UIP-9: Aligning Incentives through USUALx Locking, Buybacks, and Revenue Reform

UIP-9: Aligning Incentives through USUALx Locking, Buybacks, and Revenue Reform

Executive Summary

Background

• Market & financial strength: Usual is a top-earning protocol in its vertical with ≈ $650 M TVL, $25M annual revenue, and a $25M treasury.
• Valuation gap: Despite generating ∼20% of Circle's net income, USUAL trades at ∼0.1% of Circle's market cap.
• Innovation & insight: Usual was among the first protocol to stream real income on-chain to token holders; a six-month “open distribution” pilot (more than $15M distributed) proved that distribution alone don’t align incentives with long-term value creation.

Objective

Restructure Usual’s tokenomics to align long-term incentives by linking rewards to actual protocol revenue and commitment. We will:

1. Launch a USD0-funded USUAL buy-back program that removes tokens from circulation.
2. Introduce a tiered USUALx locking mechanism (1 / 3 / 6 / 12 months) with escalating revenue-share multipliers.
3. Phase down the “Gamma” emission rate, lowering token issuance inflation.
4. Add safeguards against delta-neutral farming to preserve genuine staking demand.
5. Route income to holders via treasury accrual, scheduled buy-backs, and lock-based USD0 distributions.

Key Mechanisms

• USUAL Buy-backs
  • 70% of protocol revenue (USD0) funds open-market buy-backs and treasury accrual.
  • Manual execution at first; transition to automated smart-contract buy-backs once proven.
  • Purchased tokens move to the ecosystem reserve, reducing float and supporting price.
• USUALx Locking & Revenue Share
  • Fixed lock terms: 1 / 3 / 6 / 12 months.
  • APR boosts: 1× / 2× / 4× / 8× proportional to lock length.
  • Only locked USUALx earns USD0 revenue; unlocked USUALx receives base USUAL emissions only.
• Emission Reform (“Gamma” Reduction)
  • Gradual dial-down of the USUAL emission rate (“Airdrop Catch-up”).
  • Smoothly retires high-emission subsidies as revenue-backed rewards take precedence.
• Expected Impact
  • Holders gain USD0 cash-flow, boosted yields, and stronger governance power, all funded by real income.
  • Market value gains a fundamental backstop from revenue-driven buy-backs.
  • Community sentiment is addressed: ~90% are in favor of locking, ~76% support buy-backs, ~67 % want limits on delta-neutral farming.
  • Positions Usual for sustainable, fundamentally driven growth while preserving its core concept of on-chain revenue sharing.

Please find the full proposal on Usual blog.

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