Mehen: Fiat-backed Stablecoin USDM

[GENERAL] Summarize your solution to the problem.

Mehen is working with the community to build a Cardano Native Asset stablecoin, USDM.

USDM uses stablecoin best practices: fully-backed 1:1 with high-quality, liquid, transparent, audited USD assets.

[GENERAL] Summarize your relevant experience.

Finance team avg 20+ yrs exp. in fiduciary TradFi. Deep experience in financial markets managing 2a-7 funds and large company cash portfolios

Lead dev is a SPO w/23+yrs exp. in Angular, Java, SpringBoot, DevOps, SysAdmin, and automation

Dev team includes: Drasil, Lidonation

[IMPACT] Please describe your proposed solution.

The Mehen team is actively building the USDM stablecoin, a Cardano-native token that will be backed 1:1 with $1 of high-quality, liquid assets.

Who is USDM for?

The USDM stablecoin will be minted and redeemed by ordinary people and institutions alike.

Individuals who would like to mint or redeem USDM will need to go through normal identity verification checks, and connect a Cardano wallet to the Mehen DApp. Once connected, they will be able to send USD, and Mehen will mint USDM into the connected wallet.

The same process works in reverse. Individuals will send USDM to their identity-verifed wallet. From there, they can initialize a burn transaction to receive USD in the connected bank account.

Licensing

Mehen is taking a well-travelled path, legally speaking. This is the path taken by premiere fiat-backed stablecoins on other blockchains, and it is the best way to ensure that the USDM token will always be redeemable 1:1 for fiat.

Licensing is an important part of safeguarding our tokenholders' off-chain rights. State licensing officials place a high priority on making sure we can fulfill our obligations to our tokenholders. 

Mehen Finance will be open for minting and burning USDM tokens wherever it is licensed and is able to legally operate. Mehen is currently seeking Money Transmitter licenses in a variety of US states and territories, and we are working with partners in the UK and the EU to facilitate licensing in those jurisdictions. 

TECHNICAL REQUIREMENTS / CODING DETAILS

Mehen Wallet

Mehen will have to navigate a plethora of laws and regulations, not only from each state in the US, but each country throughout the world. Because of this, Mehen will need to create a 3-signing-key multi-signature Cardano wallet for each user. Two signatures will be required. One signing key will be held by the user, one key by Mehen, and the final key held by a neutral arbitrator.

This wallet will be KYC-verified and used for minting and burning/redeeming the stablecoin.

Through the dApp, multi-signing occurs, and the user experience is familiar. Minting and burning happen transparently for a KYC-approved user.

But this multi-signature setup allows Mehen to comply with court orders, or to lock a mint/burn wallet if necessary to prevent fraud or abuse.

Admin Website and Mehen dApp Details

There will be 2 websites for the USDM stablecoin. The first website is the dApp that customers/users will access to mint and redeem the stablecoin. The second will be an administrative website for the Mehen team.

Admin Website

The admin website will have multiple capabilities to allow Mehen to more efficiently monitor and control the Mehen dApp. There will be various reporting tools available including AWS CloudWatch for anomaly detection. This service can alert Mehen to any irregularities within the system and hopefully allow Mehen to mitigate the issue before it becomes critical.

Other capabilities will allow Mehen to review KYC updates and notifications from the KYC provider, review wallet locks, and allow Mehen to comply with any legal issuance.

Mehen dApp

The Mehen dApp will consist of three separate components, the website, the Mehen back end, and the Drasil back end.

dApp Website

The user website will be fairly simple and straightforward. Its purpose is to allow users to deposit USD from their bank, mint USDM from their USD, transfer USDM to another Cardano Wallet, burn USDM for USD, and withdraw USD to their bank. The user’s transaction history will be viewable to the user, and they will see any KYC or other notifications received for their account. An FAQ section will be built to allow users to work through any common questions or issues from these services. If the user cannot resolve their issue, they will be able to open a ticket via a Contact Us section with Mehen to get the issue resolved.

dApp Mehen Back End

The Mehen back end will handle the KYC integration with the KYC provider and store the KYC data for regulatory purposes. It will also handle the Bank integration along with deposits and withdrawals from the user’s bank. The user's transaction history, notifications, tickets, and profile will also be handled by this component.

Drasil Back End

The Drasil back end will handle the Mehen wallet creation, the minting and burning of USDM, and all Cardano network transaction creation/execution/signing,  

dApp and Admin Website Implementation

Tech Stack

List of technologies and libraries to be used for implementing the website:

• Multiple Cardano wallet browser extensions (as many as possible)
• Cardano Browser Library
• Angular
• Java
• SpringBoot
• AWS Cloud hosting and tools (chosen based on developer's experience)
• Gitlab (this project will be opensource allowing full transparency and community interaction)
• Gitbook
• Node.js
• Drasil

Revenue

Fees similar to existing exchanges like Coinbase and Binance will be applied for the USDM service. The Fee schedule will be reviewed and determined by Mehen Financial. Fees collected will pay for further development and maintenance of the Mehen dApp.

