The Mountain Protocol’s USDM Stablecoin Receives “Adequate” Rating from S&P Global Ratings
In a recent report by S&P Global Ratings, the Mountain Protocol’s USDM stablecoin has been given an “adequate” rating, indicating its stability and ability to maintain its peg to the U.S. dollar. This assessment is part of S&P Global Ratings’ ninth Stablecoin Stability Assessment, which aims to provide transparency and reliability for different stablecoins in the market.
Assessment Criteria and Ratings Overview
S&P Global Ratings uses various criteria to evaluate the stability of stablecoins. These include credit risk, market risk, custody risk, resiliency of reserve fund, liquidation mechanisms, over-collateralization, governance, regulatory compliance, and third-party dependencies. Stablecoins are ranked on a scale of 1 to 5, with 1 representing a “very strong” ability to maintain their peg and 5 indicating weak performance.
In this rating, USDM has received an “adequate” grade at level 3. Although it demonstrates stable performance, it is of lower quality compared to other stablecoins such as USDC, which received a “strong” grade at level 2. Tether and DAI both received a “constrained” grade at level 4.
Mountain Protocol and USDM Features
USDM was launched in early September 2023 by the Mountain Protocol, a company licensed by the Bermuda Monetary Authority. It is an ERC-20 token fully collateralized by U.S. Treasuries and allows holders to receive daily yield through a rebase mechanism, similar to stETH in Lido Finance.
This unique form of yield-bearing stablecoins enables non-U.S. participants to access U.S. Treasury yields while ensuring interoperability across different decentralized finance (DeFi) protocols. USDM is user-friendly and functional, but it is not available to U.S. users and is not registered as a U.S. security.
Market Reception and Outlook
The “adequate” rating is a significant milestone for USDM and the Mountain Protocol, as it reflects the positive response from investors in the market. Chuck Mounts, Chief DeFi Officer at S&P Global Ratings, appreciates the market’s response to their Stablecoin Stability Assessments and the inclusion of USDM in their coverage. These assessments enhance transparency and provide essential data for investors and users in the DeFi environment.
The rollout of USDM by the Mountain Protocol aligns with the growing demand for stable, income-earning digital assets. With respected names backing the protocol and the use of U.S. Treasuries as security, it is a groundbreaking development in the stablecoin industry. The performance and stability of stablecoins like USDM will play a crucial role in determining the adoption and integration of cryptocurrencies in traditional financial operations.
Hot Take: USDM Stablecoin Receives “Adequate” Rating, Sets New Standards for Stability
The Mountain Protocol’s USDM stablecoin has been granted an “adequate” rating by S&P Global Ratings, affirming its stability and ability to maintain its peg to the U.S. dollar. This rating reflects positive investor response and marks a significant milestone for both USDM and the Mountain Protocol.
With its unique features, such as being fully collateralized by U.S. Treasuries and offering daily yield through a rebase mechanism, USDM provides accessibility to U.S. Treasury yields for non-U.S. participants while ensuring interoperability across various DeFi protocols.
The market’s reception to the Stablecoin Stability Assessments and the addition of USDM to S&P Global Ratings’ coverage demonstrate the increasing need for stable, income-earning digital assets. The Mountain Protocol’s efforts, combined with the maturity of the DeFi sector, will shape the future usage and integration of cryptocurrencies in traditional financial operations.
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