The Mehen Project Whitepaper

A fiat-backed stablecoin solution for the Cardano blockchain

Abstract

The Mehen token (USDM) is a digital store of value token that is (i) issued by Mehen Finance LLC, (ii) directly convertible 1:1 for U.S. dollars, and (iii) built as a Cardano-native token on the Cardano blockchain. USDM is colloquially known as a fiat-backed stablecoin, and it benefits from shared governance between Mehen Finance LLC and a decentralized autonomous organization comprised of community participants. As a Cardano-native token, USDM is transferred on the Cardano blockchain without the need for additional smart contracts, yielding a more secure, decentralized and reliable stablecoin.

Overall, Mehen aims to achieve three key objectives:

1) Issuing a Cardano-native token that is directly convertible for the US dollar, and backed fully and transparently with high quality liquid reserves.

2) Reinvesting proceeds generated by the stablecoin protocol to extend grants and sustainable investments in organizations developing on Cardano.

3) Decentralizing governance and increasing transparency of both efforts via a Mehen user’s decentralized autonomous organization (DAO).

Stablecoins can empower underbanked and underserved communities to utilize cryptocurrency as both a secure medium of exchange and a stable tool of commerce. If we build the toolkit required to achieve mass adoption, we can generate the network effects needed to fulfill the promises of a world where everyone has equal access to financial tools.

Introduction: On-chain value and stablecoins

A pile of cash won’t buy anything on Amazon.

Three fundamental characteristics define money: as a medium of exchange for goods and services, as a unit of account, and as a store of value. With the rise of electronic commerce and global trade, electronic money transfer came to replace physical cash, since it is more useful for electronic transactions. Electronic money transfer is intermediated by banks, and is highly dependent on a functioning banking system, which the developed world generally enjoys. In 2008, when Lehman Brothers and Merrill Lynch faltered, the reliability of the modern developed-world banking system was called into question for the first time in recent memory.

Following the events of 2008, the Bitcoin whitepaper was published, and subsequently the Bitcoin blockchain was launched. The Bitcoin blockchain was the first truly decentralized electronic peer-to-peer value transfer system. Bitcoin’s native token is Bitcoin, which is created by maintaining the protocol, and is transferred peer-to-peer on the network without intermediaries. Since Bitcoin’s launch, a variety of other blockchains have been developed. Each of them uses its own native cryptocurrency, including Ethereum’s ETH and Cardano’s ADA.

Open, smart-contract enabled blockchains such as Ethereum and Cardano have great potential as peer-to-peer systems for finance, identity, trade, ownership, and more. They enable the creation of blockchain-native assets such as programmable “smart” contracts, non fungible tokens (NFTs), and self-sovereign identification (SSIDs). For many of these functions, an asset that mimics the value of off-chain money is necessary. These blockchain’s native cryptocurrencies are useful for paying the fees of maintaining the decentralized network, and in other limited applications. Although Bitcoin was originally envisioned as a new reserve currency, Bitcoin and other blockchain’s native cryptocurrencies have not proven to be good substitutes for money.

The value and usefulness of blockchain technology, and by extension cryptocurrencies, are still being established. Therefore, the price of cryptocurrencies as denominated in fiat-currencies remains volatile. This makes cryptocurrencies themselves an unsuitable substitute for money. And, as long as cryptocurrencies are volatile in relation to fiat-currencies, using cryptocurrencies as the base for representing the value of fiat currencies in blockchain applications is prone to errors.

Fortunately, smart contract-enabled blockchains such as Ethereum and Cardano can be used to transfer items besides the blockchain’s native cryptocurrency. Fungible digital tokens, governed by the ERC-20 smart contract standard on Ethereum, and the native protocol on Cardano, can be created by users and transferred between and among user’s wallets. These tokens are used for a variety of purposes. Some may represent ownership shares in the project, while other tokens may be useful for an application utility. Still other tokens may be used to vote on governance matters.

ERC-20 tokens have proven to be vulnerable to a wide range of security issues. For example, when using the ERC-20 standard, users are prone to errors in copying code, are exposed to over-/under- flow vulnerabilities, and ERC-20 smart contracts typically interact with unprotected functions.

