Cardano has acquired the fiat-backed stablecoin USDM after major delays
Layer-1 blockchain Cardano has received its first 1:1 fully-fledged fiat-backed stablecoin, USDM, in a $146-billion stablecoin market dominated by Tether (USDT) and Circle (USDC) in recent years.
Launched on March 17th, the Mehen Finance-based stablecoin allows holders to spend or buy USDM in US dollars, and is more algorithmic and artificial than Cardano-based stablecoins like DJED and iUSD.
Mehen founding partner Matthew Plomin said the path to launching a stablecoin on Cardano in 2023 is not easy, with delays due to problems with US banks.
The company released its white paper in November 2022, explaining that the US dollar-backed stablecoin would provide a “critical service” to Cardano users.
Mehen planned to open USDM in 2023, but that all changed when Silicon Valley Bank, Silvergate and Signature Bank closed in March 2023, Plomin said at X Spaces on March 14.
Plomin described the bank he used to work with, Cross River, which at the time was looking for a new banking partner to partner with Serk, the second-largest stablecoin company, and cut ties with Mehen.
“Once they found us, they didn't care about us,” Plomin said.
“[It was a] Beat the nuts late.
Mehen now uses the services of fintech company Plaid to generate and burn US dollars for USDM.
Plaid provides a payment transmission network for moving fintech and cryptocurrency products between Bank of America, Chase, Wells Fargo and other major US banks. According to Mehen's chief technology officer, Steven Fisher, the company will integrate Plaid's services in August 2023.
“Adding a bank allows you to put dollars into Mint USDM and burn USDM to receive USDM,” Fisher said.
Mehen is actively seeking a money transfer and virtual asset service provider license to expand its services in the UK and Europe.
Meanwhile, Plomin says they have two dozen plans to integrate USDM into their platforms, which range from lending and borrowing protocols to decentralized exchanges. Ato Mehen pointed out that it will take one to two days for the institutions to complete the onboarding process.
“This means that the USDM will gradually reach the chain in the 18th week,” he said.
USDM provisioning and management will be managed through smart contracts and decentralized oracles to ensure transparency and security, Mehen said on his website.
Related: Cardano Coins New Name for ADA-Backed Stablecoin DJD
The creation of USDM has been described by several members of the Cardano community, including Jaromir Tesar, as a “major milestone” for decentralized finance on Cardano.
USDM enters a crowded and crowded and competitive coin market.
USDT and USDC hold the largest market caps at $103.1 billion and $30.8 billion, respectively, while seven other stablecoins have market capitalizations above $500 million, according to CoinGecko.
However, USDM is at least protected from competition from those stablecoins on the Cardano network, as they are not currently available for transit through the Cardano blockchain.
