Use Min DAO treasury funds to mint USDM and seed USDM/ADA pool

This proposal advocates for the Minswap DAO to utilize its treasury funds to mint USDM, the first 1:1 fiat-backed stablecoin on Cardano, and subsequently establish a 50/50 USDM/ADA liquidity pool within the Minswap DEX.

This Proposal has several advantages such as: having the largest ADA/USDM Pool of all Cardano DEXs, Sustainable Yield Generation for the DAO, Greater Flexibility for Users, Enhanced Security and Stability through the fiat stablecoin system. You can read more here. The Proposal also has its risks, such as Peg Stability, Liquidity (meaning how quick USDM can be redeemed for 1$) and solvency so that there is at least 1 US Dollar (or equivalent in assets) backing 1 USDM. You can read a report by community member Marco covering how these are addressed here.

Regarding the implementation, a 3rd party (likely related to Mehen) would be minting USDM. Then, there would be a double signature transaction. The transaction would send ADA from Minswap DAO wallet to the 3rd party’s wallet and send USDM from the 3rd party’s wallet to Minswap DAO’s wallet. Then, both parties would review and provide the signature to the transaction. After that, the transaction body would be assembled with both signatures and submitted to the blockchain.

The funds would come from the DAO Treasury ADA wallet, which currently has 825,646 ADA or 521k USD. You can see a breakdown of all DAO Treasury Assets here. ADA would be swapped for USDM at the opening ADA/USD price of the day according to CoinGecko. Then, the equivalent ADA would be taken to provide liquidity on Minswap. The resulting LP Tokens would be staked for farming rewards.

The options for voting can be seen below. In the near future, a working group would be set up that would have discretion over the timing, sizing and management of these funds. For now, this responsibility would remain with Minswap Labs. Not all USDM would be minted all at once, it would be done through DCA over a 3-6 month period. All transactions would be shared transparently.

Options for voting:

• Option 1: Mint up to 40k USDM and pair it with an equivalent value of ADA (15.62% of the ADA in DAO wallet)

• Option 2: Mint up to 20k USDM and pair it with an equivalent value of ADA (7.8% of the ADA in DAO wallet)

• Option 3: Do not proceed with this Proposal