Mountain Protocol USDM STEP Application

Applicant information

Name: Mountain Protocol
Address (Headquarters): Rosebank Centre, 5th floor, 11, Bermudiana Road,
City, State, Postal Code: Pembroke, Hamilton, HM08.
Country: Bermuda

Primary contact

Name: Martin Carrica
Title: Co-founder and Chief Executive Officer
Country: United States
tg: @mcarrica

Key Information

  • Expected Yield:

5% APY (as of May 1st)

Note that APY is determined by Mountain Protocol and can change based on multiple factors, including US Treasury rates changes.

  • Expected Maturity:

USDM can be redeemed at any point 1:1, similar to leading stablecoins.

USDM Reserve maturity is kept below 60 days, as per investment mandate.

  • Underlying asset:

Short-term US Treasury Bills, 60 days average maturity. See investment mandate - link

  • Minimum/Maximum transaction size:

Minimum transaction size of $100,000

  • Current AUM for product:

US$ 52,006,853 million as of May 1st, 2024, of which US$ 3,332,331 is on Arbitrum.

  • Current AUM for issuer:

Same as above. Mountain Protocol has only one product.

  • Volume of transactions LTM:

Total: $1.38 billion volume in 5,056 transactions as of Apr 30th, 2024, since our launch in September 2023.

  • Source of first-loss capital:

USDM is overcollateralized to cover for interest rate risk. This protects USDM solvency against a sudden 200bp rate increase in the reference rate. First-loss capital is provided by Mountain Protocol from VC capital and retained earnings.

Basics and background

  1. How will this investment improve Arbitrum’s RWA ecosystem?

USDM is a permissionless and regulated yield-bearing stablecoin, backed by US short-term Treasury Bills. Its permissionless fashion allows its holders to trade and utilize the coin without restrictions, besides interacting with US holders and other sanctioned jurisdictions (see Terms and Conditions). Mountain Protocol Limited is a prudentially regulated entity by the Bermuda Monetary Authority (License #202302512), safeguarding holders rights.

All USDM is backed by short-term Treasury Bills, with an average maturity of 60 days, and with an overcollateralization rate of ~5%. USDM has 1:1 mint and redemption capacity for USDC and USD. There are no mint nor redemption fees. All these imply a very low market and protocol risk, securing a coin pegged to $1 with costs reduced to minimum.

USDM supports Arbitrum’s RWA ecosystem by providing a very low risk building block that can be composed easily by virtue of being a permissionless ERC20. Examples of this are the existing USDM/USDC Curve pools and the upcoming USDM/hnUSD, wUSDM/wstETH, and wUSDM/Grai pools, as well as the usage of USDM for SOFR interest rate swaps (by IPOR) and the usage of USDM as collateral on derivative protocols (by HMX and AARK).

USDM has also been approved by the BMA, the largest global reinsurance regulator, for usage as collateral for insurance policies via Nayms for a Florida Hurricane policy. This is a case example of USDM enabling real world use cases of crypto in regulated industries.

  1. Identify key management personnel and individual experience. Also include third parties utilized for managing assets and their qualifications.

Management personnel

Martin Carrica: Founder and CEO of the Company. Experienced finance leader, launching new banking products across geographies (Latam & USA) in both Retail and Commercial verticals, as part of McKinsey and in personal capacity. Extensive experience on banking risk including conceptual Basel III implementations and practical bank receiverships.

Matias Caricato: Founder and CTO of the Company. Experienced tech leader with 10+ years in the software industry. Extensive CeFi experience, most recently building and scaling, in the role of CTO, the largest CeFi exchange in Argentina with 1M+ users and 100M+ in TVL.

Jeffrey Baron: Board Member and Senior Representative. Currently serving as Chief Compliance Officer for Coinbase Bermuda. Formerly worked at Bittrex, HSB, and the Bermuda MInistry of Defense.

Firas Habach: Board member. Currently serving as Head of Compliance & MLRO at Sygnum Bank AG. Formerly worked at JP Morgan, Deutsche Bank and CitiBank.

