# 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.