USDM was a yield-bearing stablecoin issued by Mountain Protocol, a Bermuda-licensed digital-asset business overseen by the Bermuda Monetary Authority. It was collateralized by short-duration U.S. Treasuries and paid interest through a daily rebase, redeemable at $1 on the primary market while balances grew. USDM is no longer a live product. After Mountain Protocol signed a definitive agreement to be acquired by Anchorage Digital, minting was disabled and the token entered a three-phase orderly wind-down; the primary market closed on August 22, 2025, and from that point the remaining reserves sit in a Uniswap pool against USDC rather than in Treasuries (USDM wind-down overview, Mountain Protocol FAQ).
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This article explains how the rebase worked, the Bermuda structure behind the token, why it was closed to U.S. persons, and how it sat against USDY, BUIDL, sUSDS, and Aave-USDC. Read it as a record of a retired design rather than a buying guide. Mountain's own documentation is explicit that USDM was not available to U.S. Persons and that the company complied with Reg S (U.S. restrictions).
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USDM was an ERC-20 stablecoin redeemable at $1 by primary customers. Reserves were collateralized by short-duration U.S. Treasuries with an average duration of 60 days or less. Mountain deliberately kept no USDC and no cash at transactional banks inside the reserve, sourcing redemption liquidity through collateralized OTC credit lines instead (USDM Reserves). The issuer was Mountain Protocol Ltd., licensed under Bermuda's Digital Asset Business Act, and reserves were attested monthly by a licensed accounting firm.
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The distinguishing mechanic was the daily rebase. The contract stored each account's share of the pool and multiplied it by a global rewardMultiplier, which Mountain incremented once a day at or around 12:00 UTC. Balances grew while the redemption value stayed at $1. Mountain's own worked example: 100 USDM bought at a multiplier of 1.00 becomes 103.8 USDM after a year at a constant 3.8% APY (USDM Token reference). This contrasts with USDY (price rises), sUSDS (wrapper redemption value rises), and Aave deposits (separate aToken accrues).
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USDM launched in September 2023 and was natively issued on Ethereum, Polygon, Arbitrum, Optimism, Base, ZKsync Era, Celo and Avalanche (Mountain Protocol FAQ). Minting is disabled, so supply only shrinks. DeFiLlama showed about $1.4 million of USDM outstanding at a price near $0.996, pulled September 16, 2026 (DeFiLlama stablecoins).
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Mountain did not custody the portfolio itself. Its published partner table names Fireblocks for digital-asset custody, Coinbase Prime as onramp, EQ Capital as investment manager, OpenZeppelin for smart-contract audit and Nephos for attestations (product structuring). The reserve mandate allowed Treasury bills, near-maturity notes, Treasury money-market funds, Treasury ETFs and reverse repo collateralized by Treasuries, and excluded USDC and transactional bank cash (USDM Reserves).
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The USDM contract is a rebasing ERC-20 built on OpenZeppelin's implementation, using the same share-of-total-supply pattern as Lido's stETH. Each holder's balance is their share count times a global rewardMultiplier, and Mountain updated that multiplier once a day at or around 12:00 UTC through a dedicated oracle role (USDM Token reference).
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Mountain set the reward rate administratively, through the role that updates the multiplier, and its documentation tells developers not to read past multiplier values as a forecast, pointing to the Secured Overnight Financing Rate as the better proxy (USDM Token reference). No current rate applies. The reward rate was set to 0% during the wind-down and no further rewards accrue (wind-down overview).
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Primary users with an approved Mountain Protocol account bought and redeemed USDM at $1, funding by wire or with USDC, and Mountain charged no mint, redemption or transactional fee beyond gas (Mountain Protocol Platform, wind-down overview). That path is closed. Since the primary market shut on August 22, 2025, the only exit is swapping on Uniswap against the USDC the reserves were converted into.
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USDM pays nothing today. Mountain published the schedule in advance: Phase 1 ran May 12 to June 11, 2025, with rewards unchanged and minting disabled; Phase 2 ran June 12 to July 11, 2025, with the reward rate set to 0% and no further rewards accruing; Phase 3 began August 22, 2025, when the remaining reserves were deposited into a Uniswap pool against USDC, ending both the Treasury backing and redemption at $1 by Mountain (USDM wind-down overview).
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Mountain never published a continuous reward-rate series, so no historical APY path is stated here. The monthly attestation reports are the surviving record of reserves and issuance, running from September 2023 through July 2025 plus a final Phase 3 attestation dated October 2025 (USDM Reserves attestations).
