Introduction and Overview

Powered by Succinct’s SP1 zkVM, USDm introduces a fundamentally new paradigm for stablecoins, where balances are composable across protocols without being transferred, where zero-knowledge proofs enforce privacy, and where every interaction is verifiable without requiring trust. Users mint USDm through CDP mechanics backed by MON/ETH and Security Operators, then wrap to wUSDm. This enables a powerful proof-based system where balances can be attested, locked, and spent without leaving a trail or relinquishing control.

What emerges is a programmable stablecoin architecture; verifiably collateralized, yield-generating, and composable across DeFi’s modular stack. Unlike traditional stablecoins, USDm introduces a native Proof-Economy that turns cryptographic attestations into a yield-bearing asset class.

I. A Post-Transfer Model for Stablecoins

Today, stablecoins effectively mitigate volatility for money transfer but fall short on privacy, capital efficiency, and modular utility. Every action requires token custody, and every user exposes themselves to telling the world about every transaction they make.

USDm inverts this model. Users can prove they own USDm and submit those proofs to integrated protocols without ever transferring or bridging tokens. These zero-knowledge proofs (generated via SP1) are submitted to protocols that integrate a verifier. No tokens move, and no onchain trail is created. The protocol is composed around proofs, not balances, building the foundation of proof-native capital.

II. Architecture Overview

2.1 CDP Minting and Wrapping

Users mint USDm by depositing MON as collateral into smart contract vaults on Monad or ETH into smart contract vaults on MegaETH and then Security Operation vaults, meeting a 20% collateralization requirement on Ethereum Mainnet. This ensures deterministic over-collateralization, similar to MakerDAO, but with Monad’s L1 speed and finality, also MegaETH’s fast processing. USDm can then be wrapped into wUSDm, a variant optimized for ZK balance proofs.

2.2 Proof Generation

Users can wrap USDm into wUSDm, which is optimized for proof composition. Through SP1, users can now attest to their wUSDm balance. Each proof locks the referenced balance for 24 hours. Ten proofs? Ten days locked. This introduces a usage-based microeconomy to proof generation where proofs become priced objects.

2.3 Usage Without Custody

Instead of depositing tokens into a protocol, users submit a valid proof. The protocol verifies it via SP1, simulates trading/lending/spending logic, and returns a new state proof. If users want to unwrap their wUSDm, they must submit a new state proof to unlock their balance.

III. Yield Mechanics: The Three Streams of USDm Income

Unlike passive stablecoins that rely on treasury bills or fragmented lending integrations, USDm generates on-chain, multi-source yield, including:

3.1 Proof Economy Revenue (ZK UX as Yield)

Here, USDm is pioneering: Every proof costs users a wUSDm fee.

  • Power users (quants, automated traders) may generate thousands of proofs daily.

  • Each proof payment flows back into the protocol’s yield bucket.

  • These fees scale with usage, not TVL, creating a usage-native income stream.

  • As composability grows, so does the demand for proofs. At scale, this could generate millions in protocol-native yield.

  • This model is structurally similar to gas in rollups, except the asset being spent and the asset being verified are the same — USDm.

3.2 Operator Vaults (Delegated Capital)

USDm integrates an “Operator Vault” mechanism, encouraging capital deployment for backing.

  • Institutions (e.g., Family Offices, credit desks) or individual users are whitelisted as Operators.

  • Users delegate USDC/ETH to these Operators via the Vault on Ethereum mainnet.

  • Delegation caps how much USDm can be minted and the loans an Operator can access from wUSDm.

  • Based on these caps, Operators draw USDm from the wUSDm balances and execute proprietary strategies.

  • Operators pay the yield upfront; at maturity, they pay back the principal.

  • USDm users earn yield without bridging out, trusting off-chain treasuries, or getting rugged by opaque reserve managers.

3.3 Traditional DeFi Lending (Optional Layer)

USDm can be lent into standard protocols or pooled as liquidity, with access to traditional yield farming strategies. But this is now supplemental, not primary.

The protocol is not dependent on mercenary TVL; it’s functionally self-sustaining via the Operator Vault and Proof Economy.

IV. Practical Example: Capital Efficiency Meets Privacy

Alice Capital, a trading desk, holds 1M wUSDm. To run market-making strategies on a stateless perps DEX, they generate 10 proofs via SP1, locking their balance for 10 days. Over the next 72 hours, they trade against protocols, deploy into an Operator Vault, and generate yield.

  • No asset ever moved.

  • No smart contract custody risk.

  • All activity occurs via verifiable proof trails.

By Day 10, they can unlock their wUSDm + whatever profits they have earned. Because operators double as yield earners, users also save on fees paid to generate proofs.

This system offers high-frequency participants capital fluidity, verifiable privacy, and zero-custody modularity, a structural 10x improvement over the existing DeFi UX.

V. Composability: Implications for Modular DeFi

Protocols don’t need to maintain vaults, LP logic, or custodial wrappers. They simply:

  • Accept proof objects

  • Validate them using SP1

  • Execute business logic on virtual balances

This reduces smart contract complexity, increases integration velocity, and aligns all economic logic around state transitions instead of token transfers.

VI. Strategic Rationale for High-throughput Chains and Succinct

USDm represents the most directly valuable use case for Succinct today and is purpose-built for execution environments like Monad and MegaETH, where speed, parallelism, and modularity enable fast apps that demand programmable financial primitives with verifiable guarantees:

  • It would allow billions of users to process trillions of stablecoin transfers privately.

  • It generates native demand for proof computation.

  • It monetizes proof generation without external incentives.

  • It is composable across chains.

  • It ties composability directly to SP1 verification.

  • It turns SP1 from a developer primitive into a core part of programmable money.

  • It can showcase the highest-throughput proof system in the most widely needed use case: stablecoins.

VII. Conclusion: A New Primitive for a New Stack

USDm introduces a new type of money:

→ Not just stable, but modular

→ Not just overcollateralized, but verifiably private

→ Stateless and composable.

→ Not just composable, but zero-deposit integrable.

By this design, USDm sets a new bar for what stablecoins can do: not just store value but prove it, not just hold capital but deploy it; privately, verifiably, and modularly.

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