Whale trading triggers a temporary drop of USD0, Usual protocol: has resumed stability

Whaledumping challenge USD0 anchor stability

According to the Usual Protocol, at 7:00 UTC on January 1st, an unexpected stress test occurred. A Whale's large-scale transaction in the secondary market triggered significant dumping of USD0, causing concerns about its stable anchoring to $1. The price of USD0 briefly dropped to $0.99 but quickly recovered within seconds, despite slight basis point deviations during the continuous dumping. Several hours later, USD0 fully recovered to its anchored price of $1.

USD0: Long-term stable market anchoring

As usual, agreements indicate that compared to similar stablecoins like FDUSD, PYUSD, and USDe, USD0 is more reliable, with the latter often trading at slightly below 1 USD. Today's event, although a rare stress test, once again validates the resilience of USD0 design.

1:1 collateral exchange mechanism ensures stability

The Usual agreement reiterates that the stability of USD0 is based on its ability to be exchanged on a 1:1 basis as collateral. The process is driven by smart contracts and is currently only open to whitelisted users. However, the Usual team is working to achieve permissionless collateral exchange and undergoes strict auditing to ensure this transition is completed without compromising security and solvency.

Diversification enhances the liquidity of the secondary market

Usual Protocol indicates that the resilience of USD0's secondary market liquidity is benefited from its collaboration with the issuers of tokenized real-world assets (RWA). Usual Protocol carefully selects highly liquid collateral such as USYC, and further diversifies its asset choices, including M by M^0, USDTB from Ethena, BlackRock BUIDL launched by Securitize, and OUSG issued by Ondo. This diversification strategy ensures that USD0 can be redeemed on the same day (T+0) and relies on highly liquid short-term currency market instruments support.

The first major stress test demonstrates resilience

Despite the pressure from Whale transactions, the anchoring of USD0 quickly recovered and came with abundant real-time liquidity for arbitrage opportunities. It is worth noting that the redemption volume of this stress test exceeded the total locked value (TVL) of other stablecoins (such as GHO) within a few hours, but the system still operates efficiently.

This article Whale trading triggered a temporary drop in USD0, Usual agreement: has been restored stable first appeared in Chain News ABMedia.