On the Cardano blockchain, native tokens are a far more secure asset. Native token functionality is built into the protocol, so the token’s on-chain functionality is known. Cardano’s scripting languages do not have fixed-size integers, avoiding over-/under-flow vulnerabilities. On Cardano, user code is only called in very specific cases, such as to validate minting or burning. Finally, Cardano native assets are transferred by holders using the base protocol, without smart contract intervention. Therefore, token issuers cannot, and do not need to, facilitate on-chain transfers.

Stablecoins are a relatively new digital asset class that aims to combine the benefits of cryptocurrency with the stability of conventional money. There are two primary types of stablecoins: fiat-backed and algorithmic. Both types attempt to hold a stable value by agreeing to exchange the token for an asset of known value. Fiat-backed stablecoins like Mehen’s USDM agree to exchange 1 digital token for $1 in currency. Algorithmic stablecoins agree to exchange 1 digital token for $1 of other digital tokens. After the Terra/Luna stablecoin failed in the spring of 2022, the design and utility of algorithmic stablecoins has been in doubt.

A token’s composability is a key element of its usefulness and utility in smart contract enabled applications. Composability is the ability of a token to be used to create other tokens. To the extent that a digital asset is of stable value, and is properly coded on its native blockchain, it can be composable. For example, collateralized borrowing can be achieved with either the blockchain’s cryptocurrency or a stablecoin. This action creates a “loan asset” token and a “loan obligation” token. The “loan asset” token can be combined with other “loan asset” tokens to create a diversified portfolio of secured loans. But if the original loan is collateralized with cryptocurrency, the value of the collateral will be more volatile, making the loan less composable.

A variety of fiat-backed store-of-value ERC-20 stablecoins such as the USDC, USDT, BUSD, and GUSD tokens are intended to trade for US$1 on the Ethereum and Ethereum-compatible blockchains, and they tend to hold their value relatively well. These tokens are sold to users that send USD to the smart contract owners, who in turn instruct the ERC-20 smart contract to issue a commensurate amount of those tokens to the user. Due to the network architecture of Ethereum, the smart contract also facilitates all transfers of an ERC-20 token. Users may redeem these tokens for $1 which was reserved in an account when the token was purchased.

Regardless of their design, stablecoins offer a solution to one of the biggest problems facing cryptocurrencies: price fluctuations. Because these tokens can be swapped for $1, they are less volatile than a blockchain’s native cryptocurrency, and offer similar benefits as cash. As such, stablecoins play an important role in adoption of blockchains as a system upon which additional financial utilities can be built.

A Proven Solution

Mehen proposes a proven solution to these challenges, while providing a much-needed service to the Cardano community. We are developing a transparent fiat-backed stablecoin platform with substantial user oversight and governance. Overall, Mehen aims to achieve three key objectives:

1) Issuance of USDM, a Cardano-native stablecoin that is pegged 1:1 with the US dollar, backed fully and transparently

2) Reinvestment of proceeds generated by the stablecoin platform to extend grants and financing to organizations developing for Cardano

3) Decentralizing ownership and governance of both efforts via a Mehen user’s decentralized autonomous organization (DAO)

What is USDM?

A Cardano native asset that can be purchased and redeemed for $1

Users will deposit dollars (USD) into their Mehen account, which Mehen will hold in a separate account for our tokenholders.

Once the transactions settle, the user may mint the same number of USDM cryptocurrency tokens.

The user can then transfer USDM from their Mehen Cardano wallet to their self-custody wallet, and can use USDM throughout the Cardano blockchain environment in exactly the same fashion as you would send and spend other Cardano native assets.

Because Mehen holds a dollar for every USDM in circulation, and agrees to always exchange the USDM tokens for an equivalent number of US dollars, the on-chain price of one USDM token should always approximate one dollar. The assets backing the USDM tokens will be high-quality liquid USD-denominated assets held at a US bank in separate custody from Mehen’s funds. We refer to this as the Mehen Reserve.

To ensure that the Mehen Reserve has sufficient assets to back USDM, each minting transaction will be conducted with a multi-signature transaction including open oracles which verify the sufficiency of the Mehen Reserve. This co-signing will essentially be a continuous real-time audit of the Mehen Reserve.

Right, but what is USDM, legally speaking?

