USDM: Fiat-Backed STABLECOIN - by Mehen: Cardano's Premiere Fiat-backed Stablecoin

[IMPACT] Please describe your proposed solution.

The lack of stablecoin diversity hinders Cardano DeFi adoption.

Cardano urgently needs a fiat-backed, regulatory-compliant solution for those who prefer one or need a direct-to-fiat bridge. Fiat-backed stablecoins provide a stable store of value, increased liquidity, broader appeal, reduced risk, and improved scalability for the DeFi ecosystem.

To address this shortcoming, the Mehen team is actively building the USDM stablecoin, a Cardano native token backed 1:1 with high-quality, liquid, transparent, and audited USD assets.

Who is USDM for?

The USDM stablecoin will be minted and redeemed by ordinary people and institutions alike.

With USDM, the user will be able to:

Instantly send US Dollars (as USDM) to anyone at any time leveraging the security and low transaction fees awarded to Cardano native tokens
Hedge against crypto price volatility
Be natively compatible with DeFi protocols to enable trading, lending, borrowing, fundraising, and more
Know their tokens are on-chain verified to be backed one-to-one by US dollars with the use of decentralized Oracles and smart contract mint controls
Have another onboarding ramp from fiat into the Cardano ecosystem via the Mehen dApp

Licensing

Mehen has made notable progress toward obtaining appropriate fiat and crypto licenses and will be open for minting and burning USDM tokens wherever it is licensed and is able to legally operate. These licenses include US FinCen registration, Money Transmitter licenses in a variety of US states and territories, as well as establishing licensed companies in other jurisdictions for non-US users.

Licensing is an important part of safeguarding our token holders' off-chain rights. State licensing officials place a high priority on making sure we can fulfill our obligations to our token holders.

USDM will fall under well-known financial regulations, providing a degree of legal and regulatory clarity. This clarity allows Mehen to deliver what no other stablecoin is currently offering:

Direct conversion to/from USD bank reserves.
Transparency and trust through verification
Reinvestment back into the community

Mehen will deliver on these promises via three key objectives:

1) Issuance of USDM, a Cardano-native stablecoin that is pegged 1:1 with the US dollar, backed fully and transparently with the use of decentralized oracles verifying USDM’s supply matches the reserve of US Dollars

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)

As proof of this commitment, the Mehen team has already achieved numerous milestones towards these promises:

Obtained Federal FinCen Money Service Business registration, enabling operation in over a dozen states in the US.
Money Transmitter Licenses (or equivalent) are pending in at least 6 jurisdictions, including one offshore jurisdiction that will make USDM available for non-US users.
Token design has been completed, including:
On-chain verification of reserves using Charil3 oracle provider
Controlled minting and burning with in-house developed smart contracts
On-chain workflows to ensure efficient token distribution
Banking partners have been identified, approved, and USDM reserves accounts have been opened.
Reserve management partners have been identified and approved.
Internal policies and procedures, including KYC/AML policies, have been created and implemented.
Identity verification partners have been engaged, and contracts are signed.

Revenue

Fees similar to existing exchanges like Binance and Coinbase will be applied for the USDM service. The Fee schedule will be reviewed and determined by Mehen Finance. Fees collected will pay for further development and maintenance of the Mehen dApp.

Interest revenue coming from the fiat reserves will be used by Mehen, and shared among community projects for their benefit, according to revenue share and marketing agreements. These community projects include DeFi partners, DEX partners, and NFT partners.

Future Features

Beyond the scope of this proposal, subsequent targets for development will include (but are not limited to) the following:

Additional languages for the website
Receiving other currencies for deposit besides USD
Using this design to launch stablecoins in currencies besides USD
Issuing KYC-verified credentials in Atala PRISM

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.

USDM will be a valuable addition to the Cardano DeFi ecosystem and it will bring Cardano one step closer to unlocking the next phase of DeFi: RealFi.

TECHNICAL REQUIREMENTS / CODING DETAILS

Admin Website

The admin website will have multiple capabilities to allow Mehen to more efficiently monitor and control the Mehen dApp. There will be various reporting tools available including AWS CloudWatch for anomaly detection. This service can alert Mehen to any irregularities within the system and hopefully allow Mehen to mitigate the issue before it becomes critical.

User administration tasks such as account updates and resolving issues from the banking and KYC partners, review account locks, and allow Mehen to comply with any legal matters.

