Stablecoin infrastructure provider M^0 has signed its second integration agreement with Usual, a fast-growing fiat-backed stablecoin issuer. This represents a recent diversification of Usual’s reserves, which were previously backed only by Hashnote, a tokenized money market fund built by DRW’s founders.
Usual, launched just four months ago, has set the stage for explosive growth. On Wednesday, its market capitalization surpassed $1 billion, making it the seventh-largest stablecoin. M^0 (pronounced m-zero) has also been showing remarkable growth since its launch early this year.
“We have a few expansions in the pipeline,” M^0 co-founder Gregory Di Prisco told The Block. “Putting these deals together is a two-part process. There is a technical side and a business side to the equation. From a technical standpoint, it’s very fast. “Now we can complete these tasks in weeks, and eventually we will be able to complete them in minutes.”
Di Prisco pointed out that the middleware platform could eventually become “self-service,” allowing users to create customizable “extensions” using the U.S. Treasury-backed M stablecoin platform.
“Every time you add a customization, it becomes stock,” Di Prisco said. “So the compliance features we added to Usual can now be audited and made available to everyone.” These features include the ability to blacklist addresses and unwrap UsualM tokens into M, Di Prisco noted.
“Integrating $M into the foundation of UsualM is a pivotal step in advancing our vision for stablecoins,” Usual CEO Pierre Person said in a statement. “With UsualM, we are not only launching another stablecoin, we are redefining how digital dollars can create meaningful value and impact.”
Earlier this month, the Cosmos-based Noble blockchain launched the first dollar-denominated token. USDNIt uses M^0’s technology stack.
“The Noble Dollar is in Cosmos. Normally it’s on Ethereum. And we are going to Solana soon,” Di Prisco said. “We are working with Wormhole to become multi-chain. I can’t say there is one chain that is more important than the other.”
“We are the protocol. We do everything on-chain,” Di Prisco said of customers. “Our liquidity is on-chain. Our revenue distribution is fully automated through smart contracts. We’re not trying to put a wrapper around TradFi. So I think our technology is much more attractive to the dApp space and more advanced fintechs.”
M0 announced in June that it had raised $35 million in its Series A funding round. Bain Capital Crypto led the round, including participation from market makers Galaxy Ventures, Wintermute Ventures, GSR, and Caladan. To date, only companies that financially support M0 hold the POWER tokens needed to participate in protocol governance.
How does M work?
Di Prisco said M^0’s governance system was “built from scratch” to address “voter apathy.” All POWER token holders must vote on proposals at least once a month, and if they fail to vote, their tokens will be slashed by 10% and prorated to the remaining token holders in wrapped ETH.
We also incentivize voting by offering ZERO token rewards. ZERO tokens, which are currently locked up for investors until next year, can only be obtained through voting and are “essentially where all the economic flows of the protocol go,” Di Prisco said.
M is designed to be “the most perfect approximation to holding low-risk funds that you can get,” Di Prisco said. Every issuer on the network sets up its own orphan special purpose bankruptcy vehicle to hold T-bills and then pays an “interest rate” on M generating direct returns from those holdings to the protocol.
The governance of the network then sets the “yield” paid to the set of whitelisted addresses.
“Think of M as a back-end abstraction of all collateral management,” Di Prisco said. “Yield serves as a building block for other branded stablecoins. This is our core topic. “Every application will want to control the feature set and deployment of the stablecoin in the ecosystem, including customizations such as compliance features, smart contract features, and permission lists,” he said.
“If you are considering a branded stablecoin, you should talk to us,” he said.
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