$USM: Asset-backed Stablecoin for Metaverse | by Metapoly | Mar, 2022

  1. United States of Metaverse (USM), is a USD-pegged stablecoin for Metaverse
  2. USM is both algorithmic and collateralized stablecoin
  3. Treasury backed Metaverse asset compositions; blue-chip NFT lands and stablecoin liquidity

USM, short for United States of Metaverse, is a USD-pegged stablecoin by Metapoly. The vision for USM is for it to be the universal currency used in all metaverse protocols and related ecosystems.

Like Terra’s UST and HectorDAO’s TOR, USM is a decentralized asset-backed stablecoin. It is both an algorithmic and collateralized stablecoin.

How does the algorithm work to ensure that the peg is maintained? When the market price of USM goes under $1, the algorithm will use Metapoly’s native governance token D33D to buy back USM until USM returns to the $1 peg. And vice versa: if USM goes above $1, the algorithm will mint USM until USM returns to the $1 peg.

However, we recognize that several events might cause instability to the algorithmic peg and poised a risk. This is why USM is also backed by metaverse assets, such as metaverse land assets like Decentraland and Sandbox’s land NFTs and tokens like SAND and MANA, that are held in Metapoly’s treasury in the same manner that DAI is backed by crypto-collaterals held in MakerDAO’s treasury.

The Metapoly Ecosystem with D33D, USM, and metaverse land assets

Let’s imagine from a Metaverse’s user point of view and user experience, it is painful for the user to migrate their currency from 1 blockchain ecosystem to another blockchain protocol. He/she/they needs to swap some native tokens such as Ethereum, and then move their stablecoins across the Metaverse ecosystem and only would be able to participate in multi-Metaverse.

This is extremely difficult and not user friendly. This friction is a bottleneck.

Why not, instead, have a unifying stable currency that could be used across multi-Metaverses that is:

  1. Cross-chain compatible
  2. A stable currency
  3. Asset-backed by Metaverse assets itself

That is what Metapoly aspires to achieve with its vision. To create a unifying asset-backed stablecoin that would be able to solve the frictions and pain points from a user’s point of view.

A common question one will ask is, why is there a need to create our own stablecoin? Why not use an existing stablecoin like USDT or UST?

We want to create our own decentralized stablecoin because (1) we do not want to use centralized stablecoins like USDT or USDC due to centralization and counter-party risks; (2) even decentralized stablecoins like DAI or UST either aren’t completely decentralized (e.g. DAI is partially backed by USDC) or have its own potential fallibilities (e.g. UST).

Due to these reasons, we think it is better for Metapoly to launch its own stablecoin, so that USM can stand on its own narrative and solely focus on being the de facto, “stablecoin for Metaverse”.

These are the merits for Metapoly’s own asset-backed stablecoin, $USM:

  1. Treasury backing are native Metaverse assets-Decentraland, Sandbox NFT lands, protocol utility tokens, LP tokens and more;
  2. Portfolio composition is balanced and risk on-off with blue-chip NFT lands and stablecoin liquidity;
  3. Metaverse lands are projected to grow exponentially in the next 10 years and having control over USM ensures the Metapoly protocol to have a direct stake with the growth.

Like any other stablecoins, USM can be used as a medium of exchange, i.e., to buy and sell things. Users will be able to use USM in the Metapoly ecosystem to conduct their business transactions.

USM can also be used for liquidity provision, allowing users to earn yield. To do so, users can pair USM with tokens such as SAND, MANA or USDC to form LP tokens to be staked in liquidity pools such as Curve or Metapoly.

In the future, as Metapoly grows out of its multiple segments such as its borrowing and lending, marketplace, launchpad, and games, USM will have more and more use cases.

Metapoly also looks to grow its ecosystem by providing incubation and grants for developers, enthusiasts and protocols to create use cases by integrating D33D and USM.

The Metapoly Ecosystem explained with D33D, USM, and Treasury

There are 3 ways to acquire USM;

  1. The first way is to mint it. Users can mint USM at Metapoly Lending (a fork of Sushiswap’s Kashi Lending) with their D33D tokens.
  2. The second way is to buy USM from a DEX.
  3. The third way is to stake D33D and earn yield in the form of USM.

USM is instrumental in Metapoly’s vision to be a comprehensive metaverse ecosystem. As Metapoly scales to become a dominant player in the broader metaverse ecosystem, USM will come to act as the de facto stablecoin of the metaverse.

Author: Traciwininger

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