The stablecoin issuer Usual Money executed a critical protocol update in early 2025, changing the redemption mechanism for USD0++ (the staked derivative of USD0) from a fixed 1:1 ratio to a floating model. This move ignited immediate market turbulence. According to CoinGecko data, USD0++ plunged over 8% on January 9, hitting a low of $0.905, before recovering slightly to $0.939 by January 11 — still well below the $1 peg that many expected.
Supply Contraction and Market Spillover
The core stablecoin USD0 itself held its $1 peg, but its total supply dropped from a peak of $1.88 billion on January 7 to $1.54 billion four days later — a $340 million reduction. USD0 had just broken into the top 10 stablecoins by market cap, rivaling First Digital’s FDUSD. This adjustment created a rare “double dip” scenario: both the derivative and the underlying asset suffered simultaneous losses.
Governance Token USUAL Hit Hard
The protocol’s governance token USUAL was not spared. It lost 33.1% over the past week, dropping 3.7% in the last 24 hours to trade at $0.63. With a circulating supply of 514 million, its market cap stands at just $328 million. These dynamics highlight the fragile interplay between DeFi derivatives and their underlying stablecoins — when protocol parameters shift, market sentiment rapidly cascades across all linked assets.
Underlying Mechanism and Implications
Previously, USD0++ offered a straightforward 1:1 redemption path back to USD0, allowing holders to exit at par at any time. The new formula removed that arbitrage cushion, sparking a sell-off. While the Usual team has not fully disclosed the new redemption calculation, the market has already voted with its feet. Analysts warn that such protocol changes may undermine trust in stablecoin derivatives and urge projects to conduct more community communication before tweaking critical parameters. Despite the turmoil, USD0 remains in the top 10 stablecoins, but its stability reputation is now under scrutiny.