The website, white paper, and other protocol information have been made public for M^0, or “M Zero,” a protocol that enables international institutions to issue stablecoins backed by fungible T-bills.Last year, the team—which includes formidable stablecoin pioneers from MakerDAO and Circle—came out of stealth thanks to a sizable $22.5 million seed investment headed by Pantera Capital.With the present tokenization trend, everyone from start-ups to Wall Street banks is building blockchain-based Treasuries and other unique products, such yield-bearing stablecoins.
However, according to M^0 Labs CEO Luca Prosperi, these companies are just producing an increasing amount of their goods that are sent on-chain. Prosperi feels that a centralized entity shouldn’t mint stablecoins or keep fractionalizing liquidity.As a result, M^0 adopts some of the original concepts from MakerDAO, a community hub led by Prosperi, but institutionalizes that vision.
“We’re trying to recreate networks, with rules and smart contracts for people to interact and produce digital assets,” Prosperi said in an interview. “Think about the protocol as a governor of the Eurodollar system; so, a set of rules that can allow a new generation of offshore dollar players to come and interact. The protocol collects certain fees that are then distributed on-chain to various actors for their participation, but most of the upside is staying with the actors that actually interact with it.”
M^0 is targeting the $5 trillion-$20 trillion offshore dollar market, Prosperi said. It’s “pretty ridiculous” that stablecoins are not interoperable, said M^0 Labs Chief Strategy Officer Joao Reginatto, the former VP of stablecoins at Circle. “Some people are trying to reposition their stablecoin projects as infrastructure, but these pitches are still superficial,” Reginatto said in an interview. “You can’t call it infrastructure if you have to be married to the issuer. We think the answer is to have multi-issuance, where an issuer in its respective jurisdiction complies with the individual regime, and have them all issue fungible tokens.”
In Q2 2024, the M^0 protocol will go online.Market makers, funds involved in Decentralized Finance (DeFi), and crypto-friendly institutions comprise the anticipated initial user group.But according to Prosperi, protocols will eventually power financial technology businesses’ back ends.
“Our dream users are not banks; our infrastructure is a kind of money middleware for the digital age that intends to bypass and improve part of the banking system,” he said.