At Last! Cardano Drops Its Game-Changing Fiat-Backed Stablecoin USDM

Mehen Finance initially aimed to unveil USDM, its 1:1 fiat-backed stablecoin, in early 2023. However, plans were thwarted when key crypto-friendly banks closed their doors in 2023, further complicated by its banking partner, Cross River, opting to collaborate with Circle instead.

Cardano, a leading layer-1 blockchain, has now embraced USDM as its inaugural fully fiat-backed stablecoin, marking a significant addition to the expansive $146-billion stablecoin arena, previously dominated by giants like Tether (USDT) and Circle (USDC).

Distinguished from other Cardano-based stablecoins such as DJED and iUSD, which are either algorithmic or synthetic, USDM offers a novel minting and redemption process directly through the U.S. dollar, introduced on March 17.

#CardanoCommunity,$USDM IS HERE!

policyID – c48cbb3d5e57ed56e276bc45f99ab39abe94e6cd7ac39fb402da47ad

assetName – 0014df105553444d pic.twitter.com/gnkh4NikDS

— $USDM on Cardano (@MehenOfficial) March 17, 2024

The journey to launch USDM on Cardano was fraught with hurdles, particularly due to banking sector instability in the U.S. during 2023.

Matthew Plomin, a founding partner at Mehen, highlighted the challenges, noting the unforeseen banking collapses of Silicon Valley Bank, Silvergate, and Signature Bank in March 2023 as pivotal moments that delayed USDM’s debut.

Mehen had outlined its vision for a U.S. dollar-backed stablecoin as a crucial service for Cardano users in its November 2022 white paper.

What will the launch on the 16th look like?
Regulation, fee structure and more! AMA

Did you miss the space!?#cardano $USDM March 16th! Saturday! https://t.co/LnD3qN94Mk (edited)

— $USDM on Cardano (@MehenOfficial) March 13, 2024

However, the banking turmoil and the subsequent severance of ties by Cross River in favor of partnering with Circle posed significant setbacks.

Despite these obstacles, Mehen adapted by partnering with fintech firm Plaid in August 2023, leveraging its network for seamless USD transactions for USDM minting and burning, involving major U.S. banks like Bank of America, Chase, and Wells Fargo.

#Mehen development update:

Added the ability to add your Bank through Plaid. I still need more work on the Bank management, but this is the key piece to it all.

Adding your bank will allow you to deposit USD to mint $USDM and allow you to burn USDM to receive USD.

This is… pic.twitter.com/cOvxYp3G06

— Steven Fisher | Mehen CTO (@mehen_cto) August 16, 2023

Further expanding its horizon, Mehen is pursuing licenses to operate as a money transmitter and virtual asset service provider in the UK and Europe.

Over 2,000 partners are reportedly poised to integrate USDM into their platforms, encompassing a wide range of applications from lending and borrowing protocols to decentralized exchanges.

The integration process is expected to unfold over the week following March 18, facilitated by smart contracts and decentralized oracles for enhanced transparency and security.

The introduction of USDM has been met with enthusiasm within the Cardano community, signifying a “major milestone” for decentralized finance on the platform, as echoed by community member Jaromir Tesar.

#Cardano has the first USD-backed stablecoin Mehen $USDM.

This is a major milestone for DeFi on Cardano.

Congratulations @MehenOfficial team! https://t.co/7a6juMcb04

— Cardano YOD₳ (@JaromirTesar) March 17, 2024

Despite the crowded stablecoin market, with USDT and USDC leading by market cap, USDM carves out its niche within the Cardano ecosystem, unfazed by competition from other stablecoins not transferable via Cardano.

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