- The Cardano community is excited about its first fiat-backed stablecoin.
- The hype surrounding the token has led to the stablecoin surging.
- The sudden price surge has prompted Mehen to caution users against buying more USDM.
Mehen, the brains behind Cardano’s first fiat-backed stablecoin, made history earlier this week by officially launching USDM. Its debut marked a pivotal moment for the network and community as demands for a solid stablecoin option intensified.
While anticipation surrounded USDM’s launch, its reception exceeded all expectations, with the Cardano stablecoin catching fire and de-pegging in the wake of rising demand.
USDM, Not So Stable After All?
USDM, currently accessible only to eligible institutional buyers in the approved 17 US states for minting, has garnered considerable attention within the Cardano ecosystem in its first week. From landing major partnerships with the largest decentralized exchanges on the network to generating buzz with its debut within the community, its impact has been palpable so far.
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The hype surrounding USDM, fueled by Cardano’s prior absence of such an option, has resulted in the stablecoin skyrocketing by an impressive 400% to $5, a rare sight for such an asset.
The sudden price surge prompted Mehen, USDM’s issuer, to caution users against buying the Cardano stablecoin at inflated prices.
While many community members were understandably thrilled by the prospect of a quick 400% gain on their newly minted assets, some expressed concerns about Mehen’s apparent lack of preparedness and the potential impact on trust in its pegging capabilities.
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The stablecoin issuer clarified that the token was still being rolled onto the Cardano mainnet and assured that such issues would not persist with increased liquidity in the future.
At the time of writing, USDM had retraced back to $1.6 after peaking at $5. Unfortunately, many users attempted to capitalize on the short-lived hype by purchasing at prices exceeding $3 and even $5 in anticipation of a stablecoin pegged to the dollar skyrocketing. Regrettably, many of these market participants were at a loss, with little hope of breaking even as USDM expands its reach to more institutional buyers and potential retail investors by next month.
On the Flipside
- USDM was initially scheduled for December 19, 2023. However, Mehen Finance had to delay the launch.
- Cardano Founder asserts the network’s algorithmic stablecoins are much better than their fiat-backed counterparts.
Why This Matters
USDM’s recent de-pegging, although upwards, raises concerns about the stability and reliability of the stablecoin, potentially infecting trust among users and investors. However, given that the asset is still in its earlier stages and is slated to roll out to a large pool of investors soon, such issues will likely be mitigated over time with increased liquidity.
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