X Space Review丨Can Usual+Pendle reproduce the glory of stablecoin returns?

Recently, Rhythm invited Usual co-founder and CEO Pierre PERSON, Usual growth manager Yoko, and Pendle co-founder TN to be guests at Space to talk about what wonderful sparks will collide when RWA meets the stablecoin protocol? The following is the transcript of this Space.

BlockBeats: Please introduce yourself briefly, and by the way, briefly introduce the Usual stablecoin protocol

Pierre Person:Hello everyone, I am very happy to participate in this Space. I am the CEO of Usual. Two years ago, I was a member of the French Parliament, mainly engaged in monetary policy work, and a political adviser to French President Macron. I founded Usual in 2022. After 2 years of development, Usual's TVL is close to 360 million US dollars, the project is about to TGE, and we also have a very active community. The idea of Usual is to rebuild a stable feedback mechanism through decentralized data. Through this mechanism, users can obtain more data ownership.

Yoko:I am Yoko, the head of growth at Usual. I used to work with Pierre and was responsible for Macron's presidential campaign. I have been with the Usual team for 2 years. My current work includes TVL and various DeFi combinations. Let me briefly introduce Usual. Usual is a stablecoin protocol with RWA short-term US bonds as collateral. We hope to attract users in a fair, just and open way, and hope to provide a DeFi product with composability and low user barriers.

TN:I am the CEO and co-founder of Pendle. Simply put, Pendle is a protocol for tokenizing returns. Pendle was founded in 2020 and has been around for 4 years. Pendle can be used for yield speculation. For users who value returns and points, buying YT can bring them an inherent implicit leverage effect, allowing them to get greater returns. On the other hand, for conservative users who value certainty, they can choose to buy PT. Overall, more users tend to buy PT.

BlockBeats: I would like to know how Pendle and Usual reached this cooperation?

Pierre Person：Our collaboration with Pendle started in August when we had our first liquidity pool on Pendle. The purpose of this collaboration is to help Usual grow through Pendle's mechanism. Pendle and Usual have a lot in common, and Pendle's mechanism is also friendly to Usual. On the one hand, users can use Pendle to buy YT (Yield Tokens), and the buyers of YT are also the first buyers of Usual. As I said above, YT is a token with a certain leverage effect, so YT holders are more daring in their investments, and this type of people also voted for Usual's upcoming TGE. On the other hand, some people are more conservative, they want to get fixed income in the form of PT (Principal Tokens), and do not want to participate in the pre-sale of Usual. This shows two different behaviors: the first is that YT can get more related tokens and can cash them out. We see that Pendle has published many good posts in this regard to help the community analyze the value of Usual. There are a lot of synergies from our collaboration, for example, we have increased Usual’s TVL (total value locked) through Pendle, which is great.

Yoko：The old pool expired on October 31st, and we have opened a new pool, so our top priority is to ensure that the rollover from the old pool to the new pool can go smoothly. We interact frequently with Pendle officials, Pendle ambassadors and community members on Twitter, and they help users better understand Usual’s vision, pre-sale method, and token economic design of the project. It’s great to be able to work with Pendle, and we will have more cooperation in the future.

TN：I first met Pierre in person at the TOKEN2049 event held in Dubai in April this year. In fact, many friends suggested that I talk to Pierre and his team. So I found a time to chat and understand their vision. I think this is a very attractive and interesting product. Their product attracted my attention after it was launched, and I am very happy to work with the Usual team. Given our current scale of operation, we must be more selective in selecting partners. Usually, the best way to evaluate the prospects and potential of an asset is based on the team. I think the Usual team has strong execution capabilities and high efficiency, and the operations team is also excellent, sensitive to hot spots, and professional in operations.

BlockBeats: Pendle recently launched a new USD0++ pool, which has improved points and benefits compared to the old pool. Can you introduce the characteristics of this new pool?

Yoko: The new USD0++ pool has been opened on Pendle, and the new pool expires in March next year. At present, the data of the new pool is very good. One of the reasons is that we launched the PT strategy. Yesterday, our risk curator invested an initial capital of 400,000 US dollars, and these funds were quickly borrowed out. At present, many friends have asked me when new funds will be injected. For the sake of fund security, we have set up a time lock function. Starting from the previous 400,000 US dollars injection, the injection of funds will be restricted for 24 hours. The new round of funds is expected to start injection in the afternoon of the 29th, European time, which may be a little later for Asian users, but new funds will enter on the morning of the 30th. At the same time, we will also increase the amount of funds injected.

TN mentioned earlier that many users choose the PT model because it is a more conservative investment method. We hope to provide more application scenarios for PT by stacking Lego. Many users also like the PT strategy of our old pool, and the liquidation rate of the new pool has also increased to 97%, so everyone should pay attention to the liquidation rate when doing leveraged trading.