Nic Carter: Board Member. General Partner at Castle Island Ventures.

Erika Gonzalez: Chief Compliance Officer and MLRO. 5 years of experience in crypto compliance.

Matthew Homer: Board Advisor, investor at Department of XYZ, formerly NYDFS regulator.

Service providers

Mountain Protocol engages with regulated investment managers, brokers and custodians. Following requirements from such players, they were disclosed via private email.


Mountain Protocol holds a DABA license for the (a) issuance of digital assets and (d) providing custodial services. The DABA licensing regime follows the following 3 pillars: (a) Prudential, (b) Compliance and (c) Cyber.

In practice this means that all products and services (and changes) require approval by the regulator to ensure the safety and soundness of Mountain Protocol’s products and services, including USDM.

Complying with the regulatory requirements includes monthly regulatory checkpoints, annual reporting, having an internal audit function, undergoing external audits for finance, risk, compliance and cyber; as well as approvals for changes to vendors or products.

The DABA regime establishes 3 licensing stages: T, M and F.

Mountain Protocol currently holds an “M” (Modified) license, which is granted to new operators (startups) in order to haven enhanced supervision prior to upgrading to “F” (Full) license.

Currently, Mountain Protocol’s M license expires July 26th (12 months after issuance). Mountain Protocol will be submitting an application for an “F” license in the coming months and, if required, will renew the current Class M license to ensure that the company can continue operations until the Class F is approved.

  1. Describe any previous work by the entity or its officers/key contributors similar to that requested. References are encouraged.

The founders, executive team, and board members have extensive experience working with (i) regulated finance and/or (ii) centralized crypto.

For references regarding product diligence and experience, Mountain Protocol can provide confidential introductions to customers as long as it is agreed to protect their privacy.

  1. Has your entity or its officers/key contributors been subject to an enforcement action, criminal action, or defaulted on legal or financial obligations? Please describe the circumstances if so.


  1. Describe any conflicts of interest for your entity and key personnel.

No conflicts of interest.

  1. Insurance coverages, guarantees, and backstops Name of insurer or guarantor Per incident coverage Aggregate coverage

Directors and Officers insurance, provided by RELM insurance.

  1. Historical tracking error in your proposed product, or similar to that being proposed Product 2024 YTD 2023 2022 2021

CoinMarketCap might show USDM price with some historical price error, now corrected. Mountain Protocol price today, USDM to USD live price, marketcap and chart | CoinMarketCap

For correct references on USDM historical price, please check on Mountain Protocol USD Price: USDM Live Price Chart, Market Cap & News Today | CoinGecko

  1. Brief reason for above tracking error

Issue arose because MEXC exchange listed a USDM token which is not Mountain Protocol’s, but a so-called “USD Mapped Token”. As CoinMarketCap price feeds automatically by API scraping, they wrongly considered that token with the same ticker symbol, disrupting our coin’s price. Although they have corrected it, they haven’t done it for the period in which the error was present.

  1. Please describe any experience your firm has in working with decentralized organizational structures

The company serves various DAOs for their treasury management needs, similar to this engagement.

  1. What is your entity’s current assets under management, assets held in trust, total value locked, or equivalent metric for your legal structuring?

US$ 52,006,853 as of May 1st, 2024

  1. How many of these assets held are present on Arbitrum One, if any?

US$ 3,332,331 is on Arbitrum as of May 1st, 2024

Plan design

  1. Please describe your proposed product, including a description of the underlying assets and, if more than one asset, the proposed allocation among assets and general investment guidelines. Where appropriate, include targeted maturity mix and credit quality. Attach supplementary documents as appropriate.

USDM is a prudentially-regulated stablecoin, fully backed by short term US Treasury assets.

USDM is a rebasing ERC20 token, already live and traded in Arbitrum.

