Usual Protocol, an up-and-coming decentralized finance (DeFi) protocol that has seen a remarkable rise over the past months, faced community backlash on Friday after a tweak in the protocol’s yield-generating token triggered a sell-off on secondary markets.
Amid the turmoil, the protocol’s USD0++ token, which represents a locked-up – or staked – version of its $1-anchored stablecoin USD0, fell briefly below 90 cents from $1 on decentralized marketplace Curve. The protocol’s governance token, USUAL, plummeted as much as 17% through the day before recovering some of the losses.
The selloff was caused by a change in the redemption mechanism of USD0++ token introduced by the team on Thursday that caught investors and liquidity providers off-guard.
By design, USD0 is backed by short-term government securities to keep its price at $1. Stakers on Usual receive USD0++ that comes with a four-year lock-up period, meaning that investors are locking up their funds without being able to rede
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