A dollar balance should stay worth a dollar. As a DeFi bank with an open architecture, Usual keeps USD0 at its 1-to-1 peg through a set of mechanisms that anyone can verify and participate in.
The peg in one sentence
Anyone can always redeem 1 USD0 for 1 dollar of real assets. That is what keeps USD0 at $1 on the open market.
How it works
USD0 has two independent forces pushing its price toward $1:
1. The 1-to-1 redemption guarantee
You can always deposit 1 USDC (or tokenized Treasury Bills) and receive 1 USD0 in return. You can always redeem 1 USD0 for 1 unit of the same value. This is a hard floor.
2. The arbitrage mechanism
If USD0 drifts from $1 on a decentralized exchange, arbitrageurs step in:
Situation | What arbitrageurs do | Effect on price |
USD0 trades below $1 (e.g., $0.99) | Buy cheap USD0 on the market, redeem 1:1 at Usual for $1. Profit $0.01 per USD0. | Buying pressure pushes price up. |
USD0 trades above $1 (e.g., $1.01) | Deposit USDC at Usual to get USD0 at par, then sell on the market for $1.01. Profit $0.01 per USD0. | Selling pressure pushes price down. |
This arbitrage is open to everyone. The more the price drifts, the larger the profit, the faster the price returns to $1.
A worked example
Suppose USD0 drops to $0.995 on Curve during a moment of heavy selling.
An arbitrageur buys 1,000,000 USD0 on Curve for 995,000 USDC
They redeem the 1,000,000 USD0 at Usual for real assets worth $1,000,000
They withdraw to USDC, finishing with 1,000,000 USDC
Profit: 5,000 USDC, minus gas
The act of buying 1,000,000 USD0 on Curve restores the price to near $1. In practice, this happens within seconds of the deviation.
What can threaten the peg
Threat | How Usual handles it |
Sudden sell pressure on markets | Arbitrage restores the price, as shown above. |
Liquidity crunch on markets | Direct redemption at Usual is always available. |
Collateral provider failure | Reserves are diversified across several providers. A single failure does not break the peg. |
Smart contract bug | 20+ audits have been performed. A pause mechanism exists for emergencies. See Audits & Security. |
Regulatory freeze | A theoretical risk. Discussed in Regulatory risk. |
The peg is not a guarantee
In extreme conditions — for example, a deep crisis in the US Treasury market or a systemic smart contract exploit — USD0 could temporarily trade below $1. Since launch, USD0 has stayed within a tight band around $1.
The peg is not a promise. It is the outcome of a set of mechanisms that have worked so far and that the community monitors continuously.
Note: If you see USD0 deviating from $1 by more than a few basis points, check the status page on docs.usual.money and the official communication channels before acting.
Technical note (for DeFi users): The arbitrage path relies on the spread between the primary mint/redeem path (via DaoCollateral and SwapperEngine) and secondary markets (Curve USD0/USDC pool, Uniswap pools, and aggregators). The protocol implements intelligent mint routing that directs small orders through Curve when pricing is favorable, using a price-threshold factor τ that adjusts based on allowed overpeg. See the litepaper for the full mint-routing formula and the peg defense mechanisms.
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