USDM Reserves are composed strictly by US Treasury assets including Treasury Bills, Repos, MMF and ETFs that use the former. Full investment mandate and attestations can be found here and here

  1. Do investors have any shareholder, investor, creditor or similar rights?

USDM holders have the right to redeem USDM at a fixed $1 from Mountain Protocol Limited, the issuer of the token. These rights are governed by Bermuda’s Digital Asset Business Act (DABA).

DABA’s regulation recognizes customer assets as separate from the issuers and mandates that the company makes arrangements to ensure the return of client assets in the event the DAB is placed into liquidation (SOURCE). All DABA entities are required to be Bankruptcy remote unless customers explicitly choose to rehypothecate, which requires licenses that Mountain Protocol does not hold.

For Mountain Protocol, this is done by holding USDM reserves under USDM Reserves, which is fully segregated from Mountain Protocol Limited.

In case of insolvency or loss of license of Mountain Protocol, the BMA will designate a JPL that is in charge of managing the redemption of USDM and sale of USDM Reserves to meet such needs.

  1. Describe the legal and contractual structuring for your product including regulatory bodies overseeing your business and the product and identifying all legal jurisdictions interacting with your product. Attach supplementary documents as appropriate.

Mountain Protocol Ltd is 100% owned by Mountain Holdings Ltd.
Board Of Directors: Martin Carrica, Matias Caricato, Nic Carter, Jeffrey Baron, and Firas Habach.

Mountain Holdings Ltd. is owned by the Founders and Investors.
The Board of Directors is composed of Martin Carrica and Matias Caricato.

Mountain Protocol is licensed and regulated by the Bermuda Monetary Authority (BMA), the unified financial regulator in the country, under the Digital Asset Business Act (DABA).

License #: 202302512 (

  1. Would Arbitrum’s assets be bankruptcy remote from your own entity and its officers/key contributors? If so, please explain the legal and contractual basis. On a confidential, non-reliance basis, provide any third party legal opinions to support the conclusions.

All assets issued in Bermuda are required to be Bankruptcy remote in order for a license to be issued, under DABA. DABA’s regulation recognizes customer assets as separate from the issuers and mandates that the company makes arrangements to ensure the return of client assets in the event the DAB is placed into liquidation (SOURCE).

This means that Arbitrum’s USDM holdings would be bankruptcy remote, along with all other USDM holders’ claims. A legal opinion can be shared under NDA if required.

  1. How are Arbitrum’s assets protected vis-a-vis the bankruptcy of the brokerage or applicable financial institution (e.g., bank deposit insurance, securities insurance, etc.)?

All custody of securities is done under Mountain Protocol’s USDM Reserves, with no rehypothecation, which protects the USDM Reserves in case of custodian insolvency.

All institutions that Mountain Protocol works require a risk assessment and subsequent no-objection by the regulator, to ensure safe handling of assets. Bankruptcy of brokers/custodians fall under the standard re-allocation process and don’t fall under the bankruptcy estate of the broker/custodian as assets are customer assets held off balance-sheet.

USDM Reserves hold nominal bank deposits, stablecoins and off-ramper claims. This allows for a large portion of assets to be isolated from bankruptcy.

  1. Does the Issuer issue more than one asset? If so, what is the priority relationship between different asset classes?

No. The USDM is the only asset issued by Mountain Protocol.

The wUSDM token is a ERC4626 vault token issued by a permissionless smart contract that requires the usage of USDM.

  1. Provide a detailed cash flow diagram that shows the flow of funds from ARB/Fiat conversion, investment in underlying asset, payment of expenses, sale of underlying asset, and repayment (Fiat/ARB conversion), including the counterparties and legal jurisdictions involved.

Purchases and redemptions should be made with USDC or USD (fiat). Mountain Protocol does not accept ARB tokens to purchase USDM. We can contact the Arbitrum Treasury with Market Makers that already work USDM, in case needed.

Once onboarded into the Mountain Protocol’s platform, any USDC deposit will be automatically converted into USDM, which can be later withdrawn.

