What is Mezo USD (MUSD)?

Quick Facts

  • Type: Bitcoin-backed, CDP stablecoin
  • Peg: 1:1 with the US dollar
  • Collateral: Bitcoin (via tBTC)
  • Min. collateralization ratio: 110%
  • Max. loan-to-value: ~90% of deposited BTC
  • Interest rates: Fixed, ranging from 1–5%
  • Built by: Thesis*, creators of tBTC, Fold, and Taho
  • Network: Mezo (EVM-compatible), with Ethereum token contract

Introduction

Mezo USD (MUSD) is the native stablecoin of the Mezo network — a permissionless, Bitcoin-backed digital dollar. It is designed to maintain a steady 1:1 value with the US dollar, giving Bitcoin holders a way to access liquidity without ever selling their BTC.

Unlike fiat-backed stablecoins such as USDT or USDC, MUSD is not backed by dollars held in a bank. Every MUSD in circulation is backed by real Bitcoin collateral, verifiable onchain at any time.

History & Background

Mezo was built by Thesis*, a team with over a decade of experience expanding the Bitcoin ecosystem. Thesis is also behind tBTC — a decentralized, 1:1 Bitcoin-backed ERC-20 token — as well as Fold and Taho.

MUSO launched as the centerpiece of Mezo's vision: to make Bitcoin a productive, everyday financial asset rather than a passive store of value.

How Mezo USD Works

MUSD uses a Collateralized Debt Position (CDP) model. Users deposit Bitcoin as collateral into a smart contract and mint (borrow) MUSD against it. Internally, the BTC is managed via tBTC, the Threshold Network's decentralized Bitcoin bridge, which has been operating since 2020.

Because MUSD is minted directly from collateral rather than borrowed from a lending pool, there is no rate competition. Interest rates are fixed at the time a loan is opened and never change unless the user refinances.

If a position's collateral ratio drops below the 110% minimum — due to a fall in Bitcoin's price — it is automatically liquidated to keep all MUSD fully backed. A Stability Pool absorbs these liquidations, maintaining system solvency.

Tokenomics

MUSD is a purely utility-driven stablecoin. It is minted on demand when users deposit BTC, and burned when loans are repaid — so supply grows organically with protocol usage.

Users who hold MUSD can deposit it into the MUSD Savings Vault to earn a share of protocol fees generated from loan origination, interest, and refinancing activity. Depositors receive sMUSD, a receipt token whose exchange rate appreciates over time as yield accrues.

Circulating supply ? 50.00 million MUSD
Total supply ? 50.00 million MUSD
Max supply ? 50.00 million MUSD
Fixed supply (updated manually)

Ecosystem & Use Cases

MUSD is designed as the base stablecoin for the Mezo ecosystem. Key use cases include:

  • Borrowing liquidity against Bitcoin without selling BTC
  • Spending like regular dollars wherever digital assets are accepted
  • Earning yield through the MUSD Savings Vault and partner DeFi vaults
  • Providing liquidity in the BTC-MUSD pool on Mezo
  • Composability with other DeFi protocols built on the Mezo network

Team, Governance & Community

Mezo is developed by Thesis*, a Bitcoin-focused product studio. The broader Mezo protocol uses a veBTC governance model, where Bitcoin holders can vote on gauge weights and protocol parameters. The community is active across Discord, Telegram, and Twitter under the @mezonetwork handle.

Advantages

  • Full Bitcoin backing — every MUSD is backed by onchain BTC collateral, auditable in real time
  • Fixed interest rates — loans lock in a rate from 1–5%, with no variable-rate surprises
  • High capital efficiency — borrow up to 90% of your Bitcoin's value
  • Permissionless and non-custodial — no banks, no intermediaries, smart contract-governed
  • Yield-generating — MUSD can be deposited into savings vaults for passive income

Risks & Challenges

  • Bitcoin volatility — sharp BTC price drops can trigger rapid liquidations
  • Smart contract risk — bugs or exploits in the CDP contracts could affect collateral safety
  • Peg stability — during extreme market conditions, arbitrage mechanisms may be temporarily strained
  • tBTC bridge dependency — MUSD relies on the Threshold Network bridge, adding an additional layer of trust and technical risk
  • Nascent ecosystem — as a newer protocol, MUSD's DeFi integrations and liquidity depth are still growing

Long-Term Vision

Mezo's long-term goal is to make Bitcoin the foundation of everyday finance. MUSD sits at the center of this vision as the protocol's native dollar — a credibly neutral, Bitcoin-aligned stablecoin that lets holders borrow, earn, and spend without ever leaving the Bitcoin ecosystem. More vaults, yield strategies, and DeFi integrations are planned to expand MUSD's utility over time.

Frequently Asked Questions

MUSD is Mezo's native stablecoin, pegged 1:1 to the US dollar and fully backed by Bitcoin collateral. It is minted when users deposit BTC into Mezo's smart contract system and borrow against it.

Unlike USDT and USDC, which are backed by fiat dollars held by a central company, MUSD is backed entirely by onchain Bitcoin reserves. There is no custodian holding dollars — the collateral is verifiable on the blockchain at any time.

You deposit Bitcoin as collateral into the Mezo protocol via the Mezo app. The system mints MUSD proportional to your collateral, and you receive it as a loan. When you repay the MUSD plus interest, you get your BTC back.

If the value of your BTC collateral falls below a 110% collateralization ratio relative to your MUSD debt, your position is automatically liquidated. The BTC collateral is used to repay the outstanding MUSD, protecting the system's solvency.

Interest rates on MUSD loans are fixed at the time you open your position, ranging from 1% to 5%. Unlike variable-rate DeFi lending, your rate does not change unless you choose to refinance.

The MUSD Savings Vault lets holders deposit MUSD to earn a share of protocol fees from loan activity. Depositors receive sMUSD, a receipt token that grows in redemption value as yield accumulates — no active management required.

Mezo was built by Thesis*, a team with over ten years of Bitcoin-focused development. Thesis is also responsible for tBTC, Fold, and Taho, and uses tBTC as the underlying BTC bridge for the MUSD collateral system.

MUSD is native to the Mezo network and also has a token contract on Ethereum. The underlying Bitcoin collateral is managed through tBTC, the Threshold Network's decentralized Bitcoin bridge.