Mountain Protocol
A-
USDM is a yield-bearing stablecoin issued by Mountain Protocol. The yield is generated by investing the collateral in short-term, debt obligations guaranteed by the US Treasury (such as US treasury bills or repurchase agreements).
Mountain Protocol is regulated by the Bermuda Monetary Authority (BMA) as a Class F licensee, issued under the Digital Asset Business Act 2018 of Bermuda. In May 2024, the BMA also released draft guidance for stablecoin issuers.
As per applicable legislation, the collateral backing USDM is segregated from Mountain Protocol’s corporate accounts. It is held in bankruptcy remote accounts on behalf of, and for the benefit of, USDM holders.
Mountain Protocol relies on the SEC’s Reg S exemption to avoid SEC oversight and prohibits US persons from onboarding to the platform or purchasing USDM.
USDM is suitable for non-US users who want a regulated option to earn yield paid by the US Treasury in a stablecoin format. USDM is appropriate for retail as well as institutional users, including DAOs. However, users who are unable to complete KYC will need to rely on onchain liquidity pools.
The following actions by Mountain Protocol can improve factor scores for USDM.
Publicly identify the custodians that hold US treasury bills or increase exposure via tokenized funds that offer higher transparency.
Enable primary liquidity access for retail users directly or through exchange partnerships.
Mountain Protocol
Stability
Stable
Stable
The Stability factor is evaluated on the following:
1. Reserves Management - Quality, quantity, storage and segregation of reserve assets
2. Market Feedback - Indicators of market's confidence in a stablecoin derived from price and trade data
3. Mechanism - Stabilization methods that protect the stablecoin
Mountain Protocol
Management
Low Risk
Low Risk
The Management factor is evaluated on the following:
1. Restrictions - What deterrents exist to prevent key personnel of stablecoin projects from unethical and illegal behavior?
2. Negative Track Record - Have key personnel been involved in scams, frauds or other illegal activities?
Mountain Protocol
Implementation
Not Assessed
Not Assessed
This factor aims to assess risks arising from technical implementations – i.e, smart contract code and oracles. It is currently not assessed, but we plan for it to be evaluated in the future.
Mountain Protocol
Decentralization
High Risk
High Risk
The Decentralization factor is evaluated on the following:
1. Platform Censorship Risk
2. Custodian Risk
3. Type of Collateral
4. Diversified voting Power
5. User Censorship Risk
Mountain Protocol
Governance
Very Low Risk
Very Low Risk
The Governance factor for fiat-backed stablecoins is evaluated on the following:
1. Holder Protection - What rules, statutes or code exist to protect interests of stablecoin holders?
2. Reserves Verification - What checks are done to ensure existence of reserves?
3. Redemptions - Do issuers have transparent and reasonable redemption terms?
Mountain Protocol
Externals
Not Assessed
Not Assessed
This factor seeks to incorporate external feedback mechanisms such as market and social sentiment into our internal ratings. It is currently not assessed, but we plan for it to be evaluated in the future.