Mehen dApp

The Mehen dApp will consist of three separate components, the website, the Mehen back end, and the on-chain processes.

dApp Website

The user website will be fairly simple and straightforward. Its purpose is to allow users to deposit USD from their bank, mint USDM from their USD balance, transfer USDM to another Cardano Wallet, burn USDM for USD, and withdraw USD to their bank. The user’s transaction history will be viewable to the user, and they will see any KYC or other notifications received for their account. An FAQ section will be built to allow users to work through any common questions or issues from these services. If the user cannot resolve their issue, they will be able to open a ticket via a Contact Us section with Mehen to get the issue resolved.

dApp Mehen Back End

The Mehen back end will handle the KYC integration with the KYC provider and store the KYC data for regulatory purposes. It will also handle the Bank integration along with deposits and withdrawals from the user’s bank. The user's transaction history, notifications, tickets, and profile will also be handled by this component.

On-Chain elements

The USDM structure, including smart contracts to control USDM minting and burning based on independent oracle reserves validation have already been completed.

Additional on-chain elements will securely handle post-mint USDM flow. The tokens will be distributed to users through a series of wallets with structural native-script multi-signatory security, and tokens that are received for burning are received through a series of similarly secure wallets and burned.

Post-token-launch, we will build future on-chain elements, including custodial USDM accounts which can be used for debit card functionality, corporate cash management activities, billpay, and direct deposit.

Tech Stack

List of technologies and libraries to be used for implementing the website:

Multiple Cardano wallet browser extensions
Aiken
Cardano Serialization Library
Angular
Java
SpringBoot
AWS Cloud hosting and tools (chosen based on developer's experience)
Gitlab (this project will be open source allowing full transparency and community interaction)
Gitbook
Node.js

[IMPACT] How does your proposed solution address the challenge and what benefits will this bring to the Cardano ecosystem?

The Products & Integrations Challenge focuses on two main points:

1) Creation or improvement of different products that provide value to the Cardano community and wider ecosystem:

Stablecoins offer a solution to the biggest problem facing cryptocurrencies: price fluctuations. Because USDM tokens can be swapped for $1, they are far 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.

Regular people, businesses, and enterprises will all be able to rely on USDM for:

Price stability
Liquidity
Accessibility
Consumer protection
Transparency

2) Integrations with other existing services, products and protocols that improve the end user experience. This could mean giving the user more options or making something easier to use that benefits the wider ecosystem:

Expenses and investments are often denominated in fiat currencies. Mehen will enable projects to trade their token vs. USDM rather than only vs. ADA, thus improving the user experience for every DeFi exchange/protocol, business, and individual.

USDM is leveraging Oracle providers from Cardano native projects like Charli3. DeFi DEXs and Protocols will directly benefit from USDM by boosting the number of users and increasing TVL across the DeFi ecosystem as a whole.

What impact will this project have for Cardano?

There is currently no fiat-backed stablecoin on Cardano. We have approached the capacity of Djed, and until ADA value recovers, there will be no ability to mint additional DJED stablecoin.

Ethereum-based stablecoins such as USDC and USDT do not operate on UTXO blockchains like Cardano. Even if USDC and USDT re-design their token to be available on Cardano, their corporate design is inadequate. Their reserves are opaque and unverified. They do not control minting and burning with a third-party reserves validator Oracle as USDM does.

USDM will be able to be held in wallets and transferred peer-to-peer without KYC/AML. However, if a user wants to send fiat and mint new USDM, or send USDM to burn and receive USD in a bank account, KYC/AML will be required.

Mehen will work with existing ecosystem partners to issue a Self Sovereign Identity (SSI) “Mehen KYC Approved” credential within IOG’s Atala PRISM standard. Having such a credential within your Atala PRISM wallet will allow improved functionality within Cardano’s DeFi and RealFi ecosystem, and will prevent costly re-verification by others in the ecosystem.

[IMPACT] How do you intend to measure the success of your project?

The success of USDM will revolve around two primary accomplishments. Initial success will be realized when the USDM stablecoin is deployed on Cardano mainnet, with fully functional features including direct conversion to/from USD bank reserves via minting/burning USDM, transparency and trust through verification via oracle providers on chain, and stable on-chain value for users.

Further success of this project will be quantified based on adoption of USDM, including the number of jurisdictions in which the USDM is licensed to be minted/burned, the number of individual users who hold, mint, or burn USDM, the number of projects that partner with Mehen and whose participants use USDM as a composable primitive, and the total amount of USDM outstanding.

