Cardano has finally welcomed its first fully fiat-backed stablecoin following the launch of the Mehen Finance-founded USDM, launched on the 17th of March.
USDM was initially set for launch in 2023 but faced major delays following the shutting down of major crypto-friendly banks and after its banking partner decided to work with Circle.
Cardano Finally Sees Fiat-Backed Stablecoin
Cardano’s lack of a fiat-backed stablecoin has drawn considerable criticism from the crypto community, with critics arguing that its absence undermines the network’s utility. Cardano boasts several algorithmic stablecoins, but the lack of a fiat-backed one has always been a sore point. However, this is finally set to change with the introduction of the Mehen Finance-backed USDM.
Launched on the 17th of March, USDM allows holders to mint or redeem USDM via the United States Dollar, differing from existing Cardano-based stablecoins such as DJED and iUSD, both algorithmic stablecoins. Institutional customers can begin the onboarding process from the 18th of March, meaning the USDM stablecoin could make its on-chain debut during the coming week. With the growing demand for a fiat-backed stablecoin in the Cardano ecosystem, the launch of USDM marks a crucial moment that could boost DeFi on Cardano.
According to Mehen Finance’s official announcement, USDM will initially be available in 17 US states. It will also debut on Cardano’s largest decentralized exchange, MinSwap, and Genius Yield.
“It is important to note: Yes, our App will be up and running on the 16th of March. Users in the approved 17 US states will be able to create an account, go through the KYC process, and link accounts. However, minting will only be enabled for certain institutional users. There will be a short delay for retail users. This is a soft launch and users will KYC on http://mehen.io Saturday at launch or email BizDev@mehen.io.”
A Difficult Launch
Matthew Plomin, the founding partner at Mehen, said that the launch of the USDM stablecoin on Cardano was fraught with difficulty and delays, thanks to the US banking crisis in 2023. Mehen Finance released its whitepaper in 2022, explaining why a dollar-backed stablecoin could provide a much-needed service for users on Cardano. Initially set for launch in 2023, USDM faced major delays following the collapse of Silicon Valley Bank, Silvergate, and Signature Bank.
Plomin also revealed that its banking partner, Cross River, cut ties with Mehen when it teamed up with Circle, the issuer of the second-largest stablecoin in the market.
“Once they had them, they didn’t care about us anymore.”
Mehen has now partnered with fintech firm Plaid to mint and burn US dollars for USDM. Plaid also provides a payment transfer network between the Bank of America, Chase, Wells Fargo, and other large US banks to power fintech and crypto products. Mehen is now actively seeking a money transmitter and virtual asset service provider license to expand its services in Europe and the United Kingdom.
Minting USDM
Users based in the approved 17 states can create an account, complete the KYC process, and link accounts. However, minting is currently limited to institutional users, with minting for retail users set to launch in the next few weeks. Eligible users who want to mint USDM can do so without incurring any fee. However, they will be subject to a 1.5% burn fee, with a minimum fee of $50 and a maximum of $5000. Mehen has stated that the current fee structure is subject to change, with additional features potentially affecting the fees currently in force.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
