Layer-1 blockchain Cardano has introduced its inaugural 1:1 fully fiat-backed stablecoin, USDM, marking its entry into the stablecoin market valued at $146 billion and predominantly led by Tether (USDT) and Circle (USDC).
Launched on March 17, USDM, developed by Mehen Finance, allows users to mint or redeem tokens using the United States dollar. Unlike existing Cardano-based stablecoins such as DJED and iUSD, USDM is fully backed by fiat and differs in its algorithmic and synthetic-based approach.
Mehen founding partner Matthew Plomin acknowledged the challenges faced during the stablecoin’s development, citing delays caused by issues with U.S. banks in 2023. Despite initial plans to launch in 2023, delays ensued when the bank partner, Cross River, terminated its relationship with Mehen after aligning with Circle.
To address banking challenges, Mehen now leverages fintech firm Plaid’s services to mint and burn U.S. dollars for USDM. Plaid’s network facilitates payment transfers between major U.S. banks, enhancing accessibility and functionality for USDM users.
Mehen aims to secure regulatory licenses to expand services in the UK and Europe. Additionally, it has garnered interest from two dozen firms planning to integrate USDM, ranging from lending and borrowing platforms to decentralized exchanges.
The Cardano community has embraced USDM’s launch as a significant achievement for decentralized finance on the network. Despite entering a competitive stablecoin market, USDM, shielded from competition on the Cardano blockchain, aims to establish its presence and utility in the ecosystem.
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