USDM is a fungible Cardano native asset, issued under the official policy ID or policy IDs of Mehen. It is issued by Mehen Finance LLC, and depending on the user’s jurisdiction, it is either regulated as a payment stablecoin, a digital-native stored value item (like an electronic gift card), e-money token, or a prepaid access token. Different states and territories regulate these items and their issuers differently.

Mehen Finance, LLC is the issuer of USDM. It maintains a comprehensive KYC/AML policy, and complies with all applicable US laws. Mehen gives special attention to OFAC sanctions compliance, Bank Secrecy Act reporting, Anti-terrorism Funding provisions, and other anti-financial crime statutes at the Federal and State levels.

Just like any bank, brokerage, exchange, check casher, or money wire service, Mehen will verify the identity and liveliness of anyone who interacts with the Mehen platform. We use a variety of third-party services to verify the authenticity of documents, to ensure true identity matches, and to ensure OFAC and other regulatory compliance. This helps safeguard the Mehen Reserve against fraud and malfeasance, and allows for the smooth operation and integration of USDM when converted into the fiat banking system.

How can I use USDM?

Like any Cardano native asset, USDM held in self-custody wallets can be transferred throughout the Cardano blockchain without restriction. It can be used as payments for goods or services, remittances, or inserted into deFi protocols. While we can think of many ways in which USDM can and will be used to grow the Cardano ecosystem, we will leave it to the many creative crypto-entrepreneurs and investors in the community to decide how to use their own currency.

Why does Cardano need USDM?

Decentralized finance occasionally needs to reference fiat.

A common plight of the Cardano community is that, although the blockchain itself is built to the highest possible standards of security, scalability, and ease of use, it lacks many of the necessary tools required to fully realize the potential of the blockchain itself. The Cardano community is continuing to build useful applications, wallets, and integrations on the blockchain.

Project teams build on specific blockchains to gain exposure to the tech stack, user base, and native cryptocurrency. But expenses and investments are often denominated in fiat currencies. This is why on other blockchains’ deFi exchanges, project token trading is denominated vs. stablecoins rather than the native cryptocurrency. Mehen will enable projects to trade their token vs. USDM rather than just vs. ADA.

Due to the native token structure, Cardano is an ideal blockchain for composable deFi. Current deFi primitives that reference ADA can easily be modified to also reference USDM, enabling a more predictable user experience.

In addition to the deFi advantages, a stablecoin that is reliably pegged to a fiat currency enables Cardano to truly be a blockchain for the underserved. It can be used for everyday transactions, both on chain and off-chain.

Furthermore, new users commonly join the Cardano network by going through centralized exchanges to convert their dollars to ADA. Mehen hopes to attract new users to the Cardano community by offering an appealing stablecoin and providing a safer fiat-to-ADA onboarding alternative to centralized exchanges. As a fiat on-ramp to the Cardano ecosystem, USDM brings additional liquidity directly to Cardano.

What about wrapped stablecoins?

Wrapped stablecoins are costly and pose an inherent safety risk.

Wrapped stablecoins are tokens which have been launched on other blockchains, and are stored on their native blockchain in a “bridge.” The “bridge” holds the “original” token, and issues a matched “wrapped” token on the Cardano blockchain. Stablecoin issuers will not convert the “wrapped” version of its token into fiat currency. To convert a “wrapped” fiat-backed stablecoin token to fiat currency, the Cardano token would need to be sent back to the bridge. Then the bridge will release the “original” token, which can be sent to the issuer for conversion to fiat. This is a costly process due to transaction fees and bridge fees, and would provide a less-stable Cardano experience.

Wrapped stablecoins also drain liquidity from the Cardano ecosystem. Since those tokens are purchased with fiat from the original issuer on another blockchain, bridged, and sold to Cardano users for ADA, the inherent liquidity introduced by the “original” token remains on the “original” blockchain. Considering bridging fees and transaction fees, this “new” asset is a net-negative to the Cardano blockchain.

Cross-chain bridges have been notoriously insecure, and have been described as “immense bug bounties.” Since 2020, 5 of the 6 largest deFi exploits have been bridge hacks. Between the Ronin, Poly, BNB, Wormhole, and Nomad bridge hacks, roughly $2.5 billion has been lost. Wormhole and Nomad hacks occurred due to smart contract loopholes. Ronin and Harmony hacks were due to compromised private keys. Hopefully, future cross-chain bridges will improve, but until they can provide a sustainable track record of security, they will continue to be a suboptimal solution for providing deFi primitives to Cardano.

