What Properties of mUSD Function Similarly to Money?

As per Federal Reserve Bank, Money generally has three functions:

  • A store of value

  • A medium of exchange

  • A unit of account

mUSD has properties and use cases designed to serve these functions.

  • mUSD as a Store of Value

    A store of value is an asset that retains its value over time. Since mUSD is a stablecoin, it is designed to maintain its value even in volatile markets.

  • mUSD as a Medium of Exchange

    A medium of exchange is anything that represents a standard of value and facilitates the trade of goods or services. As a stablecoin, mUSD can be used worldwide for transactions.

  • mUSD as a Unit of Account

    A unit of account is a standardized measurement of value used to price goods and services (e.g., USD, EUR, YEN). mUSD has a target price of 1 USD (1 mUSD = 1 USD). While mUSD is not used as a standard measurement of value outside of the DeFi, it functions as a unit of account within DeFi, where the accounting or pricing is in mUSD rather than a fiat currency like USD.

Beyond Fed's definition, mUSD also serves two other important functions:

  • mUSD as an Interest-Bearing Asset

    Unlike USD holders, mUSD holders receive regular stable interest income on a daily basis, and they can stake mUSD to provide mUSD/2Pool liquidity (Curve Finance on Arbitrum) and earn LP fees + yield farming rewards. By offering interest income, mUSD serves as an attractive option for users looking for stable value and real yield on their holdings.

  • Standard of Deferred Payment

    mUSD is used to settle debts within the Meta Protocol (e.g., users utilize mUSD to repay loans and redeem their collateral assets).

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