Future Features

Beyond the scope of this proposal, subsequent targets for development will include (but are not limited to) the following:

• Additional languages for the website
• Be able to use other currencies for deposit besides USD
• Re-using this technology to launch stablecoins in currencies besides USD
• Licensing KYC-verified wallets for use in broader regulated applications

[IMPACT] Please describe how your proposed solution will address the Challenge that you have submitted it in.

This project addresses all three success categories listed in "F9: Dapps, Products & Integrations".

Increasing the number of dapps and products available for the community to use that help to enrich the ecosystem with new use cases.

There is no fiat backed stablecoin on Cardano. We have seen Terra die because their algorithmic stablecoin was flawed. Tether, which is supposed to be fiat backed but later was revealed to be partially backed by unsecured debt, depegged from the dollar in 2022 as well (https://www.cnbc.com/2022/05/12/tether-usdt-stablecoin-drops-below-1-peg.html ).

USDM will be a true fiat backed stablecoin for the Cardano community, thus completely avoiding all of the pitfalls we’ve seen so far in the crypto space.

Increase the number of integrations that bring existing solutions together for a more seamless and connected experience between different products.

USDM is a native token for Cardano. It will be freely transferrable on the Cardano network, allowing different entities to transact with a stable payment model.

Increased quality of existing products & integrations through suggested improvements that is supported by customer feedback or increased usage by the community.

Dexs and DeFi platforms can rely on USDM as a stable peg to the USD. This will help them secure their investments and bottom line without forcing them to hold actual USD.

[IMPACT] What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?

The main risk would be not receiving funding to create the project in the first place. This project is complex in that there are laws and other legal requirements that need to be followed or there could be legal ramifications for Mehen. Because of that complexity and the risk of legal issues, we need a strong and disciplined development team. Documenting the system requirements, following through with system test plans, secure and robust implementation of the service, and safeguarding our customers’ KYC information will be paramount to our success. Having the funding secured will allow us to retain and even possibly attract the types of engineers required to make this project a success.

[FEASIBILITY] Please provide a detailed plan, including timeline and key milestones for delivering your proposal.

There are multiple milestones for the development and delivery timeline. The capabilities listed for each milestone are high level in some cases. Further breakdown would be addressed during issue creation in the Gitlab repository. The time listed per milestone is in calendar time and not total development hours.

After Milestone 4, the initial capabilities stated in this proposal will be completed. Any development after that time will be considered maintenance and enhancements. Costs associated with this development will be covered by this proposal for the remainder of the first year. After the first year, service fees will be used to cover further development activities.

There will be a Testnet instance where new builds will be tested before being deployed to Mainnet. It is known that one can never fully replicate production in a test environment, however, Software Testing and DevOps best practices will be put in place to help mitigate this.

Milestone 1

Milestone 1 will lead to a CDR for all things related to the Mehen dApp. Some prototyping may be required for integration exploration with Plaid or any other third party service we decide to use

.

• User dApp UI/UX Design
• Welcome screen
• Information screens (who, what, why, how)
• Create text content
• Login screen
• Profile page
• KYC Registration
• Decide Plaid modal on FE or Plaid integration on BE
• Bank linking
• Bank deposit
• Bank withdraw
• USDM minting
• USDM burning
• Send/Receive from wallet
• Transaction history
• FAQ
• Contact Us
• About Us
• User Dashboard
• Website Graphics
• Admin dApp UI/UX Design
• Admin panel user handling
• Third party key holders
• Mehen DevOps team
• KYC alerts
• Review wallet locks
• Take over a wallet with third party
• System Architecture Diagram
• Database Selection and Design
• System Requirements Documentation
• DevOps Planning
• Logging and alerting setup
• Tool identification
• User account CRUD
• Should be covered by the selected tool(s)
• User Definitions, Roles, and Capabilities
• Customer
• Mehen DevOp
• Mehen Financial (key handling)
• Third Party (key handling)
• Data Flows
• KYC registration
• Profile editing
• Bank linking
• USDM minting
• USDM burning
• Wallet transfers send/receive
• Locking a wallet
• Wallet transfer out with third party
• Contact Us (need Freshdesk or something like that)
• System to user notifications
• Milestone Schedule Creation
• Critical Design Review

Milestone 2 (2 months)

Milestone 2 will start the actual development for the Mehen dApp.

