S&P Global Rates USDM Stablecoin as Stable

S&P Global Ratings has assessed Mountain Protocol’s USDM stablecoin as “adequate” for stability and peg maintenance to the US dollar.

S&P Global Ratings has given the Mountain Protocol’s USDM stablecoin a “adequate” grade for its stability and ability to maintain its peg to the US dollar.

The institution announced this rating in its most recent release. The purpose of this evaluation is to provide tolerance and dependability for various stablecoins that are currently available on the market.

S&P Global Ratings Overview

This evaluation is part of the ninth Stablecoin Stability Assessment the company has conducted. When determining the stability of stablecoins, S&P Global Ratings considers a wide range of variables.

Several risks fall into this category, including credit risk, market risk, custody risk, the resilience of the reserve fund, liquidation procedures, excessive collateralization, governance, regulatory compliance, and dependence on third parties.

S&P Global grade stablecoins on a scale from one to five, where one signifies their ability to maintain a “firm” peg, and five indicates a “weak” performance at the performance level.

This rating gives USDM a “adequate” grade at level 3, indicating a stable performance. However, USDM’s performance pales in comparison to other stablecoins like USDC, which received a “strong” grade at level 2, Tether, and DAI, which both received a “constrained” grade at level 4.

Mountain Protocol, a corporation that the Bermuda Monetary Authority has appropriately licensed, is the company that is responsible for the release of USDM, which occurred at the beginning of September 2023.

A USDM stablecoin is an ERC-20 token fully collateralized by U.S. Treasury bonds. It also enables holders to receive a daily dividend through a rebase process, similar to how the stETH token in Lido Finance works.

This one-of-a-kind form of yield-bearing stablecoins is designed to make it possible for players from countries other than the United States to gain access to the yields of the United States Treasury while simultaneously ensuring interoperability across other decentralized finance (DeFi) protocols.

Users in the United States cannot access or register USDM as a security, despite its user-friendliness and functionality. it demonstrates the positive investor response that the market offers to both USDM and Mountain Protocol, the “adequate” grade is an essential aspect for both cryptocurrencies.

While this was happening, Chuck Mounts, Chief DeFi Officer at S&P Global Ratings, expressed his gratitude to the market for its reaction to their stablecoin stability assessments and the addition of USDM to their coverage.

The growth of the DeFi environment enables these kinds of evaluations, enhancing transparency and providing investors and users with essential data for their work.

As a consequence of this, the implementation of USDM by the Mountain Protocol is following the growing need for digital assets that are stable and generate income.

Supported by well-known brands, the protocol’s intelligent use of US Treasuries as security marks a pioneering step in the stablecoin field.

The performance and stability of stablecoins, such as USDM, will determine the utilization and incorporation of cryptocurrencies into regular financial operations when the decentralized finance industry reaches its full maturity.