Wrapped stablecoins also carry the vulnerabilities of their original blockchain, including the centralized control of lockable ERC-20 tokens. A native stablecoin, however, opens the Cardano blockchain up to the creation of new possibilities without the risk and cost associated with cross-chain bridges.

What about algorithmic stablecoins?

Algorithmic stablecoins occasionally need some fiat stablecoin glue.

In light of the fall of the Terra Luna UST and other de-pegging incidents among algorithmic coins, the uncertainty surrounding algorithmic coin solutions begs for a sound fiat-back tool for general commerce. While public trust in the algorithmic coins will take time to rebuild, they still play an important role in decentralized finance, and the addition of fiat-backed stablecoins will serve to strengthen the position of algorithmic stablecoins as a deFi tool.

Algorithmic stablecoins have been successfully deployed on other blockchains, notably on the Ethereum blockchain as Maker Dao’s DAI stablecoin. DAI uses USDC, USDT, ETH, and a variety of valuable ERC-20 tokens to back the value of the DAI stablecoins in circulation.

The Maker DAO DAI token is called a Collateralized Debt Position (CDP) stablecoin. A variety of CDP-style tokens are being contemplated on Cardano, from Indigo, Ardana, Liquid Labs, and other defi protocols. Individuals who want to mint CDP tokens will deposit an appropriate value of Cardano native assets into a CDP smart contract that governs the token. The token can be redeemed for a share of the reserves backing the token. If the value of the tokens within the CDP smart contract falls below a trigger value, the position is liquidated into the reserve.

The CDP stablecoin has the benefit of being both scalable and on-chain native. Since users can mint these CDP style tokens with any on-chain assets, including NFTs and fiat-backed stablecoins, they are both scalable and relatively stable. These tokens also require functioning, mature, and liquid two-way native asset marketplaces for discovering value and modeling price volatility with appropriate over-collateralization. As Cardano grows, it will become an even more suitable place to create CDP style tokens. And Mehen hopes they will include USDM in their eligible collateral schedule, which will enable these providers to grow and scale their use.

What is the broader Mehen Project?

Organizational Structure

Mehen is organized into four (4) distinct entities; Mehen Innovations, Mehen Finance LLC, The Mehen Foundation, and Mehen DAO. This section explores the key functions of each constituent part of the organization and outlines how they interact.

1) Mehen Innovations Inc.
Mehen Innovations owns and develops the software for Mehen and licenses it out to Mehen Finance LLC. This organization is responsible for the broader development of the Mehen ecosystem, managing the Mehen Reserve, and allowing Mehen Finance LLC to remain bankruptcy remote for the safety of USDM token holders. All interest from the Mehen Reserve is paid to Mehen Innovations Inc to cover operating costs, and redistribution to the Mehen Foundation.

2) Mehen Finance LLC
Mehen Finance LLC is a Delaware-registered Limited Liability Company, registered with the Montana Secretary of State’s office and with the U.S. Federal Government as a FinCEN Money Services Business. Mehen Finance will maintain appropriate licenses in every state and jurisdiction in which it operates.

Mehen Finance LLC is maintained by agreements with Mehen Innovations Inc. to ensure that in the event that Mehen Innovations Inc. faces financial trouble or bankruptcy Mehen Finance LLC is still able to operate, standing on its own as an added protection to USDM users and to ensure the USDM stablecoin can continue to operate irrespective of the financial status of Mehen Innovations Inc.

Mehen Finance LLC is highly autonomous from the Mehen Foundation and Mehen DAO to provide an additional layer of financial protection to token holders.

3) Mehen Foundation
Once the assets backing the Mehen stablecoin provide sufficient income, we will launch the Mehen Foundation. The Mehen Foundation will be a community-driven incubator to fund and assist projects building on Cardano.

The Mehen Foundation will be an integral part of the operations of Mehen and acts as a substitute for the traditional ‘yield’ ponzinomics of other stablecoins. We have actively elected to avoid a process by which revenue generated by the platform is reflected in holders’ wallets. Instead, we have structured USDM not around the short-term benefits of personal yield but the long-term benefits of ecosystem growth and expansion.

