USDM: Cardano's Premier Fiat-Backed Stablecoin Evolving in the $146 Billion Market
Summary:
Cardano has inaugurated its first 1-to-1 fiat-backed stablecoin, USDM, entering a $146 billion market dominated by Tether and Circle. USDM, developed by Mehen Finance, permits users to mint and redeem via the US dollar, drawing a distinction from other Cardano-based stablecoins. Despite facing banking complications, the firm leverages fintech company Plaid's services for USDM operations and is expanding to the UK and Europe. Over 2,000 partners are set to incorporate USDM on their platforms, with the onboarding process commencing gradually.
Taking the mantle as the premier 1-to-1 fiat-backed stablecoin on Layer-1 blockchain Cardano is USDM, the newest player in a formidable $146 billion stablecoin market, currently ruled by giants Tether (USDT) and Circle (USDC). USDM was introduced on March 17th by its creator, Mehen Finance, offering holders the opportunity to mint or redeem in US dollars. This novel stablecoin stands distinctly apart from its Cardano-based counterparts like DJED and iUSD that rely on algorithmic and synthetic strategies. Launching the stablecoin on Cardano wasn't smooth sailing, revealed Mehen founding partner Matthew Plomin, citing complications with American banks in 2023. A white paper was published by the firm in November 2022, highlighting how a stablecoin backed by US dollars could benefit the Cardano user base. Despite their initial plans to roll out USDM in 2023, the closing of major players like Silicon Valley Bank, Silvergate, and Signature Bank in March gave them pause. Cross River, who they were collaborating with, severed ties with the company at the same time it linked up with Circle, the second-biggest stablecoin enterprise. Plomin stated that the firm now relies on fintech company Plaid's services to mint and burn US dollars for USDM. Plaid operates a transfer network connecting large American banks like Bank of America, Chase, and Wells Fargo to support fintech and cryptocurrency products. The alliance with Plaid came to fruition in August 2023, as disclosed by Steven Fisher, CTO of Mehen. The company is also in pursuit of a money transmitter and virtual asset service provider license to broaden its portfolio in the UK and Europe. Additionally, over 2,000 partners have committed to introducing USDM on their platforms, spanning across a spectrum of lending and borrowing protocols to decentralized exchanges. The process of onboarding institutions will take up to two days, promising a gradual rollout of USDM. The issuance and regulation of USDM will be overseen by smart contracts and decentralized oracles to verify transparency and security. Many Cardano community enthusiasts, including Jaromir Tesar, have voiced their optimism for this major breakthrough in decentralized finance. Despite the crowded and uncompromising stablecoin field, USDM holds an edge over competitors, protected by the fact that rival stablecoins are not presently compatible with the Cardano blockchain.
Published At
3/18/2024 7:56:36 AM
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