Binance & Kraken Invest $10M in Usual Labs’ Stablecoin USD0

Crypto exchanges Binance and Kraken have led a $10 million investment round in Usual Labs, the issuer of the USD0 stablecoin.

At first glance, investing in a new stablecoin issuer might seem unprofitable. The stablecoin market is already saturated and divided among major players. But if giants like Binance and Kraken see potential, Usual Labs’ business model must offer something unique.

Usual’s approach initially appears more like charity than business:

• USD0 is backed by real assets, primarily U.S. Treasury Bills.
• 90% of the returns from these assets are distributed to users.

Where’s the profit? Investing in Tether, which also holds yield-generating reserves but keeps all the profits, would seem more lucrative.

But here’s the twist. According to the FAQ on Usual.money:

• Users deposit U.S. Treasury Bills to receive USD0.
• USD0 can be converted into another token, USD0++, which earns rewards.
• These rewards are paid in a third token, USUAL.

In reality, those who simply use USD0 as a stablecoin don’t receive these returns. The rewards go only to users who exchange USD0 for USD0++. And while Usual Labs earns actual dollars from T-Bills, it distributes rewards in USUAL tokens - assets no one is obligated to buy back and that could face liquidity issues.

Usual Labs’ business model may be profitable, but its lack of transparency is concerning. There are plenty of other stablecoins with clearer terms - and you can swap them all at rabbit.io.