Mehen Foundation is the body responsible for identifying and funding projects developing on Cardano via the Mehen Innovation Fund. The majority of the board seats of the Mehen Foundation will be appointed by the Mehen DAO which gives members of Mehen DAO significant influence over the Mehen Foundation. In addition to financial aid, grants, loans, and equity agreements, the Mehen Foundation provides support to developing projects via non-financial means such as advice, consultation, personnel, training, licensing, and project management tools.

As opposed to the plutocratic systems often required by the pseudonymous operating procedure of cryptocurrency, Mehen will offer a more equitable voting system where one verified identity approximates one vote. Through the Mehen DAO and our KYC platform for Mehen Finance, we can confirm that 1-person-1-vote standards are applied to voting procedures, thus giving community projects fair opportunity for funding.

The Mehen Foundation is designed to accelerate projects on Cardano that require support or resources. It offers an alternative route to project funding for upstart project leaders, as well as an alternative format to acquiring Return on Intention focus startup funding to increase the accessibility and global engagement with Cardano.

Members of the Mehen DAO control not only which projects are funded but also the selection process for project funding. This empowers our community not only to drive the future of development and innovation on Cardano, but also to vary both the barrier to entry and the method by which funding is obtained for a startup, dramatically increasing accessibility to financing from a diverse array of talent across the ecosystem. In addition, this model allows Mehen to invest directly and support projects that, while they would otherwise be successful, struggle to acquire funding by other means.

4) Mehen DAO

Once launched, individuals who maintain Mehen accounts in good standing will be invited to join the Mehen DAO. This will allow the wider Cardano community and relevant stakeholders to be able to directly influence Mehen’s development and day-to-day operations. Mehen DAO, developed in collaboration with ADAO and AGORA, appoints board members to the Mehen Foundation, and Mehen Innovations Inc. And it will appoint a member to the investment committee that governs the Mehen Reserve.

The community should be as involved as practically feasible in the operations of Mehen through the Mehen DAO. As the project grows, we will continually move toward systems of greater decentralization and community management, transparency and engagement.

Complete Governance

Asset-backed stablecoins, by their very nature, require a degree of centralization to ensure regulatory compliance. Our proposed solution aims to balance the centralized elements of the organization (which are required to hold licenses, contracts, and relationships with custodial partners) with a Cardano-based decentralized autonomous organization (DAO). Through the three-part structure of scaling decentralization of Mehen Finance, The Mehen Foundation, and Mehen DAO, we aim to provide an invaluable service to the Cardano ecosystem and do so in a way that sets the gold standard for other organizations operating in the space.

What should I expect as a Mehen user?

Onboarding

At the commencement of the registration process, users will be notified of the Mehen Finance terms of service and will be required to provide an email address to proceed. Upon receiving a valid email address, the web app generates a Base64 encoded UUID client ID and a Base64 encoded UUID verification ID. The verification ID is a link to the user’s email address after the email verification process is completed.

Before engaging in KYC verification, the user must cover the verification cost. As Mehen develops, we hope to be able to provide KYC service at a reduced cost. However, the organization will charge a fee until Mehen Finance scales sufficiently to absorb the cost of customer verification. Payments can be made via credit card or bank transfer and will be required before submitting data.

As part of the initial inquiry Mehen may be required to collect geolocation information about users to cross-reference against known lists of VPNs and Tor exit nodes. This allows Mehen Finance to maintain state and federal specific regulatory compliance.

Following the email verification, the user must provide identifying information, including but not limited to; name, address, telephone number, and date of birth. The user must also upload a copy of their government-issued identification document. After that, this data is securely forwarded to Plaid for industry standard KYC verification. The documentation provided by users is stored securely in an AES-256 encrypted database. Mehen Finance retains it only for the time required to maintain regulatory compliance following the date of account dissolution.

While the user awaits the result of third-party KYC verification, the platform generates an email to the user acknowledging receipt of documents and outlining the next steps. The amount of time required for verification may vary between users but in most cases should be completed within two minutes.

Once the third-party KYC verification is complete, the system generates another email informing the user and instructing them to log in to the platform.

