What is USDM stablecoin on Cardano

What is Mehen?

Mehen is creating the USDM fiat-backed stablecoin.

The USDM stablecoin will be an essential tool for Cardano. It will be used as a base asset for decentralized finance (deFi) protocols, and can be sent peer-to-peer for instant on-chain payments.

USDM will be a scalable catalyst for growth and adoption of the entire Cardano ecosystem.

  • Directly redeemable 1:1 fiat backed stablecoin
  • Cardano native asset
  • Capital efficient
  • Reserves are independently verified by on-chain oracles
  • Transferrable, versatile, and reliably compatible with smart contract applications and the broader Cardano DeFi ecosystem

We are working on a range of tools that will help Cardano empower people.

Committed to transparency and security, Mehen is building USDM using a smart contract-powered trustless framework. Issuance of USDM is governed by an independent decentralized oracle network that has direct API access to the USDM reserves account.

As a Cardano native asset, USDM can be easily integrated into the growing decentralized finance (DeFi) ecosystem.

Bridging financial expertise with technology, Mehen is moving global digital asset adoption forward.

Licensing and Identity

Mehen contains a FinCen registered money services business, and a British Virgin Islands registered virtual assets business. Mehen is seeking appropriate US and Cayman Islands licensing, which protects its customers’ rights and protects the status of the USDM token as a redeemable store of value stablecoin, not a security.

Minting and Burning

Mehen is using Charli3 Oracle for a 3rd party verification for the mehen bank account
Proof of sufficient reserves is essential for the smooth operation of any fiat-backed stablecoin.

We are taking a decentralized approach to reserve verification. All token mints and burns must be verified by an independent oracle service with API access to our bank accounts.

Prior to every mint, the oracle will publish our reserve balance on-chain for public viewing. The reserve value is incorporated into the native token’s smart contract design, and minting can only occur if there are sufficient reserves.

This raises the bar for other fiat-backed stablecoins, who publish self-attested proof-of-reserves on their websites rather than on-chain.

Our innovative token design is patent pending, and will not only provide additional transparency, but it will provide additional security for the users against unauthorized minting.

Building Adoption

In most blockchain environments, the chain’s native token is also used as its primary method of conducting payments. This is a problem for adoption.

Sometimes, people simply want to transfer or store value using an efficient, decentralized, safe blockchain network. But cryptocurrencies tend to have a fairly volatile price. This is where stablecoins come in.

Stablecoins in the blockchain ecosystem are treated like cash.

They are used to send peer-to-peer payments, remittances, trading NFTs or other blockchain-native items, and for building decentralized financial protocols.

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CommunityCatalyst proposal

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Now this is a well thought out architecture and regulatory strategy. What I like most is the minimized trust oracle solution. Can’t wait!

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Thank you for writing this introduction to USDM. In what capacity can users mint USDM, and what would that workflow look like?

  1. User can send USD to Cayman Island or US bank account → 2. USDM gets minted and sent to user → 3. User can now choose what to do with their USDM

I suppose to mint USDM and redeem USD, the user has to register and create an account, correct?

Looking forward to your responses :raised_hands:

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Yes. To mint or burn directly from Mehen, you will create a user account, complete a simple KYC, link a Cardano address, (and optionally an Ethereum address), and link your bank account using Plaid.

Plaid will manage the bank account info and any transfers, and keep this information secure; Mehen will not receive any of the user’s bank information.

There will be two workflows:

Overnight, the oracle will report the reserve balance, and minting/distribution process will execute.

  1. Fiat workflow - this will be similar to the user experience with a centralized exchange. Fiat transactions take 5 days to achieve finality, so the USDM will be held in a custodial wallet until finality is achieved, and then after 5 days, it will be transferred to your self-custody wallet

  2. USDC workflow - our reserve bank is a USDC member bank, and credits the reserve 1:1 with a $15 transaction fee. Ethereum settlement takes about an hour, so if you send USDC from your registered Ethereum address, it will be included in the overnight minting/distribution process and sent to your registered self-custody Cardano wallet.

Also, to be clear, our legal council has recommended British Virgin Islands rather than Cayman because their Virtual Asset Service Provider licenses are more widely accepted. We’ll update the original post shortly.

2 Likes

Yes. To mint or burn directly from Mehen, you will create a user account, complete a simple KYC, link a Cardano address, (and optionally an Ethereum address), and link your bank account using Plaid.

Plaid will manage the bank account info and any transfers, and keep this information secure; Mehen will not receive any of the user’s bank information.

There will be two workflows:

Overnight, the oracle will report the reserve balance, and minting/distribution process will execute.

  1. Fiat workflow - this will be similar to the user experience with a centralized exchange. Fiat transactions take 5 days to achieve finality, so the USDM will be held in a custodial wallet until finality is achieved, and then after 5 days, it will be transferred to your self-custody wallet
  2. USDC workflow - our reserve bank is a USDC member bank, and credits the reserve 1:1 with a $15 transaction fee. Ethereum settlement takes about an hour, so if you send USDC from your registered Ethereum address, it will be included in the overnight minting/distribution process and sent to your registered self-custody Cardano wallet.

Also, to be clear, our legal council has recommended British Virgin Islands rather than Cayman because their Virtual Asset Service Provider licenses are more widely accepted. We’ll update the original post shortly.

2 Likes

Thank you for the explanation @MatthewPlomin! This sounds very exciting.

Where can community members find out more about your project?

I wonder how you perceive and work with the regulatory uncertainty of the crypto sector in the US, especially from your company’s perspective?

Hey Nicolas you can join our Twitter.
https://twitter.com/MehenOfficial
Mehen Discord

our website
Mehen .io

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