Another reason for the excellent performance of the new pool is that we doubled the basic points of each YT and LP from 3 points to 6 points. We also launched a lottery event, which will draw 10 prizes. Two prizes have been announced so far, and the prizes will continue to be drawn from Monday to Thursday this week and next week. We cooperated with Pendle to open a new pool because we had a pleasant cooperation before. The amount of funds in the old pool reached about 150 million US dollars, which is very important for Usual. The performance of the new pool is also very good. The yield rate on the Pendle homepage has always been in the top three, and even remained in the first place for a long time. We hope to provide better income opportunities for DeFi users, Usual community and Pendle community, which is also a continuation of our previous cooperation.

BlockBeats: The name of the new pool is USD0++. Why is it called this name, with two "+"?

This is Pierre's idea. This requires a comparison of the difference between USD0 and USD0++. USD0 corresponds to RWA short-term US bonds at a ratio of 1:1. USD0, as a stable currency for collateral, does not provide income itself. Users need to provide liquidity for different DeFi pools to get less income. The bulk of the income is in USD0++. USD0++ is a pledged version of USD0 with a term of 4 years. During the project TGE, users are allowed to withdraw USD0 from the pledge at a ratio of 1:1, which can ensure the safety of the user's principal and there will be no risk of bank runs. We will also provide sufficient principal later to ensure that the principal can be withdrawn at a ratio of 1:1.

BlockBeats: I would like to ask why the Usual project initially wanted to create a new stablecoin? Why did it move in the direction of RWA?

Pierre Person：We have seen many old stablecoins like Tether's USDT and Circle's USDC. They made huge profits with users' money, but these profits were not distributed to users at all. Tether is not transparent internally, and users lack understanding of Tether's reserve holdings and the team's earnings. The real idea of Usual is to distribute USUAL token earnings to users so that users can get more ownership. Not only earnings, as a USUAL holder, you can participate in the construction and growth of the protocol like an early investor in a sense, which is why many people want to own some USUAL tokens. The main idea behind this is to provide a truly neutral ecosystem to spread value to a wider community. We just announced part of the token economic model a few days ago. We will give back 90% of the pre-sale tokens to the community, without any hiding or deception. In general, we hope to bring all the value to the community. What really brings value to Usual is the liquidity provided by people, the community. This is also the difference between Usual and other stablecoin issuers.

Yoko: The token economics of Pendle and Usual are relatively complex, not simple and easy-to-understand protocols, which is why we can appreciate each other. USUAL tokens have good DeFi Lego composability, giving users governance rights, and the value of its tokens is supported by real cash flow, not generated out of thin air. Specifically, tokens will only be minted when there is cash flow entering the protocol, thereby ensuring the authenticity of their underlying value. In addition, users can obtain income through token pre-sales, not only sharing the underlying income, but also obtaining additional income through speculation.

BlockBeats: Does the USUAL token have any impact on the market value or market share of USD0? Is there any connection between USD0 and the development of Usual protocol?

Pierre Person：The income of Usual protocol itself is the income of US Treasury bonds collateralized by RWA. At present, the income from collateral is about 3 million US dollars. I think it should be able to earn about 15 million to 16 million US dollars next year, depending on the amount of TVL. All of these incomes go into the vault 100%. When users get stablecoins, they first convert USD0 to USD0++, and holding USD0++ will generate part of the income.

So we issue some USUAL tokens. These USUAL tokens are deflationary, just like Bitcoin's halving mechanism. There will be fewer and fewer USUAL tokens, which creates a scarcity mechanism, so the earlier you participate in the distribution, the more tokens you will get. Considering the distribution of benefits, those who participated in the pre-launch phase or participated in bootstrapping the TVL should receive more rewards than those who came in later. Assuming that the TVL of USUAL tokens reaches billions of dollars, the deflation mechanism can balance the interests of most participants and reward early participants. USUAL tokens are only minted when new cash flows enter the protocol because they are tied to the development of the project. This is very important. You will see a lot of economic models where the value of the protocol is not strongly linked to the governance token itself. There is no real value behind the governance token. We don't want to be that kind of project. 90% of our tokens are reserved for the community, hoping to ensure that USUAL tokens will not be diluted. Moreover, the issuance mechanism of USUAL tokens is related to future cash flows, so it also protects the community's users from being diluted. If you want the community to hold governance tokens for a long time, you need a balancing mechanism. Usual's philosophy is to build an ecosystem based on protocol cash flow and linked to protocol revenue, ensuring that long-term buyers and long-term believers can have higher returns and hold governance tokens.

Yoko: Many friends have recently focused on whether the US Treasury rate cut will have an impact on many DeFi projects. We took this into consideration when designing the economic model. The minting and distribution design of USUAL tokens allows it to maintain its value in the future. If the US Treasury rate cuts, we will reduce the minting of pre-sale tokens to ensure that the user's allocation ratio remains unchanged, thereby ensuring that the value of the token will not be affected by the US Treasury rate cut or other external factors. I often talk to our actuary team about Usual's token economy. After each discussion, I think this design is excellent, although a bit complicated. After we released content about USUAL tokens last week, many friends felt that they bought too few YT tokens. I hope everyone can read more of our content and discuss it together.

