Layer-1 blockchain Cardano has welcomed its first 1-to-1 fully fiat-backed stablecoin, USDM, the latest entrant in a $146 billion stablecoin market dominated by Tether (USDT) and Circle (USDC).

Launched on March 17, the Mehen Finance-founded stablecoin allows holders to mint or redeem USDM via the United States dollar and differs from existing Cardano-based stablecoins such as DJED and iUSD, which are algorithmic and synthetic-based.

Mehen founding partner Matthew Plomin said the road to launching the stablecoin on Cardano wasn’t an easy one, with delays caused by issues with U.S. banks in 2023. 

The firm released its white paper in November 2022, explaining a U.S. dollar-backed stablecoin would provide a “much-needed service” to Cardano users.

Mehen planned on launching USDM in 2023, but “everything changed” when Silicon Valley Bank, Silvergate, and Signature Bank shuttered in March 2023, Plomin said in a March 14 X Spaces.

Plomin revealed the bank it was working with, Cross River, cut ties with Mehen around when the bank teamed up with Circle, the second-largest stablecoin firm, which was looking for a new banking partner at the time.

“Once they had them, they didn’t care about us anymore,” Plomin said, adding:

“[It was a] “kick in the nuts delay.”

Mehen now uses fintech firm Plaid’s services to mint and burn U.S. dollars for USDM.

Plaid provides a payment transfer network between Bank of America, Chase, Wells Fargo and other large U.S. banks to power fintech and cryptocurrency products. The firm integrated Plaid’s services in August 2023, according to an X post from Steven Fisher, Mehen’s chief technology officer.

“Adding your bank will allow you to deposit USD to mint $USDM and allow you to burn USDM to receive USD,” Fisher said.

Mehen is now also actively seeking a money transmitter and virtual asset service provider license to expand its services in the United Kingdom and Europe.

Meanwhile, Plomlin said over 2,000 partners plan to integrate USDM on their platforms, which range from lending and borrowing protocols to decentralized exchanges, and Mehen noted it will take 1-2 days for institutions to complete the onboarding process.

“This means USDM will slowly be arriving on-chain the week of the 18th,” it said.

Issuance and management of USDM will be governed by smart contracts and decentralized oracles to ensure transparency and security, Mehen states on its website.

Related: Cardano coins new name for its ADA-backed stablecoin Djed

The launch of USDM was met with optimism by several members of the Cardano community, including Jaromir Tesar, who described the launch as a “major milestone” for decentralized finance on Cardano.

USDM enters a crowded and competitive market for stablecoins.

USDT and USDC have the largest market caps at $103.1 billion and $30.8 billion respectively, while seven other stablecoins boast a market cap over $500 million, according to CoinGecko.

However, USDM is shielded from competition from those stablecoins, at least on the Cardano network, as they aren’t currently available to be transferred via the Cardano blockchain.