Bitcoin-backed mUSD Stablecoin Launching on Velar

The Bitcoin-backed mUSD stablecoin is coming to Bitcoin’s favorite native PerpDEX platform Velar, marking a significant milestone as the oldest cryptocurrency transforms into a yield-bearing asset with utility akin to ETH and SOL.

Velar announced a partnership with mUSD issuer Mezo to bring this asset onto its PerpDEX platform, utilizing the tBTC bridge infrastructure for transfers from Mezo’s incentivized testnet, matsnet.

What is mUSD?

mUSD is touted as the first decentralized stablecoin fully collateralized by BTC. To mint mUSD, users must deposit BTC worth at least 110% of the stablecoins they wish to borrow, maintaining this ratio to prevent liquidation. This overcollateralization is crucial for mUSD to maintain its 1:1 peg with the U.S. dollar.

The main advantage of mUSD lies in its decentralized collateralization process, ensuring users retain full control over their deposited Bitcoin, aligned with Satoshi Nakamoto’s principles. This innovative design allows investors to leverage their Bitcoin to mint DeFi-compatible assets for yield-generating activities with lower risks.

Mithil Thakore, CEO of Velar, stated, “Mezo’s mUSD solves the problem of custodial risk associated with most BTC-backed stablecoins.”

The deployment of mUSD on Velar is set to elevate its significance within the Bitcoin DeFi ecosystem. Velar is a major Bitcoin liquidity protocol, allowing traders to manage perpetual contracts in a decentralized manner, utilizing long and short positions across various digital assets, including BTC.

While the exact launch date is not confirmed, mUSD is expected to go live on Velar in the second quarter. Post-launch, Velar plans to create multiple mUSD trading pairs to enhance accessibility, facilitating functions like trading, borrowing, and liquidity provision. Moreover, Velar aims to support more use cases for mUSD later this year.

Thakore concluded, “Its integration into Velar’s PerpDEX will allow users to enjoy greater capital efficiency and provide more freedom in choosing stablecoins for margin trading.”