The Bitcoin-backed mUSD stablecoin is coming to Bitcoin’s favorite native PerpDEX platform Velar in a move that promises to be a key milestone as the world’s oldest cryptocurrency evolves into a yield-bearing asset with the same utility of tokens like ETH and SOL.
Velar said it’s partnering with mUSD issuer Mezo to bring the asset to its PerpDEX platform, utilizing the tBTC bridge infrastructure to facilitate transfers from Mezo’s incentivized testnet, known as matsnet.
If you’re not familiar with mUSD, you might want to get to know this new asset, which is claimed to be the first decentralized stablecoin that’s entirely collateralized with BTC. To mint mUSD, users must deposit BTC that’s worth a minimum 110% of the amount of stablecoins they borrow, and they must maintain this ratio at all times to avoid liquidation of their loan. This overcollatralization is key to how mUSD maintains its 1:1 peg with the U.S. dollar.
The advantage of mUSD is that the collateralization process is entirely decentralized, so users always retain full control over their deposited Bitcoin, in-line with Satoshi Nakamoto’s core principles. It’s a novel design that allows investors to utilize their Bitcoin to mint DeFi-compatible assets that can be used in yield-generating activities with lower risks.
“Mezo’s mUSD solves the problem of custodial risk associated with most BTC-backed stablecoins,’ explained Velar’s CEO Mithil Thakore.
Its deployment on Velar means that mUSD is likely to become much more important within Bitcoin’s nascent DeFi ecosystem. Velar is one of the major Bitcoin liquidity protocols, with its PerpDEX enabling traders to buy and sell perpetual contracts in a non-centralized way, leveraging both long and short positions for multiple digital assets, including BTC itself.
The exact date has not been announced, but the plan is for mUSD to launch on Velar sometime during the second quarter. Once it does launch, Velar plans to create multiple mUSD trading pairs to increase accessibility to the stablecoin, which will have utility including trading, borrowing and also liquidity provision. That’s just the start though, as Velar has plans to add support for even more use cases for mUSD later in the year.
“Its integration into Velar’s PerpDex will allow users to enjoy greater capital efficiency and provide greater freedom of choice when choosing a stablecoin to serve as margin for their perps trading activities,” Thakore added.