Initial onboarding is anticipated to take at least five (5) working days from the point of deposit. This delay ensures Mehen is not exposed to ‘chargebacks’ or malicious attacks.

Establishing a Mehen Account

An internal Mehen account is created for each verified user by the on-chain service part of the Mehen dApp. This account includes a blockchain wallet address on the Cardano network and is used as the deposit wallet for USDM minted by the protocol. Similar to a centralized exchange, this is a custodial wallet and Mehen Finance is required by U.S. law to reserve the right to refuse any user transaction where the account is not in good standing regarding compliance, legal, or an order to suspend the account pending a criminal or civil investigation. Any transactions initiated by users in good standing will be executed.

The user is presented with a dashboard that tracks the KYC processing during principal onboarding and displays their Mehen Account. The user can link a self-custody Cardano wallet to their account through a fixed-deposit verification system similar to that of many other platforms. This verification ensures withdrawals of USDM go to a wallet the user has custody over and reduces the risk of entering an incorrect wallet address.

Upon completing the KYC processing in the user dashboard, the user will be invited to link their bank savings or checking account. The Mehen Wallet will leverage the same Plaid KYC services for account verification as those used during principal onboarding. All data will be stored securely by Mehen and shared with the KYC provider. In the event of a failure of Plaid verification, manual entry will be made available to the user via the dual-deposit verification system.

The user can deposit (and withdraw) USD into their Mehen Wallet upon successful account linking. At launch, only deposits via bank transfer will be available. Additional payment options are anticipated in later iterations; however, due to the ‘chargeback’ functionality, we will be unable to accept credit cards at any time. Additionally, debit cards and crypto payments are anticipated to be implemented post-launch.

With an understanding of the importance of self-custody, the Mehen platform is designed to actively discourage holding any amount of USDM or ADA on the platform. Post-launch, the Mehen team aims to use our data to identify an efficient solution that encourages users not to store their USDM or ADA in the Mehen Wallet. This may include email reminders, push notifications, SMS messages, and other non-invasive techniques to discourage behavior antithetical to the overarching values of the Cardano ecosystem.

Compliance

As a fiat-backed stablecoin issuer, we must operate with strict regulatory compliance and maintain flexibility to ensure we can do so in an ever-changing legal landscape. As part of our product, we complete industry standard know-your-customer (KYC) inquiries. The law requires us to report suspicious activities to the relevant legal authority at the onboarding and off-boarding stage.

Individual USDM tokens are considered a payment stablecoin, a digital-native stored value item (like an electronic gift card), e-money token, or a prepaid access token. To mint or burn the token, requires know-your-customer (KYC) verification. Users may hold USDM tokens in self-custody wallets without needing to go through KYC verification.

Mehen Finance operates under a ‘Money Transmitter License’ system similar to other established fiat-backed stablecoins with the key difference being that due to the structure of native assets on the Cardano blockchain, Mehen Finance is unable to “freeze” any USDM that is not held in Mehen account wallets.

At launch, Mehen Finance will allow minting and burning for individuals in the widest possible number of US states, and in other jurisdictions that either do not require formal licensing, or where we have obtained licenses to operate. Implementation and services provided may vary from region to region due to legal and regulatory limitations. When onboarding with non-USD fiat currency, the user will be charged a small conversion fee and offered the standard interbank exchange rate. Initially, international payments and non-USD payments may take significantly longer to process.

Mehen seeks to expand its services overseas to jurisdictions and communities with limited access to traditional finance, and a broader range of methods for onboarding will be developed. Mehen hopes to eventually offer crypto onboarding (both ADA and non-ADA cryptocurrencies) and a range of traditional financial on-ramps to ensure the on/off ramp services of Mehen can be enjoyed by a broad range of potential users.

As a business, we are required to comply with regulations, sanctions, and other government instructions. Therefore, we are dedicated to operating legally and transparently from the outset. If Mehen is given a lawful demand to suspend a user’s account, we will comply to the extent we are legally required. Mehen Finance practices a minimum viable compliance policy and will only suspend user accounts in response to mandatory government intervention or user fraud. Mehen will include a warrant canary in terms of service to ensure transparency with users and the wider Cardano community. In the event of a suspension, the user will be able to log into their account but unable to interact with the platform. The user would be notified via email with information about the suspension and will be provided the steps required to get more information on the reason for their suspension.