Overall, success for USDM in the Cardano ecosystem can be quantified by the marketing revenue share sent to partner projects in the ecosystem whose communities find value in using USDM, and the number of reinvestments have been made in the Cardano ecosystem. Overall growth of the Cardano deFi ecosystem can also be used as a success metric is also an indirect measure.

The community will stay up-to-date with our results, milestone progress, and other relevant news through our website, newsletter, and official social media pages. Below are links to all Mehen Finance social media platforms:

Twitter - @MehenOfficial

Facebook - https://www.facebook.com/MehenInnovations

Discord - https://discord.com/invite/guX6hGqk

Linktree - https://linktr.ee/mehenofficial

LinkedIn - www.linkedin.com/company/mehenofficial

Medium - medium.com/@MehenOfficial

Instagram - @mehen_official

Reddit - https://www.reddit.com/r/Mehen/

[CAPABILITY/ FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability?

The Mehen team is led by known members of the Cardano community, including multiple SPOs, developers, and community leaders. The team includes the developers of Aiken, Plutus Pioneer program graduates, seasoned Tradfi professionals, and multiple full-stack developers, including one with over 20 years of enterprise leadership in high-security environments.

Individuals from the team have built systems that are currently being used by thousands of community members. The team has demonstrated they can be trusted and are capable of managing funds properly as they have successfully delivered proposals from Fund8 and Fund9:

Fund8 / Idea #19332 - FreeLoaderz: Load Balancer
Fund9 / Idea #23153 - ADA Bug Bounties platform

They have also delivered FreeLoaderz's SmartClaimz token claiming front-end and MELD Finance's NFT minting portal, whose front-end is currently being used for the MELD’s ongoing 45,000 Bank Manager NFT minting service.

The team’s Tradfi experience includes individuals with compliance and cash management backgrounds, and the team has retained multiple well-known law firms to advise on the legal aspects of operating a fiat-backed stablecoin in a regulated environment.

The track record of success of the Project Leads and the milestones already achieved (listed in “Proposed Solution” section) makes our team best suited to deliver this project.

Additional information can be found in the “Project Team” section.

[CAPABILITY/ FEASIBILITY] What are the main goals for the project and how will you validate if your approach is feasible?

Our main goals are to:

Complete project development and token launch by hitting all markers for each milestone
See continued growth of user accounts and USDM in circulation
Be listed on every Cardano DEX and DeFi platform
Partner with and give back to community projects who further the development of the Cardano blockchain and its community
Incorporate treasury management, billpay, debit card functionality, and direct deposit

[CAPABILITY/ FEASIBILITY] Please provide a detailed breakdown of your project’s milestones and each of the main tasks or activities to reach the milestone plus the expected timeline for the delivery.

Deliverable 1: USDM token mint/burn on testnet

Deliverable 2: Back-end and middleware, account management, and admin dashboard complete

Deliverable 3: Mehen dApp on test net, including KYC and bank integration

Deliverable 4: Mehen USDM and dApp on mainnet

[CAPABILITY/ FEASIBILITY] Please describe the deliverables, outputs and intended outcomes of each milestone.

Deliverable Milestones

There are multiple milestones for the development and delivery timeline. The capabilities listed for each milestone are high-level in some cases. Further breakdown would be addressed during issue creation in the Gitlab repository.

After Milestone 4, the initial capabilities stated in this proposal will be completed. Any development after that time will be considered maintenance and enhancements. Costs associated with this development will be covered by this proposal for the remainder of the first year. After the first year, service fees will be used to cover further development activities.

There will be a Testnet instance where new builds will be tested before being deployed to Mainnet. It is known that one can never fully replicate production in a test environment, however, Software Testing and DevOps best practices will be put in place to help mitigate this.

Milestone 1

Milestone 1 will lead to a CDR for all things related to the Mehen dApp. Some prototyping may be required for integration exploration with Plaid or any other third-party service we decide to use.

User dApp UI/UX Design
Website Graphics
Admin dApp UI/UX Design
System Architecture Diagram
Database Selection and Design
System Requirements Documentation
DevOps Planning
User Definitions, Roles, and Capabilities
Data Flows
Critical Design Review

Milestone 2

Milestone 2 will start the actual development of the Mehen dApp.

System/Software Test Plan Documentation
Start of FAQ Creation
Web App (Angular)
Off-chain Back End (Java SpringBoot)
On-chain Back End
AWS
Milestone Integration and Test

Milestone 3

Milestone 3 will focus on being able to link, remove, and use a banking account along with the USDM minting and burning service.

