity on secondary markets (e.g., the Curve USD0/bUSD0 pool), the protocol may route deposits through the secondary market rather than the primary mint. This allows users to receive more bUSD0 per USD0, while the resulting buy pressure helps restore the bUSD0 price toward par.

---

Redeeming bUSD0

Before maturity (early exit)

You have multiple options:

1. Redeem at par via recombination (primary): Combine 1 bUSD0 + 1 rt-bUSD0 to redeem 1:1 into USD0.

2. Exit on the secondary market:

   • Sell bUSD0, or

   • sell rt-bUSD0 (keeping bUSD0 and its coupon stream).

3. Primary market floor redemption (no rt-bUSD0): If enabled by DAO governance, redeem bUSD0 at the protocol-defined floor.

   • Current floor: 0.92 USD0 per bUSD0

At maturity

At maturity, you can redeem bUSD0 alone:

• 1 bUSD0 → 1 USD0 (rt-bUSD0 not required)

---

Yield Mechanism

bUSD0 yield is paid as daily USUAL token coupons distributed automatically to bUSD0 holders.

---

Post-Disinflation Yield Structure (January 2026+)

Following the UIP-11 disinflation shock, yield behavior depends on where bUSD0 is held:

Position Type	Daily USUAL	Yield Model
bUSD0 in USL (Euler)	0	Pure zero-coupon bond — yield comes from the discount to par (~2.9% APR at $0.92 floor, up to ~45% APR with max leverage)
bUSD0 outside USL	127,718 USUAL/day	Standard USUAL coupon distribution

---

Early Exit Options (Summary)

Method	Value Received	Retains Yield	Requires rt-bUSD0
Recombination (primary)	1 USD0	No	Yes
Sell rt-bUSD0 (secondary)	Market price of rt-bUSD0	Yes (on bUSD0)	N/A (selling it)
Sell bUSD0 (secondary)	Market price of bUSD0	No	No
Floor price redemption (primary)	0.92 USD0 (current DAO setting)	No	No
Hold to maturity	1 USD0 (guaranteed)	Yes (until maturity)	No

---

USL (Euler Fixed Rate Market)

bUSD0 can be used as collateral in the Usual Stability Loan (USL) on Euler.

Parameter	Value
LTV	0.88
LLTV (liquidation)	0.9999
Oracle	Hardcoded 1:1 (bUSD0 → USD0)
Vault type	Ungoverned (immutable after deployment)
Borrowing fee (post-disinflation)	1,50% per year

Collateral safety constraint: Only USD0 that is not used to collateralize bUSD0 can be allocated to USL vaults. This is enforced by smart contract infrastructure to prevent undercollateralization.

---

UZM (Fira Fixed Rate Market)

bUSD0 can be used as collateral in the Usual Zero Rate Market (UZR) on Fira.

Parameter	Value
LTV	0.88
LLTV (liquidation)	0.9999
Oracle	Hardcoded 1:1 (bUSD0 → USD0)
Vault type	Ungoverned (immutable after deployment)
Borrowing fee (post-disinflation)	0,1% per year

---

Risks

• Maturity / lock-up: 1:1 USD0 only at 11 Jun 2028; early exit depends on rt-bUSD0 or secondary market (can be below par).

• Coupon risk: coupons are paid in USUAL, realized yield depends on USUAL price and incentive settings.

• Liquidity / discount: bUSD0 / rt-bUSD0 can trade at discounts; spreads can widen in stress.

• Governance / rule changes: DAO can change parameters; redemptions depend on protocol/liquidity conditions.

• Protocol + USD0 stack: smart-contract/upgrade risk + underlying USD0 collateral/custody/settlement risk.