Cardano, the layer-1 blockchain, has finally introduced its first 1:1 fully fiat-backed stablecoin, USDM, after facing significant delays. Launched on March 17 by Mehen Finance, USDM enters the $146 billion stablecoin market dominated by Tether (USDT).

Unlike Cardano's existing stablecoins like DJED and iUSD, which are algorithmic and synthetic-based, USDM allows users to mint or redeem the stablecoin directly with U.S. dollars. This fiat-backed nature sets USDM apart in the Cardano ecosystem.

The launch of USDM was initially planned for early 2023, but Mehen Finance faced setbacks due to the closure of several crypto-friendly banks in March 2023, including Silicon Valley Bank, Silvergate, and Signature Bank. Matthew Plomin, a founding partner at Mehen, described this as a "kick in the nuts delay."

Mehen's original banking partner had shifted to work with Circle, the issuer of USD Coin (USDC), leaving Mehen to seek alternative solutions. The firm eventually integrated with fintech company Plaid to facilitate minting and burning of USDM using U.S. dollars from major banks like Bank of America, Chase, and Wells Fargo.

Steven Fisher, Mehen's Chief Technology Officer, explained that adding a bank account through Plaid would enable users to deposit USD to mint USDM and burn USDM to receive USD.

Mehen is actively pursuing money transmitter and virtual asset service provider licenses to expand its services to the United Kingdom and Europe.

According to Mehen, around two dozen firms plan to integrate USDM on their platforms, including lending and borrowing protocols and decentralized exchanges. The company expects USDM to gradually arrive on-chain during the week of March 18, with institutions taking one to two days for onboarding.

The issuance and management of USDM will be governed by smart contracts and decentralized oracles to ensure transparency and security, as stated on Mehen's website.

The launch of USDM has been met with optimism from the Cardano community, with Jaromir Tesar, a prominent figure, describing it as a "major milestone" for decentralized finance on Cardano.

While USDM enters a crowded stablecoin market dominated by USDT and USDC, it faces no direct competition from these stablecoins on the Cardano blockchain, as they are not currently transferable via Cardano.