Cardano Ends Wait for Fiat-Backed Stablecoin as Mehen Finance Unveils USDM

Layer-1 blockchain Cardano is set to welcome a fully fiat-backed stablecoin as Mehen Finance unveils USDM following the delay since early 2023. Launching a fiat-backed stablecoin was delayed by shuttered crypto-friendly banks in 2023. Unfortunately, the banking partner would abandon the project and join the USD-Coin (USDC) stablecoin issuer Circle.

The layer-1 blockchain Cardano is ushering 1:1 fully fiat-backed stablecoin (USDM) to make a stab into the $146-billion stablecoin market currently dominated by Tether (USDT). 

Mehen Finance Ends Delay to Issue USDM Stablecoin

Mehen Finance unveiled the USDM stablecoin on Sunday, March 17, allowing the minting and redeeming of USDM through the US dollar. The USDM varies from other Cardano-based stablecoins, including iUSD and DJED, which are identified as synthetic and algorithmic. 

Mehen cofounder Matthew Plomin admitted the challenges suffered in attempting to unveil USDM stablecoin on the Cardano. He admits the US banks crisis in 2023 was behind the postponed launch. 

Plomin recalls releasing the white paper in November 2022 in anticipation of launching the US dollar-backed stablecoin the following year. The founding partner reiterates that the fiat-backed stablecoin will offer the much-needed service to Cardano users. 

Plomin indicated in a Thursday, March 14 update in X Spaces that Mehen Finance scheduled a 2023 launch for USDM. However, the banking crisis that took down Silvergate, Signature Bank, and Silicon Valley Bank (SVB) in March last year forced the delay. 

Plomin admitted that Mehen Finance engaged Cross River only for the bank to sever ties and team up with the second-largest stablecoin USDC issuer, Circle. The latter was also searching for a new banking partner following the banking crisis. 

Plomin laments that Cross River abandoned the project, which he attributed as the source of the delay. Mehen Finance would later engage the fintech firm Plaid to mint and burn US dollars for the USDM stablecoin. 

Plaid offers a payment transfer network across several US banks, including Wells Fargo, Chase, and Bank of America, that powers crypto and fintech products. A previous post by Mehen chief technology executive Steven Fisher revealed that Plaid had been integrated in August 2023. 

Mehen Finance Pursues VASP and Money Transmitter Licenses in Europe

Fisher illustrated that adding the bank details will allow the users to have seamless USD deposits, which helps burn USDM when receiving USD. Mehen is pursuing the virtual asset service provider (VASP) and money transmitter licenses to expand to Europe and the UK. 

Plomin hailed progress with over two dozen firms plotting the USDM integration on the platforms. The firms include borrowing protocols, lenders, and decentralized exchanges. Mehen illustrates that the institutions take 24 – 48 hours to onboard. It implies that USDM will arrive on-chain by the 18th week. 

Mehen reveals that smart contracts and decentralized oracles will facilitate the USDM issuance and management. Doing so is necessary to guarantee transparency and security.

News of the USDM launch yielded optimism among the Cardano community led by Jaromir Tesar, who termed it a significant milestone for the Cardano-based decentralized finance (DeFi). 

USDM Enters Competitive Stablecoin Market

USDM’s entry into the crowded yet competitive market signals growth in the stablecoins segment. The stablecoin segment commands $149.796 billion in market capitalization, with a daily trading volume of $99.326 billion in the past 24 hours. 

Today, USDT commands the largest market share with a capitalization of $103.7 billion, translating to 71.36% market dominance. USDC ranks second at $30.8 billion, accounting for 21.26% dominance, as per CoinGecko data. At press time, 09:35 UTC, the USDT realized $81.610 billion daily trade volume while First Digital USD attained $11.305 billion and USDC attained $11.248 billion in the past 24 hours.

USDM is set to face seven other stablecoins with a collective market capitalization of over $500 million. USDM is set to leverage the shield from rival stablecoins within the Cardano network since they cannot transfer via the Cardano blockchain.