Usual is designed to be one of the safest places to hold dollars and euros on-chain. But as a DeFi bank, it is not risk-free. This article is an honest overview of the risks you take when you use Usual and what the platform does to manage them.
Risk is not the same as danger
"Risk" is the possibility that an event causes a loss. Every financial product has risk. The question is not "is it risky?" — the question is "what are the risks, and are they priced correctly?"
Usual's approach: be transparent about every risk, mitigate what can be mitigated, and give you the information to decide whether the trade-off suits you.
The main risks, at a glance
Risk | What it is | Dedicated article |
Depeg risk | USD0, EUR0, or other tokens temporarily trading away from their peg | |
Collateral risk | Issues with the real assets backing your balance | |
Smart contract risk | Bugs or exploits in Usual's contracts | |
Regulatory risk | Changes in laws affecting the protocol or its providers | |
Liquidity risk | Not being able to exit at the price you expect | |
Bad debt risk | Accumulated loss that cannot be recovered |
How Usual manages these risks
Diversification — collateral spread across multiple regulated providers
Transparency — all reserves visible on-chain, audited regularly
Short duration — collateral concentrated in short-term Treasury Bills to limit interest rate exposure
Audits — over 20 audits by leading security firms since launch
Bug bounty — $7.5M bug bounty program via Cantina
Pause mechanism — emergency pause available if a critical issue is detected
Governance oversight — the DAO can respond to risks through UIPs and treasury deployment
What you can do to manage your own risk
Diversify across products and chains
Read the risk article for each product before committing significant capital
Start small with any new product or integration
Monitor your positions via the app and via on-chain dashboards
Stay informed through the docs, blog, and governance forum
Use hardware custody for large balances
Do not over-concentrate in a single product or chain
What is NOT a risk with Usual
Some risks common in DeFi and traditional finance do not apply to Usual:
Not a risk | Why |
Commercial bank failure | Reserves are not held in commercial banks |
Fractional reserve crisis | No fractional reserves — 1:1 backing |
Hidden leverage | No leverage in core products |
Insider self-dealing on revenue | 100% of revenue is distributed through the Revenue Switch contract |
Unilateral protocol changes | Every change goes through a DAO vote |
These risk exclusions come from architectural choices, not from marketing. They are enforced by contracts and governance.
When risks materialize
Usual has faced real events in the past (e.g., the January 2025 bUSD0 floor adjustment event). The response pattern is consistent:
Identify the event quickly
Communicate transparently through official channels
Analyze the cause
Propose a mitigation via governance
Publish a post-mortem
You can find past post-mortems and incident responses on gov.usual.money and the docs.
Note: A realistic view of risk is better than a reassuring one. If a risk disclosure seems inadequate, ask about it in Discord or on the governance forum. Good questions lead to better risk management for everyone.
Technical note (for DeFi users): The risk framework is codified in the Usual litepaper and the ongoing UIPs. Risk parameters (lock weights, collateral allocations, emission caps) are governed on-chain. See the docs for the full risk spec and the governance forum for ongoing risk discussions.
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