Injective Integrates Mountain Protocol to Power Tokenized T-Bills

Today, Mountain Protocol is launching on Injective to bring the first native yield-bearing stablecoin (USDM) into the Injective ecosystem.

Users can now leverage USDM for a diverse array of dApps built on Injective while still earning yield from treasury bills. Potential use cases include using USDM for margin when trading derivatives, using the asset for lending protocols or deploying assets into various money market platforms on Injective.

What is Mountain Protocol?

Mountain Protocol is the issuer of USDM, the first permissionless yield-bearing stablecoin. Backed by Multicoin Capital, Coinbase Ventures, and Castle Island Ventures, Mountain Protocol launched in 2023 with a vision to enable stablecoin holders to own the “risk free rate” through a secure, regulated, enterprise-grade product.

Historical Context

Typically, stablecoins are designed to maintain a stable value relative to a specific asset. While there are multiple ways to peg a stablecoin, the most straightforward one is to have a stablecoin backed by a reserve of fiat currency. These reserves are typically held in bank accounts or in other low-risk, liquid assets, such as treasury bills, to ensure stability.

In many cases, if a stablecoin’s reserve is held in treasury bills, which earn a specific yield as defined by the US Treasury, the issuer of the stablecoin receives that yield. With USDM, Mountain Protocol turns this this common practice on its head by offering the yield back to the user, which currently sits at 5%.

What is USDM?

USDM is a stablecoin backed by treasury bills, providing a secure foundation. Unlike most other stablecoins, USDM allows users to earn and retain daily interest on their holdings.

Currently with USDM, users are able to receive a 5% yield on their principal. Users who hold USDM in their wallets will automatically receive this yield through a process called rebasing.

How does USDM work on Injective?

USDM will be bridged into the Injective ecosystem as wUSDM. This wrapped version will reflect the current USDM price and include the yield in its price.

This in effect will lead to a more seamless flow for end users on Injective, since rebasing would not be necessary. Instead, wUSDM will steadily increase by 5% annually, with daily increments reflected in its value on Injective, providing users with the same consistent 5% annual yield as USDM.

This difference for wUSDM is standard and expected.

Any Injective user will also be able to unwrap their wUSDM and convert it back to USDM, receiving the stable USDM asset along with the accrued yield.

Powering New Tokenized Use Cases on Injective

This integration unlocks a number of novel use cases on Injective. A prime example of this is the ability for USDM to be utilized as margin for trading derivatives on DEXs built on Injective. Not only does this allow traders to earn yield while trading but it also marks the first time in history that USDM can be used as margin for trading derivatives. Now for instance, users trading with USDM on Helix can participate in on-chain markets, such as BTC/wUSDM Perp, while still earning yield.

Use cases such as the one illustrated above can significantly enhance capital efficiency and passive yield generation for users. In addition, utilizing USDM on Injective can potentially reduce opportunity costs, improve risk management by offsetting potential losses with yield, and boost market liquidity and stability.

To see an example use case for USDM in action, click here.

RWAs on Injective

The integration of Mountain Protocol with Injective and the introduction of USDM into the Injective ecosystem mark a significant milestone in the evolution of asset tokenization on Injective. This collaboration bridges the gap between traditional and on-chain finance, creating a seamless pathway for users to interact with both models in tandem. The availability of a regulated, yield-bearing stablecoin like USDM within the Injective ecosystem enhances tokenized offerings on Injective, cementing its position as the blockchain built for finance.

The integration of Mountain Protocol and Injective, along with the introduction of USDM, heralds a new era of innovation and convergence in the financial world. As TradFi and DeFi continue to merge, Injective will continue to play a crucial role in shaping the future of finance.

About Injective

Injective is a lightning fast interoperable layer one blockchain optimized for building the premier Web3 finance applications. Injective provides developers with powerful plug-and-play modules for creating unmatched dApps. INJ is the native asset that powers Injective and its rapidly growing ecosystem. Injective is incubated by Binance and is backed by prominent investors such as Jump Crypto, Pantera and Mark Cuban.