In a world where funds are still transferred by a system established in the 1970s — we’re looking at you Automated Clearing House (ACH) — blockchain technology has given us the opportunity to transfer funds at the speed of the internet.
One type of crypto, particularly stablecoins, are rapidly proving to be the best bridge between traditional finance and crypto. In the last article, we talked about the importance of different kinds of stablecoins in an ecosystem.
- What are Stablecoins?
Stablecoins are a category of cryptocurrencies designed to maintain a stable value, making them suitable for everyday transactions and providing an alternative to the high volatility of other cryptocurrencies like Bitcoin, Ether, or Ada.
Stablecoins’ most important use case is their role in transacting in cryptocurrency on public blockchains. The 24/7/365 access to stablecoins like Mehen’s USDM will unlock efficiencies and synergies that are not currently possible in traditional finance. We will illustrate 4 types of use case environments for stablecoins below, and the best part is the future may hold more than the following 4 environments in which stablecoins will act as a catalyst for change:
- Digital markets — To trade digital assets such as stablecoins, Mehen will serve as an onramp from fiat currency to digital assets recorded on blockchains
- Payments — Stablecoins will facilitate instant, around-the-clock peer-to-peer cross-border payments. (i.e pay for goods or services, send remittances)
- Treasury management — Stablecoins will facilitate transfers of funds within institutions allowing for efficient movement of capital and treasury management (i.e allocate capital to different departments of a company to manage liquidity and adhere to regulatory requirements)
- Defi — The programmability and composability in DeFi allow protocols to utilize stablecoins like USDM for their market making, collateralized lending, derivatives, asset management, and other services (i.e use stable swaps, earn DeFi yields, or create another stablecoin with USDM as a reserve asset)
Mehen’s stablecoin, USDM, is a fiat-backed stablecoin where 1 USDM token will always be equivalent and redeemable for 1 US Dollar in Mehen’s bank account. With Mehen, users will be able to:
- Hedge against crypto price volatility on-chain instead of transferring value off-chain, incurring fees in the process
- Instantly send US Dollars (as USDM) to anyone at any time leveraging the security and low transaction fees awarded to Cardano native tokens
- Be natively compatible with DeFi protocols to enable trading, lending, borrowing, fundraising, and more
- Know their tokens are on-chain verified to be backed one-to-one by US dollars with the use of decentralized Oracles and smart contract mint controls
- Have another onboarding ramp from fiat into the Cardano ecosystem via the Mehen App
Providing Cardano’s first fiat-backed stablecoin will bring a stable store of value, increased liquidity, reduced risk, broader appeal, and improved scalability for the DeFi ecosystem. Stablecoins like USDM are leading the world to a more financially inclusive marketplace, setting the foundation for the next generation of financial services.