Usual Protocol experienced a significant backlash following an unexpected update to its yield-generating token's redemption mechanism. The USD0++ token, designed to maintain a $1 peg by being backed by short-term government securities, briefly dropped below $0.90, causing its governance token, USUAL, to plummet by 17% before partially recovering. The new 'dual-path exit' feature allowed early unstaking at a discounted rate, undermining its peg and leading to severe criticism from the DeFi community. The Usual team stated that the change had been communicated in advance but acknowledged the lack of clarity. Many liquidity providers were caught off-guard, and the incident highlighted risks associated with DeFi products that promise high yields. As of the latest updates, the USD0++ was trading around $0.91, while the protocol's total value locked had decreased to below $1.6 billion, illustrating the fragility of the DeFi ecosystem amidst regulatory and structural challenges.

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