USDC is offramped at least daily into fiat and sent to one of our brokers for the purchase of eligible USDM Reserves assets (e.g., Treasury Bills). Purchase is done by an independent investment manager to ensure compliance with the investment mandate.

All accounts require whitelisting to ensure a secure flow of funds. This includes a non-executive approval from our “3rd party signer”, to avoid collusion.

This process is summarized in the following chart:

Counterparties and legal jurisdictions description attached on private email.

  1. Describe anticipated tax consequences (if any) in transacting on the underlying and/or receipt of yield.

Mountain Protocol does not provide tax advice. The specific tax implications will depend on the foundation’s facts and circumstances.

Mountain Protocol, as a Bermuda entity, has no tax withholding requirement nor does the usage of USDM generate any tax liabilities with Bermuda.

  1. Describe the process and expected timeline for liquidation of assets, if given instructions to do so by Arbitrum governance.

For converting USDM back to USDC, Arbitrum governance should (i) access the Mountain Protocol platform, (ii) deposit the USDM into the designated wallet, (iii) request a withdrawal (to a whitelisted wallet), (iv) wait for transaction to complete.

SLA for withdrawals is 2 business days. However, this is usually completed in a shorter period, with most happening T+0. To do so, we have partnered with Market Makers like Wintermute for a repo-like agreement (details here) to facilitate such liquidity.

  1. What amount of first-loss equity will Sponsor provide to ensure over-collateralization, how is the first-loss equity denominated, and what is the source of capital?

USDM is overcollateralized to cover for interest rate risk. This protects USDM solvency against a sudden 100bp rate increase in the reference rate. First loss capital is provided by Mountain Protocol from VC capital and retained earnings.

  1. Describe the liquidity and stability of the proposed underlying assets, including anticipated settlement times from the sale of the underlying to the repayment of ARB.

Liquidity: short-term Treasury Bills trade 100’s billions daily. This means that any amount bought or sold results in virtually no market price impact.

Stability: short-term TBills trade at par on secondary markets, even in times of distress. Note that the y-axis is measured in fractions of a bp.

SOURCE: link

  1. If relying on the blockchain for any of the transactional flows, please describe any blockchain derived risks and mitigations.

Blockchain processes involve:

  • Minting/burning: performed with several layers of approval and into trusted wallets
  • Reward multiplier: the message for addRewardMultiplier is issued on chain daily. This process has been audited and has been operational for months across multiple networks
  • Custody: USDM holders can either (i) self-custody USDM or (ii) choose to custody USDM with Mountain Protocol, which is license to provide such custody. In the case of Arbitrum, the decisions could be made to custody in the same mechanism as the ARB treasury is being custodied today or to custody with Mountain Protocol.
  • Compliance: like any centralized issuers, we are required to comply with FATF guidelines and local AML/ATF requirements. This includes the freezing of sanctioned addresses, performed on chain.
  1. Does the product rely on any derivative product (swaps, OTC agreements)?


  1. List all the third party counterparties linked to your assets including and not restricted to prime broker if any, custodian, reporting agent, banks for derivatives or loans and provide primary contact details for the third party counterparties.

Shared on private email.

  1. Can you explain how is risk management (inv and operational) being done? Can you provide a copy of your risk management policy?

Investment Mandate

Risk Management Policy

The following documents were shared via private email:

  • Risk Management Policy
  • External risk audit, performed by global audit firm
  • External cybersecurity audit, performed by global cybersecurity firm focused on financial and technology services
  • Due diligence questionnaire, with extensive risk detail

Performance reporting

  1. What are your proposed performance benchmarks? If this is substantially different from the underlying assets, please explain why.

USDM reward rates are distributed daily on chain (sample transaction link). The annualized reward rate has been steady at 5% APY.

The rate is determined by Mountain Protocol based on many factors which include the collateral reward rate, market dynamics, interest rate expectations, and other factors.

  1. Describe the content, format, preparation process, and cadence of performance reports. This should include proof of reserves, if appropriate. Please include a sample report.