Asset Custody

In collaboration with our custodial partners, Mehen Finance stores U.S. dollars in low-risk interest-bearing bank accounts and AAA-rated Money Market Funds. The USDM token is backed 1-to-1 with U.S. dollar assets stored across the network of banking partners. USDM minting transactions will be multi-signed by open oracles that verify asset sufficiency in the Mehen Reserve. Therefore, there will never be more USDM than USD in the Mehen Reserve. By the nature of this structure, USDM will be at times over-collateralized through the benefit of interest accruals.

USDM tokens are an unsecured debt of Mehen Finance, and U.S. consumer protection laws will govern use of the Mehen Reserve. The Mehen Reserve will not be used for other purposes. This renders the seizure of Mehen Reserve assets doubtful. As a precaution against ‘unbanking’ or risking the failure of a single provider (federal deposit protections also provide a degree of coverage), Mehen has formed relationships with multiple banking partners in different legal jurisdictions, both in the United States and abroad.

Conclusion

We Are Endowed With Glorious Purpose!

Mehen is designed from the ground up to be an unrelenting force for Cardano onboarding. Founded upon the deeply held principles that permeate the broader Cardano ecosystem, our protocol not only provides an essential service to the Cardano De-Fi ecosystem, but is also designed to make significant investments into future up-and-coming projects building on our blockchain.

The Mehen Project team shares a relentless drive to push beyond the very limits of how decentralized a fiat-backed stablecoin can be. This sets us apart from other organizations as a true evolution of what it means to build, develop, and maintain an asset-backed stablecoin.

The Mehen Project strives to bring together Cardano’s best and brightest minds and collaborate with the leading organizations in our space. Because we are all so profoundly passionate about Cardano, the Mehen team can network and collaborate with those in the Cardano ecosystem that share our vision of a more decentralized world.

The development of a stablecoin that people can rely on is essential for the development and mass adoption of blockchain technology. If cryptocurrency is to deliver on the promises of decentralization and equal access to financial tools, then we must first deliver on the main concern that people have over their finances: stability. We believe that the Mehen Project offers a unique combination of experience, transparency and accessibility, which will enable the creation of such a financial instrument.

Access to financial services should not be a birth privilege of the few, it should be a right for all. Together we can bring stability to an unstable world.

References

Liao, Gordon Y. and John Caramichael (2022). “Stablecoins: Growth Potential and Im- pact on Banking,” International Finance Discussion Papers 1334. Washington: Board of Governors of the Federal Reserve System, https://doi.org/10.17016/IFDP.2022.1334.

Richard K. Lyons and Ganesh Viswanath-Natraj (2020). “What Keeps Stablecoins Stable?” NBER Working Paper Series, Working Paper 27136. National Bureau of Economic Research, http://www.nber.org/papers/w27136.

Mai, Heike, “Stablecoins: DeFi, Libra, and Beyond,” (March 25, 2022). Deutsche Bank Research, https://www.dbresearch.com/PROD/RPS_EN-PROD/PROD0000000000522496/Stablecoins%3A_DeFi%2C_Libra_and_beyond.PDF?undefined&realload=hTRFy5bd3udMlxJpyUaffHeZb5WIuRWFh9BPA~PHpTyikAt~gYQKnls/ImlCaFbI.

President’s Working Group on Financial Markets, the Federal Deposit Insurance Corporations, and the Office of the Comptroller of the Currency (2021). “Report on Stablecoins,” https://home.treasury.gov/system/files/136/StableCoinReport_Nov1_508.pdf.

Congressional Research Service (2022). “Algorithmic Stablecoins and the TerraUSD Crash,” https://crsreports.congress.gov/product/pdf/IN/IN11928.

Catalini, Christian and de Gortari, Alonso and Shah, Nihar, “Some Simple Economics of Stablecoins,” (December 15, 2021). MIT Sloan Research Paper №6610–21.

Jackson, Howell E. and Massad, Timothy G. and Awry, Dan, “How Can We Regulate Stablecoins Now — Without Congressional Action,” (August, 2022). The Brookings Institution, https://www.brookings.edu/wp-content/uploads/2022/08/WP76-Massad-et-al_v4.pdf