The USD0 stablecoin, issued by the Usual Protocol, experienced a brief de-pegging event earlier today following a large sell-off by a single whale on the secondary market. The event, which began around 07:00 AM UTC, saw the price of USD0 dip to $0.99 before quickly recovering to near its $1 peg within seconds. While some minor price fluctuations persisted for a few hours due to continued selling pressure, the stablecoin has since fully regained its peg.
In a statement released following the incident, Usual Protocol acknowledged the large sell-off, characterizing it as a significant stress test of the USD0 peg. The protocol emphasized the robustness of its infrastructure and model, highlighting the rapid recovery of the peg and the availability of ample liquidity for arbitrage opportunities.
The protocol further reassured users about the stability and solvency of USD0, pointing to its 1:1 collateral backing and the redeemability mechanism facilitated by a smart contract. While this redemption process is currently limited to whitelisted entities, Usual Protocol stated its intention to eventually make it fully permissionless following a series of rigorous audits.
“This morning’s event served as our first major stress test of the USD0 peg, with redemptions exceeding the entire Total Value Locked (TVL) of GHO [another stablecoin project] in just a few hours,” the statement read. “Despite these pressures, it was business as Usual. The peg is back to normal, and there’s now plenty of instant liquidity available.”
Usual Protocol underscored its commitment to maintaining a strong peg, citing USD0’s historical performance as one of the most stable stablecoins on the market. The protocol compared favorably to other stablecoins like FDUSD, PYUSD, and USDe, which it claims experience more frequent deviations from their $1 pegs.
The protocol also highlighted its strategy of diversifying its collateral holdings with highly liquid assets, including USYC, M by M^0, USDTB from Ethena, BlackRock BUIDL by Securitize, and OUSG by Ondo. This diversified approach, according to the statement, ensures multiple exit routes and optimal liquidity, allowing for T+0 redemptions of USD0 backed by short-term money market instruments.
