M^0 and Noble Aim to Challenge Tether’s $136 Billion Market Share
M^0, a decentralized stablecoin infrastructure layer, introduces a modular architecture and innovative revenue model. Its first distributor, Noble, unveils the Noble dollar, USDN, aiming to disrupt the stablecoin market.
Tether has historically dominated stablecoin issuance, with its Ethereum market share dropping to 30% in 2022 due to competition from Circle's USDC and Binance's BUSD. Despite this, Tether maintains a strong presence on the Tron blockchain.
Robbie Petersen from Delphi Digital highlights M^0's potential to challenge Tether's dominance, noting its unique approach.
A New Framework
M^0 operates as a multi-issuer protocol, allowing issuers to adhere to protocol rules rather than centralized mandates. Its main stablecoin, M, enables the creation of custom-branded stablecoins, termed M-extensions, with the Noble dollar being the first.
This system offers programmability for issuers to allocate yield to liquidity pools, users, or stakeholders. Greg Di Prisco, co-founder of M^0, claims this structure enhances scalability, safety, and liquidity compared to traditional models.
Petersen points out that current dapps do not capture value generated by stablecoin issuers. M^0’s model could turn US Treasury yield into a significant revenue source for apps, potentially establishing a new business model: Selling Stablecoin Distribution as a Service (SDaaS).
Noble plans to distribute 100% of USDN's native yield to token holders initially, according to co-founder and CEO Jelena Djuric.
Djuric emphasizes Noble's frictionless growth strategy, highlighting zero transaction fees for using stablecoins and the advantages of the Cosmos and IBC ecosystems.
Noble previously facilitated the integration of USDC into IBC-connected chains. Djuric describes USDN as a complementary addition to USDC on the Noble chain, likening M^0’s combination to a partnership between Circle and MakerDAO.
Modularity Meets Interoperability
M^0 addresses the needs of appchains and fintech providers wishing to launch branded stablecoins without managing collateral or interoperability, which is integrated within the M protocol.
Di Prisco states that collateral management is streamlined, contrasting it with other issuers like Paxos that require extensive negotiations. M^0 allows rapid deployment of branded stablecoins.
Issuers are required to maintain bankruptcy-remote SPVs and hold only short-term T-bills with daily collateral checks to ensure compliance.
All M-extensions will be fungible by default, with some flexibility for brand partners regarding exchanges with different distributors.
Noble's modular design supports ecosystem expansion, particularly with the upcoming IBC Eureka upgrade and integrations with wormhole-supported chains, enhancing USDN's market reach.
The Noble Dollar will launch alongside a points campaign tied to a future Noble token, promoting adoption.
The emergence of multiple yield-bearing stablecoins suggests that future applications may start with base yields, challenging traditional non-yield bearing models.