Mehen: Onboarding Assistance

[GENERAL] Summarize your solution to the problem.

Mehen wishes to lower the barrier to entry unbanked creators and investors face by subsidizing the cost required to enter the Mehen ecosystem, including background check and ID verification expenses.

[GENERAL] Summarize your relevant experience.

Matthew Plomin, Founder of Mehen, has been involved in fiduciary TradFi for nearly fifteen years, managing US credit research for liquidity products. He has navigated multiple regulatory reforms in the US and European money market industries.

[IMPACT] Please describe your proposed solution.

Cardano needs a stable coin that can be directly converted into fiat. The Mehen team is building MUSD, a Cardano native asset that is the first fiat-backed stablecoin on Cardano.  Every MUSD token will be backed 1:1 with $1 of high-quality, liquid assets.

Building a fiat-backed Cardano native asset

It's basically cash but built as a Cardano native asset, and that's why it's better.

How MUSD works

It's fairly simple. 

Over time, the best performing stablecoins are those that:

1. Operate transparently

2. Are directly redeemable 1:1.

Mehen will issue and redeem MUSD 1:1 for USD, because every on-chain MUSD token will be backed by $1 in an account at a US bank. 

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

Individuals who would like to mint or redeem MUSD 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 MUSD into the connected wallet.

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

Of course Cardano network fees will apply, and small minting and burning fees will also apply.

Cardano native

With the development of multiple bridges from the Ethereum blockchain, non-Cardano native stablecoins are being bridged to Cardano. Unfortunately, the bridges can be costly, and to redeem the bridged version of the token back to fiat, it needs to go back across the bridge, costing additional transaction fees.

Since MUSD is a Cardano-native asset, it will be transferrable, versatile, and reliably compatible with smart contract applications. 

It can be sent peer-to-peer on the Cardano network to settle everyday transactions. 

Some stablecoins aren't so great

De-pegging, death spirals, token lockups, and minting shutdowns.

Even "good" fiat-backed stablecoins that work, hold their value, are convertible to fiat, and are easily purchased can be a raw deal. 

Tether and Circle, the companies behind the two largest fiat-backed stablecoins (USDT and USDC) keep the millions in interest generated by the fiat assets backing the coins.

You get a token for your dollar, you use the token on-chain, and later redeem it to get the dollar back. That's a pretty low bar.

Cardano can do much better. 

Reinvesting the proceeds on Cardano

Once the MUSD stablecoin achieves scale, we will launch the Mehen Foundation.

Mehen Foundation will receive a significant portion of the yield generated by the portfolio backing the MUSD coin, and then will re-deploy it in projects that are building the future of Cardano. 

Licensing

We are 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 MUSD token is always 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. 

People who operate money services businesses improperly or without required licensing can face severe criminal and civil penalties.

Mehen must, by law:

• Redeem MUSD tokens 1:1
• Safeguard personally identifying information
• Safeguard assets in the fiat portfolio backing the coin
• Not use any false, misleading, or deceptive advertising
• Not engage in unfair, deceptive, or fraudulent practices
• Maintain best practices for IT security

Mehen Finance LLC is a registered Money Services Business, and will be open for minting and burning MUSD 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. 

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

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

Creating a fiat-backed stable coin has several moving parts, and therefore several potential points of failure. The most pressing are:

1) Failure to raise enough funds to meet the minimum requirement of assets on hand to maintain licenses or pay licensing fees

To mitigate this, we are seeking Project Catalyst funds. A second, less appealing option is to approach VC funds, who would expect ROI to go to them, not to the community

2) Our stable coin is not widely adopted by the Cardano community and therefore does not become self-sustaining

If the people of Cardano do not readily accept and use the Mehen stable coin, then we have misjudged the needs of the community, and would need to adjust accordingly by performing more market research and remodeling the business structure.

3) ID/KYC becomes too cost prohibitive to keep end user costs low.

If the cost of meeting the legal requirements of our licenses exceeds revenue, the stable coin becomes unsustainable. We would need to raise onboarding fees, making the barrier to entry higher.

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

Establishing Operations of Mehen Finance

Please see our Project Catalyst proposal: Mehen Licenses for a detailed timeline.

DApp Website Creation

Please see our Project Catalyst proposal: Fiat-backed Stable Coin for a detailed timeline.

[FEASIBILITY] Please provide a detailed budget breakdown.

KYC services cost approximately $2 per individual. This proposal will allow over 5,000 people to receive KYC-verivied wallets.

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

The tram is doxxed on mehen.io

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

This project is self-funding.

[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?

Metrics:

An important measure of success for this portion of the Mehen stable coin project will be the global reach we will be able to have. We will track the geographic regions where Mehen is being used and making a positive impact in the world. The broader the reach, especially in underdeveloped countries, the greater the success!

Since another core tenet of the Mehen project is promoting and giving back to the Cardano community, we intend to 'run a tight ship,' establishing and growing Mehen stable coin in the most efficient and cost effective manner. In this way, we can ensure that we give the Cardano community the highest possible return in the form of an incubator for future Cardano projects.

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

First level of success: Mehen stable coin reliably sustains itself over time.

Second level of sucess: Through the stable coin, Mehen will have a presence on every continent. More countries reached = greater success.

A less tangible measure of success: we hope to foster economic growth in underdeveloped parts of the world, through the facilitation for global commerce and through the funding of new successful businesses.

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

Mehen is an entirely new project, entering Project Catalyst for the first time.

Sustainable Development Goals (SDG) Rating

8 - Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

9 - Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation

17 - Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development