Cardano (ADA) has launched the new fiat currency-based stablecoin USDM after many delays. After the original plan to release the Mehen token (USDM) in early 2023 was delayed, Cardano has now managed to bring the stablecoin to market Available online.
Cardano’s first fiat stablecoin
USDM is Cardano’s first 1:1 fully fiat-backed stablecoin. USDM is backed by the US dollar. This allows users to exchange one US dollar for one USDM.
This is not Cardano’s only stablecoin. For example, Cardano has more stablecoins like DJED and iUSD, but these are based on an algorithm and are not actually backed by fiat currency.
Additionally, USDM will use smart contracts to make the entire process as transparent as possible.
Banks choose Circle over USDM
The Mehen token (USDM) is expected to be released in early 2023. Things only changed completely when several large banks went bankrupt, namely Silicon Valley Bank, Silvergate and Signature Bank.
When Cross River, the bank she worked with, also broke their agreement, a timely release of the stablecoin was no longer possible.
Cross River dropped Cardano as a customer because they partnered with their competitor Circle, the company behind USDC. USDC is the second largest stablecoin and therefore more attractive than a new stablecoin from Cardano.
Cardano is now using Plaid to partner with major banks like Bank of America to exchange USDM for US dollars. They are also looking for a similar service so they can expand in Europe and the UK.
Very competitive market
USDM is entering a crowded market dominated by two players. Tether, the company behind USDT and Circle, has a market value of $103 billion and $31 billion, respectively. All other stablecoins have a combined market value of $500 million.
USDM has one advantage that they want to use to succeed in this competitive market: it is the only stablecoin that can be traded on the Cardano network.
Over the next week, USDM will slowly come online and be available for trading.