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Before the wind-down, reserves were held in the name of the company with regulated financial institutions, in bankruptcy-remote accounts segregated from Mountain's operating accounts and held for the benefit of redeeming users, with Fireblocks providing digital-asset custody (USDM Reserves, product structuring). That structure no longer applies. After Phase 3 the backing is USDC sitting in a Uniswap pool, so the trust assumptions are the collateral stablecoin, Ethereum and the Uniswap protocol (wind-down overview).
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Regulatory risk is not hypothetical here. It is the stated reason the token no longer exists. Mountain says the wind-down decision was based in part on the evolving U.S. regulatory landscape, including upcoming stablecoin legislation, and that it coordinated the transition with the Bermuda Monetary Authority under DABA and SCPS guidance (wind-down overview). Compliance obligations for secondary-market monitoring, including sanctions screening, continue through Phase 3, but users redeeming on Uniswap are no longer inside BMA-regulated activity.
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The contract is built on OpenZeppelin's upgradeable libraries, and Mountain's published access-control table lists the UPGRADE_ROLE as not assigned. Smart-contract audit was handled by OpenZeppelin, alongside an Immunefi bug bounty and an OpenZeppelin-run security center (USDM Token reference, product structuring). Oracle, minter, burner, blocklist and pause roles remain at named addresses.
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The daily rebase increases balances. Some DeFi protocols and many corporate accounting systems handle balance increases poorly: the rebase looks like income, which it functionally is, but the transaction trail is non-standard. Wrappers (wUSDM) exist for use cases that need a non-rebasing token. The wUSDM redemption value rises while the balance stays constant.
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Secondary liquidity was always thinner than USDC's, and the wind-down made it the only liquidity there is. Phase 3 routes every remaining holder through a single Uniswap pool of concentrated wUSDM against USDC, and holders on other chains have to bridge to Ethereum through Chainlink CCIP before they can redeem (wind-down overview). DeFiLlama priced USDM near $0.996 on September 16, 2026, below the $1 the primary market used to honor (DeFiLlama stablecoins).
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What set USDM apart was the combination of a permissionless rebasing ERC-20, a Bermuda-licensed issuer and a reserve held only in short-duration Treasuries. It was not a U.S.-accessible product: Mountain states that USDM could not be purchased by U.S. Persons and that it would not market to them (U.S. restrictions). The closest structural peers remain sUSDS and USDY, which differ in reserve composition and accrual model. Rows above describe each token's design, not a current yield.
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Closed. Minting was disabled at the start of the wind-down and no additional USDM will be issued (wind-down overview).
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The remaining route is a swap. Mountain directs holders to redeem through the Uniswap protocol, using the Uniswap front end or an aggregator such as Odos, 1inch or CoW Swap, and notes that it endorses no front end (wind-down overview).
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Rebasing tokens break protocols that assume a constant balanceOf, so Mountain shipped wUSDM, an ERC-4626 vault wrapper modeled on Lido's wstETH: the balance stays constant and the redemption value rises instead (USDM Token reference).
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Mountain says it made a reasonable effort to notify protocols where USDM or wUSDM was integrated of the wind-down, and recommends holders withdraw from those platforms and redeem through the routes above (wind-down overview). Treat any surviving integration as a wrapper around a token that no longer accrues rewards.
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Mountain Protocol is licensed under Bermuda's Digital Asset Business Act (DABA), administered by the Bermuda Monetary Authority (BMA). The framework is one of the few jurisdictions globally that explicitly addresses tokenized-Treasury products with a clear regulatory perimeter. Three features matter for USDM holders.
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DABA requires licensed issuers to segregate customer reserves from corporate funds. USDM Reserves were held in the name of the company with regulated financial institutions, in bankruptcy-remote accounts segregated from operating accounts and held for the benefit of users requesting redemption (USDM Reserves). During the wind-down the reserves sat in an orphan SPV for the benefit of holders before moving on-chain at Phase 3 (wind-down overview).
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Mountain published monthly reserve attestations, produced by accountants at Nephos Group rather than a Big Four firm, and is explicit that these are accountant reports and not audits, with separate yearly financial audits covering the reserves. The published series runs from September 2023 to July 2025, plus a final Phase 3 attestation dated October 2025 (USDM Reserves attestations). No attestation after that exists.
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Mountain took a Reg S approach. Its documentation states that Mountain Protocol's products, including the USDM token, the platform and any other services, were not available to U.S. Persons; that USDM could not be purchased by U.S. Persons; that Mountain would not market to U.S. Persons; and that mountainprotocol.com was not accessible from the U.S. (U.S. restrictions). Any description of USDM as a U.S.-accessible yield token is wrong.
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While USDM was live, its reward rate floated with short-term rates. The mechanics still matter for anyone weighing a Treasury-backed token against a bill ladder.
