UIP-11: Critical Deflationary Reform to Protect USUAL Value

Background - Bridging Vision and Reality

USUAL was built on a fundamental promise, proof of revenue, creating a dynamic balance between token distribution (sell side from USD0++ users) and intrinsic value (buy side from protocol buybacks and revenue-sharing models). Our goal has always been to anchor USUAL’s price in pure fundamentals.

The model delivers: The DAO generates $25M in annual revenue, holds over $30M in treasury, and provides USUALx holders with an historical 75%+ APR in USD. The fundamentals are proven.

But USUAL's tokenomics need optimization: Despite repurchasing 10% of the circulating supply since July, the price doesn't reflect this value. USUAL trades at just 1.6x P/E on market cap and ~4x on FDV, while the average stock market P/E exceeds 20x and crypto P/E runs into the thousands or turns negative. The protocol is strong. The emission structure needs refinement.

Why This Vote Matters

As USUAL v2 approaches, the protocol is firmly moving out of its bootstrapping phase. Token emissions and farming are no longer central to its design; value now derives from product usage and real yield. The disinflation adjustment restores balance across the system, not a reset but a recalibration that aligns incentives, protects TVL, and anchors USUAL’s growth in sustainable fundamentals.

Why Current Tokenomics Are Sub-Optimal

The Structural Imbalance

• Current emissions: 82M USUAL per month
• Required buying pressure at $0.05/USUAL: $4M; at $0.20/USUAL: $16M (challenging to sustain)
• Result: A price ceiling that does not reflect strong fundamentals

Incentive Misalignment

In the current setup, USD0++ holders in the USL face structural pressure to sell their rewards (≈94% weekly), turning what was meant to be a growth loop into a self-reinforcing drain. This creates a negative flywheel, where each sale adds to price pressure, weakening liquidity and TVL stability. Over time, this extraction dynamic has weighed on the system’s ability to evolve naturally and fund the next stage of growth. The disinflation reform realigns incentives, restoring balance so the protocol can realize its USUAL v2 roadmap.

The Reform Package — Vote YES for:

Key Adjustments

• Max supply: –25% (4B → 3B USUAL)
• Overall future inflation: –50% compared to the original schedule
• Incentive program selling pressure: –85% (from 47.6M to 6M USUAL/month)

Allocation Changes

Allocations that INCREASE

As the maximum USUAL supply decreases by 25%, the relative share of existing allocations increases.

In other words, receiving the same number of tokens as before now represents a larger percentage of total supply.

• USUALx: Proportional increase
• USD0++ outside USL: Proportional increase
• Usual Foundation: Proportional increase
• Team, Advisors & Investors: Proportional increase

Allocations that DECREASE

• LP incentives: –80% reduction, with more efficient liquidity concentration to maintain or even improve depth with fewer emissions.
• USD0++ in USL: 100% → 0% (transformed into a zero-coupon structure with 0% lending rate).

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Stakeholder Benefits

USUAL & USUALx Holders

• Max supply cut by 25%, permanently reducing total token issuance.
• ~85% expected reduction in emission selling pressure from the incentive program.
• USUALx allocation sees a significant increase due to disinflation—from 10.83% to 15.14% of max supply.
• Enhanced price discovery potential
• Locked USUALx:
  • Free early unlock window between January 27, 2026 and February 2, 2026, ensuring fair transition for locked stakers given revenue adjustments.
  • USUALx locked yield (in USD0) will be guaranteed during the transition period, allowing locked USUALx holders to maintain their existing APR.

USD0++

• In USL: Pure maturity payoff play with duration focus, no interest rate risk.
• USL LTV will be increased from 86% to 87.7% in a first step, then to 88% in January 2026.
• Outside USL: USUAL rewards continue as before.
• New bridge between USL and USD0++ enables choice between zero-coupon and coupon-oriented strategies.
• In the context of the upcoming release of the USD0++ redesign into bUSD0, the Early Redemption mechanism will be replaced.

Protocol Evolution

• Revenue reduction due to USL interest rate adjustment but a tons of new economics opportunities that will increase revenues.
• Gains: A sustainable model for upcoming USUAL v2 products, with aligned incentives across stakeholders.
• A deliberate trade-off to cut selling pressure and ensure long-term sustainability.

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Timeline

• November 13–18: Governance vote

Phase 1 (By November 30)

• USD0++ in USL: USUAL rewards reduced 70%
• USL interest rate: 5% → 1.5%

Phase 2 (Early January)

• USD0++ in USL: Transitions to zero-coupon structure
• USL interest rate: 0% with a fee as low as 10 bps
• USD0++ outside USL: Rewards continue as currently (mechanically increasing as % of total supply)
• Launch of USUAL v2 sustainable products

Phase 3 (From January 27, 2026 to February 2, 2026)

• Locked USUALx unlock window

The Vision Forward

This reform prepares USUAL for v2, a mature phase where tokenomics support the product rather than define it. The focus shifts from short-term incentives to long-term structure, creating the stability needed to carry the protocol through late 2025 and into 2026. It's a deliberate move toward sustainable growth, lasting balance, and a stronger foundation for what comes next.

Vote YES on UIP-11 to transition USUAL from bootstrapping to sustainable growth.