• System/Software Test Plan Documentation
• Start of FAQ Creation
• Will continue through all milestones, but not listed in all
• Web App (Angular)
• Skeleton for all pages
• Navigation between pages
• Welcome Screen
• Information screen
• Registration
• Plaid modal or custom?
• Login
• Profile
• Editing
• Deletion
• Notifications
• Mehen Back End (Java SpringBoot)
• Authentication Service
• Handle login/JWT creation
• Authorization Service
• Set roles based on user
• KYC Service (Registration)
• *TBD if submitting KYC data or FE submits through modal
• Receive and store KYC metadata
• HandleKYC updates
• Profile creation
• Persistence Service
• KYC CRUD
• Notification Service
• Drasil Back End
• Create wallet for given profile
• User key
• Mehen key
• Third party key
• Lock/unlock wallet
• AWS
• Partial architectural implementation
• Enough to test everything to this point
• Milestone Integration and Test

Milestone 3 (2 months)

Milestone 3 will focus on being able to link, remove, and use a banking account along with the USDM minting and burning service.

• Web App
• User Dashboard
• Bank linking/removal
• Bank deposit/withdraw
• About Us
• FAQ
• Mehen Back End
• Banking Service
• Bank linking
• Bank removal
• Deposit
• Transfer from user's bank to Mehen
• Not minting yet, just moving funds into my account like Coinbase or other exchanges
• Withdraw
• Transfer from Mehen to user's external bank
• Drasil Back End
• USDM Minting Service
• Create tx and sign
• USDM Burning Service
• Create tx and sign
• AWS
• Additional architectural implementation for testing
• Milestone Integration and Test

Milestone 4 (2 months)

Milestone 4 will be the final new development for the Mehen dApp. All initially intended functionality will be present and the system will be ready to go live.

• Web App
• USDM Minting
• USDM Burning
• Transaction History
• Contact Us
• Admin Web App
• Admin panel user handling
• Third party key holders
• Mehen DevOps team
• KYC alerts
• Review wallet locks
• Third party key/wallet handling
• Mehen Back End
• Banking Service
• Trigger minting
• Trigger burning
• Contact Us/Ticket Service
• Historical Service
• Drasil Back End
• Third party key handling for locked wallets
• Always be tx out
• AWS
• Additional architectural implementation for testing
• AWS CoudWatch Integration
• Milestone Integration and Test

Maintenance mode

• Main scope will include addressing user issues and suggestions to increase the usability and robustness of the dApp. However there are other drivers which could trigger additional dApp development. Examples include:
• Changes to the known legal framework
• Additional language translations to the website as we are granted legal operating ability in countries outside of the US.

Total Development Time: 8 Months

Total Maintenance Time: 4 months

Total Time: 1 year

[FEASIBILITY] Please provide a detailed budget breakdown.

Lead Software Engineer/Full Stack Developer (pre-tax): $50,400

This line item pays for 560 hours of a Lead Software Engineer/Full Stack Developer’s time at a rate of $90/hour. 480 hours are dedicated through Milestone 4. 80 hours are dedicated to maintenance and DevOps after Milestone 4 is completed.

Responsibilities for this role include (but are not limited to):

• UI/UX design and development
• Server infrastructure setup and deployment
• Mehen back end design and development
• Documentation and FAQs
• DevOps

Senior Front End Software Engineer (pre-tax): $15,000

This line item pays for 200 hours of a Senior Front End Software Engineer’s time at a rate of $75/hour. 160 hours are dedicated through Milestone 4. 40 hours are dedicated to maintenance and DevOps after Milestone 4 is completed.

Responsibilities for this role include (but are not limited to):

• UI/UX design and development
• DevOps

Senior Back End Software Engineer (pre-tax): $28,500

This line item pays for 380 hours of a Senior Back End Software Engineer’s time at a rate of $75/hour. 300 hours are dedicated through Milestone 4. 80 hours are dedicated to maintenance and DevOps after Milestone 4 is completed.

Responsibilities for this role include (but are not limited to):

• Server infrastructure setup and deployment
• Mehen back end design and development
• Documentation and FAQs
• DevOps

Drasil Sub-Contracting (pre-tax): $39,000

This line item pays for the costs associated with subcontracting out the Cardano network integration to Drasil. 260 hours are estimated at a rate of $150/hour. 200 hours are estimated through Milestone 4. 60 hours are estimated for maintenance and DevOps after Milestone 4 is completed.

Responsibilities for this role include (but are not limited to):

• Mehen wallet creation and handling
• Withdraws from the Mehen wallet to an external Cardano wallet
• Mehen stablecoin minting and burning
• DevOps associated with any of the above

Lead Systems Engineer (pre-tax): $32,300

This line item pays for 380 hours of a Senior Systems Engineer’s time at a rate of $85/hour. 300 hours are dedicated through Milestone 4. 80 hours are dedicated to maintenance activities and DevOps after Milestone 4 is completed.

