MetaMask USD (mUSD): Our take on the MetaMask stablecoin

MetaMask has just launched its own MetaMask USD (mUSD) stablecoin, a stablecoin backed by the US dollar and compatible with the GENIUS Act. With 30 million users and a market cap of $100 million quickly peaking, the natural question is: Can mUSD compete with USDC and USDT?

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MetaMask USD is a 1:1 USD-backed stablecoin backed by short-term US Treasuries. But unlike USDC, which is issued exclusively by Circle, mUSD is based on unique modular architecture which divides the responsibility between three parties:

• MetaMask manages user experience and wallet integration
• Bridge (a subsidiary of Stripe) is responsible for issuance and regulatory compliance
• M0 provides basic technical infrastructure

This distribution of roles is strategically interesting: each player focuses on his expertise. But it also creates more potential points of failure than a traditional centralized model like USDC.

Compliance with the GENIUS Act: the real advantage of mUSD MetaMask USD is the first major stablecoin launched under the new US GENIUS Act which is expected to be adopted in July 2024. This is not a marketing ploy: this is a paradigm shift for the stablecoin industry.

Specifically, the GENIUS Law provides for:

Mandatory monthly audits of reserves. Unlike USDT, which has long lacked transparency, Bridge must publish a monthly audit report confirming that 100% of mUSD in circulation are covered by equivalent assets. These reports are public and available to all on the Bridge website.

Strict segregation of assets mUSD reserves are legally separate from Bridge assets. As a result, if Bridge goes bankrupt, your mUSD funds cannot be withdrawn creditors. This is a crucial protection that few stablecoins directly offer.

A clear legal framework for issuers and users. No more regulatory gray areas. Bridge operates under a US federal banking license with well-defined capital, reporting and compliance requirements.

For you, the investor: this significantly reduces regulatory risk. When the SEC or other regulators take action against non-compliant stablecoins (and they will), mUSD will already be in compliance.

Criteria million US dollars USDC US dollar Use of capital letters 100 million dollars 60 billion dollars 140 billion dollars 24-hour volume ~500 thousand US dollars ~8 billion dollars ~80 billion dollars To audit Monthly (GENIUS Act) Monthly Quarterly Reserves 100% US Treasuries 100% cash + treasury bonds Mixture (less clear) Blockchains Mainly Linea 15+ channels 20+ channels Bankruptcy protection Yes (legal segregation) Yes (Circle LLC reserves) Blurred Regulation Genius Act (USA) Strict regulation in the USA Offshore (controversial) Liquidity and Volume: Where is the mUSD? Data on the network does not lie. Here is where MetaMask USD stands 3 months after launch:

✅ Capitalization: $100 million (quickly achieved, stable growth)
❌ 24-hour volume: ~$500K (ridiculous compared to $80B USDT)
❌ Number of owners: ~8,000 addresses (USDC has millions)
❌ Trading pairs: Almost absent outside the Linea ecosystem

If you want to trade $50,000 mUSD for ETH, you are taking a risk significant slippage (the difference between the expected price and the actual execution price). On current mUSD/ETH pools, a $10,000 order can easily generate 0.5-1% slippage compared to 0.01% on USDC.

Risk #1: 86% of the offer is focused on Linea Of the $100 million in circulation, $86 million is on Linea, a second-tier blockchain set to launch in July 2023. We are talking about a blockchain that is not even 2 years old yet.

What does this mean specifically? If Linea experiences a critical error or significant overload, 86% of mUSD will instantly become unusable. It cannot be sold, transferred or even transferred to another blockchain. Your funds are blocked until the issue is resolved.

Compare that to USDC, which is deployed on over 15 different blockchains. If Arbitrum crashes, don’t panic. You still have USDC on Ethereum, Polygon, Optimism, Base, Solana and a dozen other networks. Multichain diversification is real protection not a marketing gimmick.

The conflict of interest is obvious. MetaMask and Linea are owned by Consensys. They are obviously interested in focusing mUSD activity on their own L2 to increase adoption, even if this strategy is not optimal for your security.

Long live decentralization!

Risk #2: Your funds may be frozen mUSD is a centralized stablecoin. Bridge can freeze your money at any time if:

• You used Tornado Cash or a mixer
• Your address is on the sanctions list (OFAC)
• A US court orders it

This is not a theory. Since 2020, Circle (USDC) has frozen more than $200 million worth of addresses, especially after the Tornado Cash sanctions in August 2022.

Comparison with LUSD (liquidity):

million US dollars LUSD Freezing power Yes, in general No, it is impossible Resistant to censorship No Yes OFAC compliance Mandatory None Decentralization Centralized (bridge) 100% decentralized LUSD is backed by ETH via immutable smart contracts. No one can freeze your LUSD even the Liquity team.

The compromise is as follows:

• mUSD = Regulatory safety but possible censorship
• LUSD = Censor resistant, but there is a risk of liquidation if ETH falls

If you value true decentralization and immutability, LUSD remains the best option. If you prioritize compliance and legal peace of mind, mUSD will get the job done.

Read also : My opinion on LUSD: I analyze the best stablecoin ETH-maxis

…and long live decentralization!

MetaMask has launched a Visa debit card that allows you to spend cryptocurrency directly, a mUSD is easy to integrate with her. In theory, you can top up your card and pay for products without any fees for converting cryptocurrency to fiat currencies.

Read also: Our opinion on the MetaMask bank card

Problem? The MetaMask card is not available in France, and even where it is available (US, UK), our opinions are mixed.

What works well:

• Instant wallet replenishment in mUSD
• No conversion fee as mUSD = USD
• Smooth interface, well integrated into the MetaMask app

Practical limitations:

• Standard Visa fees for each transaction (1-3% depending on the merchant)
• High fees for withdrawing cash from ATMs ($2.50 + 2% of the amount)
• Very limited geographic availability at this time

A real use case. If you live in the United States and already use MetaMask on a daily basis, the + mUSD card will be interesting for occasional payments. But for intensive use, we invite you to familiarize yourself with this card:

⭕ 21M Opinion: mUSD is a stablecoin… just like any other, just not as good IN 21M ⭕ we closely follow the evolution of stablecoins, because they are the basis of everything: profitability, liquidity, and now… and compliance.

21M ⭕ is the community of crypto investors behind the 25% Club, a strategy designed to generate a steady return of 25% per year for 10 years without active trading.

We see in mUSD a harbinger of significant changes : transition from closed banking system to open, programmable and transparent systems.

mUSD is not (yet) a stablecoin for DeFi. It transitional a stablecoin designed to bring Web2 users closer to the crypto world with a clear legal framework and impeccable UX.

It won’t make you any money, but will create a foundation for the next generation of productive stablecoins: those that will finally share a percentage of reserves with their owners.

But today to your stablecoins worked without depending on a centralized actor, you need to go even further.

This is what we do every day in 25% Club : convert your stablecoins to real and measurable profits no trade, no promises, with controlled risk.

Source: journalducoin.com