What is USD0?
USD0 is a decentralized stablecoin backed by tokenized US Treasury securities. Built by Usual Protocol, it aims to combine the stability of government debt with the transparency and composability of DeFi.
How it works
USD0 is minted by depositing approved collateral — primarily tokenized T-Bills and other short-duration government securities. The collateral backs USD0 at a 1:1 ratio, providing the stability mechanism.
Unlike fiat-backed stablecoins that rely on bank accounts, USD0's reserves exist onchain as tokenized RWAs. This enables real-time verification of collateral without depending on periodic attestation reports.
The protocol uses approved collateral providers who tokenize Treasury securities through regulated frameworks. These tokens then serve as USD0 backing within the Usual system.
Transparency and verification
Because collateral lives onchain, anyone can verify USD0's backing in real time. Smart contracts hold the tokenized securities, making reserve composition publicly auditable without trusting third-party reports.
This transparency addresses a common criticism of fiat-backed stablecoins — the need to trust issuers' attestations about offchain reserves. With USD0, the collateral is visible on the blockchain.
US Treasury securities are considered among the lowest-risk assets globally. Using them as collateral provides USD0 with stability derived from sovereign debt rather than algorithmic mechanisms.
USD0++ and yield
USD0++ is a staking derivative of USD0. Users lock USD0 to receive USD0++, which earns yield from the underlying Treasury collateral. This transforms a non-yielding stablecoin into a yield-bearing position.
The yield comes from interest paid on the Treasury securities backing the system. As T-Bills mature and roll over, interest accrues to USD0++ holders.
Risks to understand
Smart contract risk exists with any DeFi protocol. USD0 depends on multiple contracts for minting, redemption, and collateral management.
Collateral provider risk matters because USD0's backing depends on tokenized RWA providers maintaining proper reserves and redemption capabilities.
Interest rate risk affects yield. If Treasury rates decline, USD0++ returns decrease. The underlying collateral remains stable, but yield expectations may not be met.