S&P Global Ratings Issues Stablecoin Stability Assessment for Mountain Protocol’s USDM
S&P Global Ratings has released its ninth Stablecoin Stability Assessment, focusing on Mountain Protocol’s yield-bearing stablecoin USDM. The assessment evaluates the capacity of a stablecoin to maintain its peg, with USDM receiving a rating of 3, indicating “adequate” performance based on S&P’s criteria.
Assessment Criteria
- Credit risk
- Market risk
- Custody risk
- Reserve funds
- Robustness of liquidation mechanism
- Available overcollateralization
The firm scores these criteria between 1 (very strong) and 5 (weak). Factors such as governance, regulatory frameworks, and third-party dependencies are also considered.
Previous stablecoins assessed by S&P Global Ratings include:
- USDC at 2 (strong)
- Tether at 4 (constrained)
- DAI at 4 (constrained)
Mountain Protocol’s Statement
In a statement, Chuck Mounts, Chief DeFi Officer at S&P Global Ratings, expressed excitement about expanding the coverage to include USDM. He highlighted the positive market reception to their Stablecoin Stability Assessment and their commitment to enhancing transparency and insights in the decentralized finance world.
Mountain Protocol launched USDM in early September 2023 and obtained a license from the Bermuda Monetary Authority. USDM is an ERC-20 token fully backed by short-term U.S. Treasuries. It provides holders with a daily yield through a rebasing mechanism and an algorithm that helps maintain the token’s price. Mountain Protocol compared USDM to Lido Finance’s stETH, stating that they are very similar.
Hot Take: S&P Global Ratings Assesses Mountain Protocol’s USDM Stablecoin
S&P Global Ratings has recently conducted its Stablecoin Stability Assessment for Mountain Protocol’s USDM stablecoin. The assessment evaluates the stability of the stablecoin based on various criteria, including credit risk, market risk, custody risk, reserve funds, and the robustness of its liquidation mechanism. USDM received a rating of 3, indicating “adequate” performance according to S&P’s standards.
This assessment provides valuable insights into the stability and reliability of USDM, allowing investors and users to make informed decisions. By evaluating factors such as governance, regulatory frameworks, and third-party dependencies, S&P Global Ratings ensures a comprehensive analysis of the stablecoin’s overall performance.
Mountain Protocol launched USDM in early September 2023 and obtained a license from the Bermuda Monetary Authority. This regulatory approval adds another layer of trust and credibility to the stablecoin. Furthermore, USDM is fully backed by short-term U.S. Treasuries, providing additional reassurance regarding its value and stability.
The daily yield offered by USDM through its rebasing mechanism appeals to investors looking for passive income opportunities in the crypto space. The algorithm implemented by Mountain Protocol helps maintain the token’s price, reducing volatility and enhancing stability.
Comparisons have been drawn between USDM and Lido Finance’s stETH due to their similarities. This indicates that USDM may be a reliable option for those familiar with stETH or looking for alternatives in the yield-bearing stablecoin market.
S&P Global Ratings’ commitment to enhancing transparency in decentralized finance is commendable. By providing comprehensive assessments of stablecoins like USDM, they contribute to the overall understanding and trustworthiness of the crypto industry.
Investors and users can rely on S&P Global Ratings’ Stablecoin Stability Assessment to make informed decisions regarding their involvement with USDM. The rating of 3 indicates that the stablecoin has demonstrated adequate performance, reducing concerns about its peg stability.
As the crypto market continues to evolve, assessments like these become increasingly valuable. They provide a benchmark for stablecoin issuers and investors, ensuring transparency and accountability in the rapidly changing world of decentralized finance.
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