Mountain Protocol provides monthly attestations prepared by an external accounting firm from the UK. These attestations provide CUSIP level detail of holdings. Available at: USDM Reserves - Attestations | Mountain Protocol

  1. Who provides the performance reports in respect of the underlying assets?

Performance reports are provided by Nephos, a UK accounting firm, in the form of monthly attestation reports. The preparation of reports is done by an independent verification of assets by the Nephos team, which has “read” (or equivalent) access to all custody accounts.

  1. Describe any formal audit process and timing of such audits.

Mountain Protocol is mandated by license to perform yearly financial audits. The company’s statutory auditor is The Network Firm - link.


  1. Provide a copy of your standard contract, or one similar to what is being proposed here.

USDM terms and conditions are equal to all USDM holders. Terms and conditions can be found on our website on this link. USDM Rewards are described on 5.2 on terms and conditions.

  1. Fee summary: Inclusive of the full scope of services requested. Product Fee schedule If asset based Fee calculation for our plan if asset based Annual fee if flat fee Any other fees (including redemption or minting fees)

There are no performance/management fees to USDM holders and no fees for minting/redeeming. Mountain Protocol’s revenue is the spread between the net USDM Reserve yield and the reward rate. USDM reward rate is set by Mountain Protocol and has been 5% APY for several weeks. Note that USDM rewards are paid “net”, meaning there are no fees or charges on the rewards.

  1. Describe frequency of fee payment and its position vis-a-vis payment priority compared with other expenses (i.e., cash waterfall)

USDM rewards are distributed daily with a rebasing mechanism, via the execution of the addRewardMultiplier function.

Smart Contract/Architecture

  1. How many audits have you had and name of auditors? Please provide a copy of reports.

We have run two security audits (one for USDM and one for wUSDM), conducted by OpenZeppelin: GitHub - mountainprotocol/audits: Mountain Protocol Code Audit Reports

For full security overview, please visit the Security Center, hosted by openZeppelin: link.

More information on Mountain Protocol’s security program sent on private email.

  1. Is the project permissioned? If so how are you managing user identities? Any blacklisting/whitelisting features?

Project is permissionless. Centralized functions such as minting/burning and blocklisting are managed by the company. Access controls can be found here.

  1. Is the product present on several chains? Are there any cross chain interactions?

The product is available on Arbitrum, Ethereum Mainnet, Polygon POS, Optimism, and Base.

  1. Are the RWA tokens being used in any other protocols? Please describe the various components of the ecosystem


USDM is available on Curve on Arbitrum for swapping from and to USDC (link).

Also, a pool with wstETH will be created shortly, providing a more efficient bridge between USD and ETH assets on Uniswap.

In addition, there are plans to set up a USDM/hnUSD pool on Poolside and a wUSDM/Grai pool on Uniswap through Bunni.


Derivatives: USDM is being integrated on HMX and Aark.

Interest rate swaps: USDM is being integrated into IPOR as part of LTIPP.

Other: USDM is being integrated into Reserve Protocol as part of their stablecoin factory.


Chronicle provides a price feed oracle for wUSDM on Arbitrum (link)

  1. How are trusted roles/admins managed in the system? Which aspects of the solution require trust from users?

As any centralized issuer, Mountain Protocol and affiliated entities have access to core functions. Access controls can be found here: link.

Admins are distributed geographically and include both team members as well as third parties, to protect users from collusion. For Security Operations purposes, the admins are not disclosed.

  1. Is there any custom logic required for your RWA token? If so please give any details.

USDM is an ERC20 that follows a rebasing mechanism pioneered by Lido’s stETH. Functionality is being widely used, with stETH having a $30B+ market capitalization. USDM can be custodied and permissionlessly transferred in all wallets (e.g., Fireblocks, Safe, Metamask, etc.)


  1. Please attach any further information or documents you feel would help the screening committee or ARB tokenholders make an informed decision

Additional information shared by email to