As of May 5, 2024, stablecoins have amassed a market capitalization exceeding $160 billion, as reported by CMC. This remarkable growth in value is largely attributed to the escalating global demand for stablecoins.
While the market predominantly features dollar-backed stablecoins, Markus Franke, the Founder and CEO of Mento, delivered a presentation at the Token2049 in Dubai, where he highlighted the pivotal role of non-dollarized stablecoins in propelling the next wave of adoption of Web3 financial assets worldwide.
Franke noted that Mento is poised to become a vital platform driving this transformative shift in the world in the years to come.
What is Mento?
Mento is a platform developed by Mento Labs that enables the creation and management of transparent, stable digital assets. The mission of Mento Labs is to facilitate the real-world adoption of digital assets by providing technological solutions for launching and operating stable value cryptocurrencies.
The Mento platform is designed around the core principles of transparency, decentralization, stability, and sustainability. It allows partners to launch and operate stable digital assets in a transparent manner.
This includes supporting the creation of stablecoins pegged to various fiat currencies, such as the Celo Dollar (cUSD), Celo Euro (cEUR), Celo Real (cREAL), and CFA Franc (eXOF).
The Mento platform utilizes an Oracle-based mechanism to maintain the stability of the stablecoins it supports.
This mechanism allows users to mint new stablecoins by depositing the equivalent value in the native cryptocurrency, and to burn stablecoins in exchange for the native cryptocurrency.
This helps ensure the stablecoins maintain their peg to the underlying fiat currency. Mento Labs was founded in 2022 as a spinoff from cLabs, the team behind the Celo blockchain.
Why Mento?
“Today you can send a stable coin transaction that costs less than a basis point in fees and you can pay for these gas fees also in stable coin which I think is a great use case,” he told the audience.
However, revealed that there is even a dire need for today’s “non-dollar stable coins” because various local currencies across different markets play a crucial role in driving the next wave of adoption.
The founder also told the audience about the increasing popularity of stablecoins worldwide, citing their widespread use in payments, remittances, and savings.
He highlighted the challenges faced by individuals and businesses in regions with high inflation rates, such as Africa and Latin America, and proposed stablecoins as a solution to mitigate currency depreciation risks.
He stated that Mento facilitates the generation and trading of diverse local currency stablecoins, granting users access to stable assets and promoting financial inclusivity and accessibility.
Additionally, he said that Mento’s impact extends to transforming FX trading, microlending, equity funding, and remittances.
He went on to say that what will drive this stablecoin innovation in the Mento platform is its Stablecoin Factory. The Stablecoin Factory is an open-source infrastructure for local currency stablecoins that is designed to simplify the process of launching new assets in the cryptocurrency space.
It will serve as a no-code toolkit that will enable users to create and deploy new stablecoins in a permissionless and decentralized manner.
It will empower future operators to create new stablecoins using smart contracts and provide essential parameters such as a reference price feed, collateral asset, and name/ticker for the token.
Once these parameters are specified, the Stablecoin Factory will automatically deploy a series of smart contracts that collectively form a fully functional decentralized stablecoin ecosystem.
These smart contracts include an ERC-20 token contract, allowing for the issuance and transfer of the stablecoin, a Vault Factory to facilitate interactions with borrowers, and a Stability Pool designed to provide liquidity for necessary liquidations.
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