Security Operators

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Stablecoins collateralized by volatile, recently launched assets; eg, tokens of new blockchains have consistently struggled to maintain long-term stability. These failures often stem from extreme price fluctuations and a fundamental lack of resilient, inherited security mechanisms during periods of market stress. As a result, users are frequently locked into self-referential, unsustainable economic loops—characterized by reliance on cyclical fees or inflationary token emissions to deliver yield. Such systems are neither scalable nor structurally sound, often steering users toward precarious financial positions.

While these models may present superficially attractive returns—boosted by emissions from nascent tokens or yield opportunities tied to high-risk instruments like memecoins—the threat of depegging and systemic instability remains ever-present.

USDm is designed to overcome these pitfalls through a fundamentally different approach to security and yield generation. At the heart of the USDm protocol is a decentralized layer of Security Operators, whose role is indispensable to the system’s integrity and growth. These operators serve as the conduit through which the protocol inherits security guarantees from Ethereum. To participate, each Security Operator must receive collateral delegations—exclusively in ETH and USDC—on Ethereum mainnet, collectively amounting to at least 20% of the total USDm supply.

This 20% threshold is not a soft target—it is a hard security requirement. If the total value of these security delegations fall below the mandated threshold, the protocol will immediately halt all USDm minting and prioritize redemptions only. This ensures that the system cannot expand its liability footprint unless it remains sufficiently secured by Ethereum-backed assets. USDm is, therefore, not only capital-efficient but security-conscious by design.

To reinforce this critical security infrastructure, 20% of all yield generated by wUSDm, the yield-bearing version of USDm, is allocated directly to Security Operators. This mechanism incentivizes sustained operator participation and encourages users to wrap their USDm into wUSDm to access yield opportunities, effectively aligning economic incentives across the ecosystem.

On the yield side, USDm leverages a decentralized, competitive network of execution agents that deploy independent, adaptive strategies. These agents are incentivized to outperform a dynamic benchmark yield derived from network-wide performance, ensuring a constantly optimized return profile. Yield sources may include cross-market arbitrage, liquidation flows from lending platforms, and emerging profit opportunities within new decentralized applications.

Importantly, USDm is built to scale natively with user adoption and capital inflows while maintaining collaterization with assets of newer tokens. All agents and their strategies are rigorously evaluated and monitored by protocol risk managers to safeguard user funds while ensuring long-term competitiveness.

In summary, Security Operators are not just a component of USDm—they are the foundation.

By anchoring security to Ethereum and enforcing strict delegation thresholds, USDm ensures structural integrity, user protection, and the ability to scale without compromising its peg or stability.