Web App
User Dashboard
Bank linking/removal
Bank deposit/withdraw
About Us
FAQ
Mehen Back End
Banking Service
Bank linking
Bank removal
Deposit
Transfer from user's bank to Mehen
Not minting yet, just moving funds into my account like Coinbase or other exchanges
Withdraw
Transfer from Mehen to user's external bank
Back End
USDM Minting Service
Create tx and sign
USDM Burning Service
Create tx and sign
AWS
Additional architectural implementation for testing
Milestone Integration and Test

Milestone 4

Milestone 4 will be the final new development for the Mehen dApp. All initially intended functionality will be present and the system will be ready to go live.

Web App
USDM Minting
USDM Burning
Transaction History
Contact Us
Admin Web App
Admin panel user handling
Third-party key holders
Mehen DevOps team
KYC alerts
Review wallet locks
Third-party key/wallet handling
Mehen Back End
Banking Service
Trigger minting
Trigger burning
Contact Us/Ticket Service
Historical Service
Back End
Third-party key handling for locked wallets
Always be tx out
AWS
Additional architectural implementation for testing
AWS CloudWatch Integration
Milestone Integration and Test

Maintenance mode

The main scope will include addressing user issues and suggestions to increase the usability and robustness of the dApp. However, there are other drivers which could trigger additional dApp development. Examples include:

Changes to the known legal framework
Additional language translations to the website as we are granted legal operating ability in countries outside of the US.

[RESOURCES & VALUE FOR MONEY] Please provide a detailed budget breakdown of the proposed work and resources.

Lead Software Engineer/Full Stack Developer (pre-tax): 173,000 ₳

This line item pays for 560 hours of a Lead Software Engineer/Full Stack Developer’s time at a rate of $90/hour.

Senior Front End Software Engineer (pre-tax): 52,000 ₳

This line item pays for 200 hours of a Senior Front End Software Engineer’s time at a rate of $75/hour. 160 hours are dedicated through Milestone 4. 40 hours are dedicated to maintenance and DevOps after Milestone 4 is completed.

Senior Back End Software Engineer (pre-tax): 93,000 ₳

This line item pays for 380 hours of a Senior Back End Software Engineer’s time at a rate of $75/hour. 300 hours are dedicated through Milestone 4. 80 hours are dedicated to maintenance and DevOps after Milestone 4 is completed.

Blockchain Software Engineer (pre-tax): 135,000 ₳

This line item pays for the costs associated with Cardano network integration with the Mehen dApp, including oracle integration required for minting and burning USDM. 260 hours are estimated at a rate of $150/hour. 200 hours are estimated through Milestone 4. 60 hours are estimated for maintenance and DevOps after Milestone 4 is completed.

Lead Systems Engineer (pre-tax): 112,000 ₳

This line item pays for 380 hours of a Senior Systems Engineer’s time at a rate of $85/hour. 300 hours are dedicated through Milestone 4. 80 hours are dedicated to maintenance activities and DevOps after Milestone 4 is completed.

Service Hosting and Infrastructure for 1 Year: 35,000 ₳

These costs cover Mehen infrastructure for the dApp, including domain registration and DNS services, website hosting, Mehen back-end service hosting, and testnet and mainnet integrations.

Marketing and Community Engagement: 100,000 ₳

These costs cover Mehen Business Website hosting and service, website build and graphics, general marketing materials, and community manager part-time salary

Licensing & Insurance: 50,000 ₳

Fees for Money Transmitter Licenses vary from state to state. This would pay for a few more state applications 26,000 ADA

Legal & Administrative 50,000 ₳

Ad-hoc legal advice and administrative duties

Total Budget: 800,000 ₳

[RESOURCES & VALUE FOR MONEY] Who is in the project team and what are their roles?

Steven Fisher

Steven has been in the software field for over 23 years. In addition to developing and fielding full stack solutions, he’s led teams though multiple system, preliminary, and critical design reviews. He has been involved in customer training for the products and services he has delivered and he’s used that time to push added value back into those projects.

He created a small LLC named Swift Crypto LLC (https://www.swiftcryptollc.com) to mine Ethereum in 2021. Looking to the future, he became a Cardano enthusiast and single stake pool operator for ADA for Warriors (https://4wardpool.swiftcryptollc.com). He is a core member of the FreeLoaderz Cardano group as well as a member of the Cardano SPA and xSPO alliances.