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A rolling short-duration Treasury portfolio transmits rate changes with a lag, because the yield only moves as bills mature and are replaced. Mountain published no rate-transmission series for USDM, and its documentation warns that past multiplier values do not predict future yield, pointing to SOFR as the better proxy (USDM Token reference). Specific transmission figures for USDM are not available, so none are given here.
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A direct T-bill holder locks in the auction yield for the term to maturity. A USDM holder receives the rolling-portfolio yield, which floats. In a rising-rate environment, USDM transmits higher yield faster than a held T-bill ladder. In a falling-rate environment, USDM compresses faster.
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Mountain charged no mint, redemption or transactional fee on its platform; users paid only gas to move USDM to their deposit address (wind-down overview). Yield reached holders through the reward multiplier, which Mountain set, so the spread between portfolio return and holder reward was an issuer decision rather than a published management fee. Mountain does not disclose that spread.
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USDM was natively issued on Ethereum, Polygon, Arbitrum, Optimism, Base, ZKsync Era, Celo and Avalanche (Mountain Protocol FAQ). The structural problem it illustrates outlives it. A treasury team holding any yield-bearing token on one chain still has to settle payments on chains where that token is not deployed, and the unwinding sequence, sell the yield token for USDC on a DEX, bridge USDC to the destination, settle, adds steps and slippage.
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Eco Routes handles the orchestration. A team holding a yield-bearing token on Polygon submits an intent to settle USDC on Solana, and Routes selects the path: a solver willing to source USDC on Solana against value on Polygon, or a multi-leg route through a DEX and CCTP. Solvers compete on the route. The team retains yield-bearing positions where they earn most while still settling counterparty obligations on the chain those counterparties prefer. See related context in stablecoin treasury APIs compared and stablecoin automation platforms.
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The tokenized-Treasury category held about $15.65 billion in distributed value across 25 assets as of September 15, 2026 (RWA.xyz Treasuries dashboard). USDM is no longer part of it. DeFiLlama showed roughly $1.4 million of USDM still outstanding on September 16, 2026, redeemable only through the Uniswap pool (DeFiLlama stablecoins).
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As of September 15, 2026 the largest tokenized Treasury funds on RWA.xyz were BlackRock's BUIDL at about $2.70 billion, Circle's USYC at about $2.60 billion, Ondo's USDY at about $2.23 billion and Franklin Templeton's iBENJI at about $1.70 billion, against a category total near $15.65 billion (RWA.xyz Treasuries dashboard). No single issuer is close to half the category.
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USDM never reached that scale. Mountain prioritized a Bermuda-licensed, Treasury-only structure and DeFi composability, and the token was retired through an acquisition rather than displaced by a competitor.
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Mountain gives the reason directly: the decision was based in part on the evolving U.S. regulatory landscape, including upcoming stablecoin legislation, and it followed the definitive agreement for Anchorage Digital to acquire the company (wind-down overview). The design did not fail technically. It met a regulatory perimeter and an acquirer with a different product line.
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No. Mountain Protocol's documentation states that its products, including the USDM token and the platform, were not available to U.S. Persons, and that the company took a conservative Reg S approach (U.S. restrictions). The primary market is closed to everyone now.
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The contract stored shares rather than balances and multiplied them by a global rewardMultiplier, which Mountain incremented once a day at or around 12:00 UTC. Every holder's balance rose proportionally while the primary redemption value stayed at $1 (USDM Token reference). The multiplier no longer increases: the reward rate was set to 0% during the wind-down (wind-down overview).
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No. Mountain set the reward rate to 0% in Phase 2 of the wind-down and stated that no additional rewards would accrue to holders (wind-down overview). Read the digital dollars explainer for the broader stablecoin context.
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Mountain recommends withdrawing USDM and wUSDM from lending platforms and redeeming through the Uniswap route, and notes it cannot remove the tokens from permissionless protocols itself (wind-down overview). Any position left in a lending market earns no USDM rewards, because the reward rate is 0%.
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USDM rebases through a growing reward multiplier; wUSDM is an ERC-4626 vault wrapper whose balance stays constant while its redemption value rises (USDM Token reference). Both represent the same claim. With the primary market closed, the Phase 3 reserve pool holds wUSDM against USDC on Uniswap (wind-down overview).
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The comparison no longer holds. USDC is a live product with an active issuer; USDM is a retired token whose reserves were converted to USDC inside a Uniswap pool, pays 0%, and can only be exited by swapping (wind-down overview). DeFiLlama priced it near $0.996 on September 16, 2026 (DeFiLlama stablecoins). See automation platforms for related yield strategies.
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