Responsibilities for this role include (but are not limited to):

• System Requirements
• System Test Plan
• System testing
• Documentation and FAQs
• DevOps

Service Hosting and Infrastructure for 1 Year:  $10,000

These costs cover Mehen infrastructure for the dApp. Drasil has its own infrastructure and payments for services will be covered by an agreement between Drasil and Mehen.  

• Domain registration and DNS Services
• Testnet
• Website hosting
• Mehen back end service hosting
• Mainnet
• Autoscaling website hosting
• Load Balancer for the website
• Autoscaling Mehen back end service hosting

Marketing and Promotion: $18,460

Mehen Business Website hosting and service: $185 per month x 12 months = $2,220

Website build and graphics: $1,460

General marketing materials (Videos, PowerPoints, etc.): $4,800

Community manager part-time salary: $10,000

Total Budget

$193,660

[FEASIBILITY] Please provide details of the people who will work on the project.

Steven Fisher

Steven has been in the software field for over 23 years now. In addition to developing and fielding full stack solutions, he’s led teams though multiple system, preliminary, and critical design reviews. He has been involved in customer training for the products and services he has delivered and he’s used that time to push added value back into those projects.

He created a small LLC named Swift Crypto LLC ( https://www.swiftcryptollc.com )to mine Ethereum in 2021. Looking to the future, he became a Cardano enthusiast and single stake pool operator for ADA for Warriors https://4wardpool.swiftcryptollc.com. He is a core member of the FreeLoaderz Cardano group as well as a member of the Cardano SPA and xSPO alliances.

With FreeLoaderz, he is the lead web developer for SmartClaimz. The testnet version can be found here: https://rwd.freeloaderz.io and the repo for the front end can be found on FreeLoaderz’ Github here: https://github.com/FreeLoaderz/rwd-frontend

Additional information can be found on Steve’s LinkedIn page:

https://www.linkedin.com/in/stevenkfisher/

Torben Poguntke

Torben has over 20 years in multiple programming languages and is an expert in "Rust" which emphasizes high performance, type safety, and concurrency. He is the creative mind and lead developer behind Drasil: https://www.drasil.io

Additional information can be found on Torben’s LinkedIn page:

https://www.linkedin.com/in/tpoguntke/

Benjamin Ethington

Benjamin is a highly creative, motivated, and innovative person with a passion for blockchain technologies. One of his strengths is a love for learning and quickly adapting to new technologies. He is analytically minded with strong critical thinking skills and the ability to effectively communicate complex ideas to his team and others. He is a team player with experience in Agile Development utilizing Scrum. His last 5 years of experience has been working with an innovations team for traditional banking and insurance systems.

Additional information can be found on Benjamin’s LinkedIn page:

https://www.linkedin.com/in/benjamin-ethington/

Darlington Wleh

Darlington is a highly respected member of the Cardano community with 20+ years of experience in cloud technologies. He spends a large portion of his time mentoring students in Kenya. His partner Stephanie has over 10 years bridging the gap between technology and people and empowering them through a variety of non-profit entities.

Additional information can be found on Darlington’s LinkedIn page:

https://www.linkedin.com/in/profd2004/

TBD Systems Engineer

[FEASIBILITY] If you are funded, will you return to Catalyst in a later round for further funding? Please explain why / why not.

Further funding for this effort will not be requested. This is a self-contained proposal to create, deploy, and give some maintenance runway. The funding requested in this proposal will cover the cost of site hosting and developer maintenance for the first year. Site revenue will cover the costs beyond that time frame.

[FEASIBILITY] Are you or any member of your team working on any other proposals in this Fund9?

[FEASIBILITY] Are you or your team working on any other proposals from previous Funds?

[AUDITABILITY] Please describe what you will measure to track your project's progress, and how will you measure these?

The Gitlab repo will contain a list of tasks/issues that need to be completed. These tasks are tied to project milestones. Each milestone has an end date. Progress will be measured by completing these tasks for the current milestone before the milestone end date.

[AUDITABILITY] What does success for this project look like?

Incremental project development success would be hitting all markers for each milestone. Deploying the Mehen dApp with full stated capabilities at the end of Milestone 4 would be the final project development success.

As a project, the highest success achievable would be if the Mehen stablecoin, USDM, becomes the de facto stablecoin on Cardano. Disregarding that, success would be continued growth of user accounts and continued growth of USDM in circulation.

Other success markers would be the number of DEXs and DeFi platforms that hold USDM and the ability to give back to the community via project funding. Further information about project funding will be available on the Mehen website: https://www.mehen.io

[AUDITABILITY] Please provide information on whether this proposal is a continuation of a previously funded project in Catalyst or an entirely new one.

This is a new proposal.