With FreeLoaderz, he is the lead web developer for SmartClaimz. The testnet version can be found here: https://rwd.freeloaderz.io and the repo for the front end can be found on FreeLoaderz’ Github here: https://github.com/FreeLoaderz/rwd-frontend

Additional information can be found on Steve’s LinkedIn page:

https://www.linkedin.com/in/stevenkfisher/

Matt Tristan

Matthew Tristan is currently pursuing his Master’s in Computer Science at Georgia Tech and is a talented software engineer with an outstanding background of exceeding performance and community engagement. He is second cohort Plutus Pioneer Graduate, a former Meld Finance ambassador, and a Testing Solutions Engineer from 2017 to 2023.

Matt currently has two patents pending for:

Smart Contracts for Global State Control in a eUTXO environment

Modifiable input validators and implementation in eUTXO environment

Additional information can be found on Matt’s LinkedIn page:

https://www.linkedin.com/in/matthew-tristan/

Matt Plomin

Matthew is responsible for regulatory compliance, internal process controls, and business management. He has worked in fiduciary TradFi roles for nearly 15 years, most recently as global head of ABCP and US head of Money Market Credit for a large global asset manager. He is on the steering committee for ESG matters with the Structure Finance Association, and is a FreeLoaderz Core Contributor.

Previously, he held roles in institutional relationship management, client onboarding, KYC/AML, and regulatory reporting.

Additional information can be found on Matt’s LinkedIn page:

https://www.linkedin.com/in/matthewplomin/

Eddie D’Amore

Eddie has a B.S. in Finance and Operations Management from the University of Delaware and has been consulting startups since 2018. He is a process improvement professional currently leading a team of four tax reclamation specialists recovering foreign withholding tax. Eddie also has extensive marketing experience. He brings his diligent, lean six sigma approach to the team.

Additional information can be found on Eddie’s LinkedIn page:

https://www.linkedin.com/in/edwardadamore/

Sean Kelly

Sean has a PhD in Chemical Engineering from Iowa State University and has been a stake pool operator on the Cardano blockchain for the past two years. He is a core member of FreeLoaderz and he runs ENVY Stake Pool. He maintains the FreeLoaderz load balancers and also a distributed DBSync backend system for FreeLoaderz.

Additional information can be found on Sean’s Linktreepage:

linktr.ee/envystakepool

Alex Schwartz

Alexander Schwartz is an educator, entrepreneur, and project manager. He works as a behavioral therapist for autistic children while working as a Community Manager for Mehen. Alexander has over a decade of eCommerce and project management experience. Alex previously managed elite eSports players of Starcraft and Dota 2 participating in tournaments such as ESL and MLG. He also cultivated strong sponsorships that helped the teams follow their dreams. Cryptocurrency (particularly Cardano) and Web3 have been a passion for Alexander since 2019. He believes in building a brighter future through DeFi because cryptocurrency is more than just money, it is a goal for long-term peace and fairness of trade.

Additional information can be found on Alex’s LinkedIn page:

https://www.linkedin.com/in/alexander-j-schwartz-49994b44/

James Meidinger

James (‘Blockjock’) has over 23 years experience running his own business, performing all aspects of operations/route management/sales/customer service/client relations. James is a co-host of Cardano over Coffee, a community manager at Freeloaderz, and a contributor to the Twitter show Crypto War Room.

Additional information can be found on James’ LinkedIn page:

https://www.linkedin.com/in/james-meidinger-650b3b240/

Jillian Plomin

Jillian is a former Sergeant in the U.S. Army Reserves, worked for the Domestic Nuclear Detection Office in Washington D.C., and holds a Masters in Public Relations from The GW School of Political Management. She has extensive experience in Communications, Marketing, and Public Relations, and has been leading dynamic teams for decades.

Jillian is also a talented writer. She is publishing her first novel, Blade of Baz, on the Cardano blockchain with Project Bookworm.

Additional information can be found on Jillian’s LinkedIn page:

https://www.linkedin.com/in/jillianplomin/

[RESOURCES & VALUE FOR MONEY] How does the cost of the project represent value for money for the Cardano ecosystem?

Mehen’s stablecoin is a grassroots initiative with real ties to the community. Its existence suggests and supports decentralization in a real and tangible way, to every current and future end-user on the Cardano Blockchain. The value is in its people and what they believe in, which is true “power to the edges." This, of course, will grow exponentially as the blockchain grows, as we are a symbiotic part of the chain itself.

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