October 23, 2024: Move Mountains 🏔️🗻
Curve adds Mountain's USDM as $crvUSD Peg Keeper
Last month a conversation started on removing TrueUSD as a peg keeper.
Just a month later, the Peg Keeper landscape has been reshaped. A vote first reduced the TUSD Peg Keeper to zero, while also dropping the struggling pyUSD to $5MM.
A DAO vote was proposed by Wormhole Oracle of Llama Risk fame to officially onboard Mountain USD as the newest Peg Keeper. Technically speaking, the vote serves to add the peg keepers to the Regulator contract, update the debt ceiling on the Controller Factory, and add the new Peg Keeper to three Monetary Policy contracts.
The pool will have a debt ceiling of 10MM, a bit lower than the primary peg keepers of $USDC and $USDT. The vote passed unanimously,
With voting closed, let’s meet the newest Peg Keeper…
Mountain USD
Mountain USD, headquartered in Bermuda, bills themselves as “the first permissionless yield-bearing stablecoin.” They are fully regulated, and fully backed by T-Bills, and the yield accrues to the token on a daily basis as a rebasing token (ie like stETH). Similar to Lido, they also offer a wrapped version of the token for apps that cannot tolerate rebasing tokens.
As of their October 1 attestation, here are their holdings in Treasuries.
They note in their docs that USDM is over-collateralized.
To protect USDM holders from interest rate risk, USDM Reserves are always over-collateralized. This over-collateralization acts as an equity buffer to absorb potential variations in the underlying asset values resulting from interest rate increases.
As a regulated stablecoin, they also have to kick out Americans, so we cannot go through the process of minting USDM.
Since it’s effectively a centralized stablecoin, and we can’t access it in the US, how exactly it permissionless? On this point, they appear to refer to the fact it’s an ERC-20 token that can be freely transact 24/7 onchain (of course, unless your token gets blacklisted). They currently support minting onto Ethereum, Polygon, Arbitrum, Optimism and Base. Minting is possible at present with $USDC, and soon they plan to accept wire transfer.
What’s in it for USDM? Their terms of service claims that any fees are taken as a cut of the yield:
“All fees, including those charged by the company and any applicable partners, are netted from the yield quoted to users”
Since their homepage advertises a 5% rate, we imagine the website is a bit stale, since this would be above T-Bill rates. We aren’t sure the exact fee structure, but considering USDC and USDT take the entire yield for themselves, one can imagine how offering any portion of the yield would be useful.
At the moment they’ve got about $59MM total worth of stablecoin, in fact lower than $crvUSD’s circulating supply.
Despite it’s relatively low supply to date, $USDM has been getting some amazing traction around DeFi. In addition to getting added as a $crvUSD Peg Keeper, they were also recently selected as part of Ethena’s reserve fund out of 25 candidates.
Investors appear to be bullish on the model, as Mountain raised an $8MM Series A round last June.
Their most recent efforts have been in building out a DeFi application.
The governance vote also cites “USDM/crvUSD is expected to perform between these pools due to a commitment by Mountain Protocol team to promote the pool and the native yield associated with USDM which may offer additional incentive to support liquidity in the pool.” Possibly of interest for yield farmers…