Can Usual’s revenue switch fulfill its promises amid rising concerns?

The Revenue Switch, a system designed to allocate 100% of Usual’s (USUAL) protocol revenue to USUALx stakers, has been launched by the creators of the USUAL token and the USD0 stablecoin ecosystem. While this initiative represents a significant advancement for decentralized finance, its introduction comes with ongoing community apprehensions regarding recent updates to the protocol’s redeem function.

Initiated on Jan. 13, 2025, the Revenue Switch allows USUALx stakers to receive protocol-generated revenue, projected at $5 million monthly, directly in USD0. This mechanism connects token value to actual earnings, with the goal of encouraging long-term staking and fostering sustainable protocol growth.

As of Jan. 14, 2025, the USUAL token trades at $0.5319, with a market cap of $275.68 million and a 24-hour trading volume of $194.6 million. About 36.53% of the token supply is staked, offering an annual yield of 275%, which includes 42% in USD0 rewards and 233% in USUAL.

Usual Protocol activates revenue switch amid redeem function debate - 1
USUAL 1D chart | Source: CoinmarketCap

Despite the enthusiasm surrounding the Revenue Switch, the protocol has faced scrutiny over its update to the redeem function for USD0 stablecoins. The new feature permits a temporary suspension of redemptions under certain conditions, such as during market volatility or liquidity challenges. While USUAL has explained that this alteration is meant to preserve stability in extreme circumstances, it has sparked concerns regarding the concentration of control and its potential effects on decentralization.

The rollout of the Revenue Switch and changes to the redeem function are part of USUAL’s broader strategy to consolidate its standing as a prominent DeFi protocol. The Revenue Switch seeks to improve the functionality of USUAL tokens, stabilize returns for stakers, and establish a transparent framework for revenue distribution. USUAL has also signaled intentions to enhance its model in the upcoming months, incorporating advanced staking and governance structures inspired by the “veModel” utilized in other DeFi projects.

As USUAL navigates these changes, the effectiveness of the Revenue Switch may act as a proof of concept for revenue-based tokenomics, potentially shaping future practices in the industry. At the same time, the protocol’s response to community concerns will be closely observed, as it could influence trust and adoption in an increasingly competitive DeFi landscape.