Cardano Has A Unique USD-backed Stablecoin USDM

Published 20.3.2024

The Cardano community celebrates as Mehen’s USDM, the pioneer USD-backed stablecoin on Cardano, was successfully launched on March 16, 2024. The onboarding process for institutional customers commenced on March 18, marking the official on-chain debut of USDM. Although the initial launch was planned for December 19, 2023, the Mehen team had to postpone it. Fortunately, the second attempt was successful. USDM is the first stablecoin we know of where no authority can force the freezing of accounts or censor transactions.

About Mehen USDM

Mehen USDM is a fiat-backed stablecoin, meaning it is backed by the US dollar on a 1:1 ratio. Every minted USDM token is backed 1:1 by USD, ensuring its stability and reliability. Minting of USDM is initially available in 17 US states.

The minting and burning process is as follows.

Users in eligible jurisdictions can connect their Cardano wallet to the Mehen dApp, complete identity verification (KYC), and link a bank account. The minting of USDM is only possible if USD is deposited into a linked bank account. For every USD deposited, one USDM token is minted. This ensures that every USDM token is backed 1:1 by USD in a US-based bank.

Once a user has USDM tokens on their blockchain address, they can send them to another address or use them in a DeFi application.

KYC-cleared users can redeem USDM 1:1 for USD, which is then sent to a linked bank account. The corresponding USDM tokens are burned to maintain the 1:1 peg.

While minting USDM does not incur fees, redeeming US dollars for their USDM will incur a 1.5% fee, with a minimum fee of $50 and a maximum of $5000.

Mehen USDM is transparently verified by a 3rd party Oracle service Charli3, ensuring that every mint and burn is authenticated. Charli3 is a well-known Oracle service in the Cardano ecosystem that allows smart contracts to securely interact with off-chain data.

Charli3 has API access to the bank accounts to verify all token mints and burns. Charli3 is tasked with verifying the bank’s reserve balances before every minting operation of USDM and broadcasting this information publicly on-chain. This unique approach to reserve verification ensures that the value of each USDM token is fully backed by real-world fiat reserves at all times.

Mehen is a registered money services business with the Financial Crimes Enforcement Network (FinCEN), ensuring that its operations meet the highest standards of financial integrity.

It is also a registered virtual assets business in the British Virgin Islands, adhering to the region’s stringent financial regulations. Furthermore, Mehen is actively seeking appropriate licensing in the US and the Cayman Islands. This pursuit underscores Mehen’s dedication to protecting its customers’ rights and ensuring the USDM token’s status as a redeemable store of value stablecoin, not a security.

In terms of user verification, anyone can hold, transfer, or use USDM without undergoing Know Your Customer (KYC) procedures. However, users wishing to mint new USDM with fiat or redeem USDM for fiat will undergo a simple KYC process, aligning with global regulatory standards. Mehen conducts real ID checks, liveliness verification, fraud checks, and sanctioned individual/institution screening.

Moreover, Mehen supports the creation of ‘KYC-approved’ credentials in collaboration with platforms like Atala Prism, iAMX, ADA Handle, and other decentralized/self-sovereign ID standards under development.

MinSwap and Genius Yield DEXes are official launch partners of USDM.

Mehen's policy ID: c48cbb3d5e57ed56e276bc45f99ab39abe94e6cd7ac39fb402da47ad

The Power of Cardano's Native Assets

In the realm of USD tokenization (the creation of USD-backed stablecoins), two projects stand out: USDT and USDC. Both of these projects have achieved significant success, securing spots in the top 10 by market capitalization.

USDT and USDC are ubiquitous across major networks. These stablecoins can be found on Ethereum, Solana, Avalanche, Algorand, Tron, Polygon, Stellar, and Hedera Hashgraph, among others.

The issuers of these stablecoins, Tether for USDT and Circle for USDC, possess the capability to freeze accounts and censor transactions on various blockchains. This action is typically taken in response to law enforcement requests or to mitigate suspicious activities.

Both Tether and Circle reserve the right to freeze accounts linked to illegal activities or activities that breach their terms of use. On all the platforms mentioned above, it is possible to freeze an account holding these stablecoins or blacklist specific addresses.

By design, Cardano's native assets do not permit the freezing of accounts or censoring of transactions. This characteristic makes USDM, a unique stablecoin in the crypto industry, immune to confiscation or spending restrictions imposed by any entity.

Cardano treats tokens identically to ADA coins in terms of transfer and ownership. The protocol does not require a smart contract to facilitate token transfers. Instead, tokens are Unspent Transaction Outputs (UTxOs) stored directly in the ledger.

To put it simply, it’s not feasible to incorporate code into a smart contract that would restrict stablecoin holders, as token transfers do not utilize a smart contract. Instead, a script is employed by the Mehen team to facilitate the minting and burning of USDM tokens.

The Cardano community has often debated the feasibility of hosting USDC and USDT on its network. The argument hinges on the issuers' need to comply with regulatory requirements, which often necessitate the ability to freeze accounts and censor transactions. However, Mehen's USDM has demonstrated that it is indeed possible to launch a fiat-backed stablecoin on Cardano, where users can be confident that the issuer will not hinder their spending or impose other restrictions.

To the best of my knowledge, there is no other USD-backed stablecoin in the crypto industry that adheres to the principles of decentralization and ownership rights as closely as Mehen's USDM does.

A common query that arises is the potential impact of authorities freezing USD in a bank account. The crux of the issue lies in the fungibility of fiat currencies. In the context of Cardano, there is no direct link between USD in a bank account and a specific blockchain address with USDM. While authorities have the theoretical power to freeze funds in a bank account, this action does not influence on-chain activities. Consequently, USDM holders will not experience any restrictions on their ability to spend USDM. However, such an event could potentially lead to a de-pegging scenario.

You can track USDM minting in Cexplorer.

Mehen USDM was Funded by Catalyst Fund10

The Mehen project was funded by Catalyst Fund10. The team asked for 800,000 ADA. The community voted to support the project.

The Mehen project serves as a testament to the significance of Catalyst as a financial support mechanism for community projects within the Cardano ecosystem. The successful introduction of a USD-backed stablecoin, funded by ADA coins from the Cardano treasury, is a noteworthy achievement.

The Cardano community now has access to a fiat stablecoin and is no longer dependent on Tether or Circle’s decision to mint USDT and USDC on Cardano. The Mehen project was conceived with the specific aim of bringing a USD-backed stablecoin to Cardano, a goal they have accomplished.

Mehen’s USDM boasts unique attributes compared to USDT and USDC, leading to speculation that the team might consider expanding to other platforms. However, this remains conjecture at this point, as the team has not officially addressed this possibility.


USDM, as the first fiat-backed stablecoin available on Cardano, has the first-mover advantage. Even with the potential introduction of USDT and USDC to Cardano, it's highly probable that USDM will remain the preferred choice of the community, given its backing by the Catalyst fund. The efforts of the Mehen team also deserve loyalty and support.

Currently, there are ongoing efforts within the community to enable the minting of Cardano tokens that bear similarities to the ERC-20 standard. This would allow for token transfers to be controlled via smart contracts. The pursuit of bringing established stablecoins on Cardano still makes sense. An increase in diversity leads to enhanced security for users.

However, should these stablecoins impose restrictions on user spending rights, akin to other platforms, users are likely to stay loyal to USDM. If you’re seeking a USD-backed stablecoin in the crypto industry that is immune to spending restrictions imposed by a third party, then USDM on Cardano is your go-to choice.


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