jakiro
author:Prathik Desai, Source: Token Dispatch
It feels familiar every week lately – another stablecoin release, and once again trying to change the direction of value.First, we see the bidding war for Hyperliquid to issue USDH; then we discuss the trend of verticalization to acquire U.S. Treasury yields.Now, it is the native mUSD of MetaMask.What are all these strategies connected?Distribution capability.
Distribution capabilities have become a kind of cheat code, not only in the cryptocurrency space, but also in various fields, in order to build a thriving business model.If your community has millions of users, why not take advantage of it and put the tokens directly into their hands?However, this doesn’t always work.Telegram has tried to achieve this with TON, claiming to have 500 million message users, but these users have never moved to the chain.Facebook has also tried to do this with Libra, believing that its billions of social media accounts can form the basis of a new currency.In theory, these two projects seem doomed to succeed, but fail in practice.
This is probably why MetaMask’s mUSD (with fox ears and the “$” symbol on the top) caught my attention.At first glance, it is no different from other stablecoins—backed by regulated short-term U.S. Treasuries and issued through a framework developed using the M0 protocol by Bridge.xyz.
But what is different about Metamask’s mUSD in the current $300 billion stablecoin market, which is duopoly?
MetaMask may be entering a highly competitive field, but it has a unique selling point that other competitors cannot match: distributed.MetaMask has 100 million annual active users worldwide, and its user base is almost unmatched.mUSD will also be the first stablecoin issued natively in a self-custodial wallet, allowing users to purchase, exchange, and even spend in the store through fiat currency.Users no longer need to look for exchanges, bridge across chains, or deal with the hassle of adding custom tokens.
Telegram doesn’t have the fit between this product and user behavior, and MetaMask does it.Telegram attempts to transfer its messaging users to the blockchain for decentralized financial applications.MetaMask improves the user experience by integrating native stablecoins into the application.
Data shows that this move is adopted very quickly.
MetaMask’s mUSD market cap soared from $25 million to $65 million in less than a week.Nearly 90% of the funds come from Linea, the Layer 2 platform inside ConsenSys, which shows that the interface of MetaMask can effectively guide liquidity.This leverage is similar to the exchange’s past operations: in 2022, Binance automatically exchanged deposits for BUSD, causing circulation to soar overnight.Whoever controls the user will control the token.MetaMask has over 30 million monthly active users and has the largest number of users in the Web3 space.
This distribution capability will distinguish MetaMask from early participants who tried to build sustainable stablecoins but failed.
Telegram’s grand plan failed in part by regulatory issues.MetaMask circumvented this problem by working with Stripe’s issuer Bridge and endorsing each token with short-term Treasury bonds.This meets regulatory requirements, and the newly introduced GENIUS Act in the United States also provides a legal framework for it from day one.Liquidity will also be the key.MetaMask is injecting mUSD pairs into Linea’s DeFi, betting that its internal network can consolidate its applications.
However, distribution does not guarantee success.The biggest challenge facing MetaMask will come from existing giants, especially in a market that has been dominated by several giants.
Tether’s USDT and Circle’s USDC have accounted for nearly 85% of all stablecoins.Third place is Ethena’s USDe, which has a circulation of up to $14 billion, attracting users due to its revenue.Hyperliquid’s USDH is just launched to reinvest exchange deposits into its ecosystem.
This brings me back to this question: What exactly does MetaMask want mUSD to be?
It seems unlikely that the USDT and USDC will have direct challengers.Liquidity, exchange listing and user habits are all beneficial to existing giants.mUSD may not require head-on competition.Just as I expected Hyperliquid’s USDH to benefit its ecosystem by delivering more value to the community, mUSD is likely to be trying to get more value from existing users.
Whenever a new user deposits through Transak, whenever someone exchanges ETH for a new stablecoin within MetaMask, and whenever they swipe a MetaMask card in the store, mUSD will be the first choice.This integrates stablecoins as the default option within the network.
This reminds me of days when I need to bridge USDC between Ethereum, Solana, Arbitrum and Polygon, depending on what I need to do with my stablecoin.
And mUSD ends all the tedious bridging and exchange.
Then there is another important gain: the rate of return.
With mUSD, MetaMask can earn profits from U.S. Treasuries that support the token.Every $1 billion in circulation means tens of millions of dollars of interest flow back to ConsenSys each year.This will transform the wallet from a cost center to a profit engine.
If only $1 billion of mUSD is backed by equivalent U.S. Treasury bonds, it can earn $40 million in interest income per year from the earnings.By comparison, MetaMask earned $67 million in revenue from the fees it collected last year.
This can open up another passive, important source of income for MetaMask.
However, there is one factor that makes me feel upset.For years, I have considered a wallet to be a neutral signature and sending tool.mUSD blurs this line, turning the neutral infrastructure tool I once trusted into a business unit that profits from my savings.
Therefore, distribution is both an advantage and a risk.It may make mUSD the default sticky choice, and it may also raise questions about bias and lockdown.If MetaMask adjusts the redemption process to make its own token path cheaper or preemptively display, this could make the world of open finance less open.
There is also the problem of fragmentation.
If each decentralized wallet starts issuing its own dollar, it can create multiple closed currencies instead of the interchangeable USDT/USDC double oligopoly we have now.
I don’t know where this will go.MetaMask integrates mUSD with cards, which blocks the financial cycle of purchase, investment and consumption well.The first week of growth shows that it can overcome the barriers in the early stages of release.However, the dominance of existing giants shows how challenging it is to climb from millions to billions.
I don’t know where this will go.MetaMask completes the financial cycle of buying, investing and consuming mUSD well by integrating mUSD with cards.The first week of growth shows that it can overcome the barriers to the early stages of release.However, the dominance of existing giants shows how challenging it is to climb from millions to billions.
Between these realities, it may determine the fate of MetaMask’s mUSD.