BlockBeats: What do you think and comment on Usual's token economics?

TN: Ultimately, it doesn't particularly matter which mechanism you choose. I think the purpose of token economics is to encourage positive development of the project and promote the growth of the protocol. Of course, as the protocol grows, this should also be reflected in the token price. I think the best way to drive this relationship is to have very solid and good fundamentals, and these fundamentals must be reflected in the indicators.
Overall, I think a lot of token economic models are viable at the moment. But many times, many protocols do not generate significant revenue, which can in turn damage the entire token economic model. Usual is not much different from many other protocols. It is still a very basic ve token economic model, which was learned from Curve and is largely motivated and inspired by Curve. But I think the focus that can help the token price rise is TVL and trading volume. Both the TVL and trading volume of the project have achieved significant growth, and the community has also witnessed these developments.

BlockBeats: The stablecoin market is very competitive. We can see that many Web2 giants such as Paypal have joined the competition. How does Usual expand its stablecoin market?

Pierre Person: The customer market is one of the largest markets, but it is also one of the most competitive markets. For example, I think Maker (Sky)'s DAI is a very good product, and users can earn good returns with DAI. But DAI is not yet a means of payment, so it has not yet reached systemic development. Usual's rapid expansion provides an example of a paradigm shift in the market. You have idle cash liquidity, which is not predictive and only provides funds to certain institutions such as Tether and Circle. Usual's idea is to rebuild something different through Usual's model and paradigm to help us expand quickly. For a protocol to thrive, it needs to have a large counterparty and collateral and become a means of payment. But you can't do this at the beginning, you need other ways to expand.

The way we expand is to give users the right to redistribute the value generated by stable currencies, which is the first step in the growth of Usual. This is actually like a bridge built between cash liquidity and decentralized financial liquidity. We really want to build some new forms of decentralized commercial banks, in a sense, you have liquidity, because stablecoins are no different from liquid deposits in banks. Usual's plan is long-term and diversified, making Usual more like an ecosystem by building the value of products, providing various other services besides liquidity. Liquidity is key and the first step in development, but you need to build new products on it to generate additional income, and these incomes are not only related to real-world asset returns. We all know that risk-free returns should decline over time, so it is also very important to ensure the sustainability and profitability of Usual.

Yoko:There are many new stablecoins or stablecoin-like concepts emerging in the market. Although some projects say they are not stablecoins in the traditional sense. The market demand for annualized returns and innovation in stablecoins is very high, so we are also very happy to see more and more people paying attention to the field of stablecoins. This track has been criticized by many people in the past, but now the success of many projects in this track has also made us see the potential of Usual.

Many friends will ask what are the current use scenarios of stablecoins? Stablecoins can not only be used as collateral, but also in different pools. The payment function is a point of great concern to everyone, but for emerging stablecoins, the payment function may not be the primary development direction because it requires a large market volume. Before reaching a sufficient scale, stablecoins will be used more in other DeFi applications. In short, we are confident in stablecoins and their potential, and look forward to working with more people to jointly promote the development of this field.

In addition, we use RWA as the underlying collateral, which is a very good method. It can bring funds from traditional finance into DeFi. Without the inflow of funds from traditional finance, the overall amount of funds in DeFi will account for a very small proportion. We also plan to launch other innovative products such as DAI0 in the future. I hope everyone will pay more attention to it.

TN:We will announce new rules for TGE soon. Thank you very much for your contribution to the community and the protocol, and we will continue to work hard.

Question session

Audience: Many people think that Usual's token economic model is very similar to Bitcoin. I would like to ask how you understand it?

Yoko:Usual's economic model is very novel, and no project has made similar attempts before. So we have spent a lot of energy in educating the community and educating users. There are many factors that influence the minting and distribution of Usual. In short, it is a little bit related to Bitcoin, but there are actually many differences. For example, unlike Bitcoin, it does not have a fixed supply cap. Its supply will change according to the growth of the TVL of the protocol. If the TVL continues to grow, the minting rate will also change.

Our actuarial team often upgrades the token economics and often thinks about how to make users more profitable? How can the pre-sold tokens maintain or even appreciate in different market environments? Pendle has been very successful in developing protocols for 4 years. We also hope that Usual can bring continuous benefits to users, rather than a flash in the pan. Solving these problems requires considering many factors, including market environment, time, and user behavior. We want to ensure that the distribution and minting of USUAL tokens can bring very stable benefits to users regardless of whether the TVL grows or decreases.

Space link: https://x.com/i/spaces/1mnxeAEjbvqxX