Hello everyone, happy August! On the first day of August, let's talk about the @MentoLabs project. Many people may not have heard of it, but what it does is actually related to the stablecoins and cross-border transfers we use in our daily lives. I'll give a simple analysis and share my own views.

Let's first take a look at what Mento is?
What it does is very simple, just like when we usually exchange foreign currency, for example, exchanging Renminbi for Yen or Pounds. We either have to queue at the bank or use a third-party platform, which may result in slower transaction times and fees.

Mento came up with a solution: to create a bunch of "digital fiat currencies" on the blockchain, such as digital yen, digital pounds, and digital South African rand, which are tied to the value of their corresponding real fiat currencies.

1 digital yen is equivalent to 1 real yen, so you don't have to worry about it fluctuating like Bitcoin, it is stable! Now they support 15 currencies, including mainstream stablecoins from G7 countries, such as yen and pound, which can be exchanged directly, and the coverage is getting wider.

There are two benefits to doing this:
Exchanging money has become faster; just transfer it on the blockchain, and it arrives in minutes. The transaction fees are also much cheaper. Whether it's exchanging dollars or the currencies of small countries, it's equally convenient.

In the past, many businesses in small countries had to use US dollars for transactions or loans. If their national currency depreciated, the debt would increase, causing a lot of pressure. Now, with the introduction of digital coins pegged to their national currencies, they can directly use these for accounting and borrowing, eliminating the daily worries about fluctuations, which saves a lot of trouble.

In simple terms, it is about turning all the money in the world into "digital cash" that is easy to exchange quickly online, and it can also help businesses that do not rely much on other currencies to simplify their processes.

So what can it be used for? Is it practical?

For example, if someone in your family is working abroad and wants to send money back home, with Mento, as soon as the money is transferred, your family members will receive it on their phones, the fees deducted are much lower than before, and there's no need to wait several days or get ripped off by intermediaries.

If a small company is doing international business, for example, buying things from Thailand, in the past it had to first convert RMB to USD, then convert USD to THB, losing some money on the exchange rates both times. Now, using the RMB stablecoin on Mento, it can be directly converted to THB stablecoin, completing the transaction in one step without losing on the price difference, allowing for a bit more profit.

There is also a new user benefit: when operating on the Celo network, the necessary "service fees" (Gas fees) can be paid directly with these stablecoins, without the hassle of buying other coins. Beginners do not need to learn so many rules and can use it directly.

What is the team's and investment background like:
The development team is Mento Labs, backed by two well-known investment institutions: Hashkey Capital and No Limit Holdings, with No Limit Holdings having invested in several well-known projects such as Ethena and Sei, which indicates a strong belief in the stablecoin sector.

Recently, I was featured on the Castle Island Ventures blog show "On the Brink," specifically discussing the application of stablecoins in foreign exchange. This fund only invests in "early-stage / long-term / foundational" projects, such as Casa and Felix Pago, which are infrastructure projects they have invested in, indicating that the industry recognizes their direction quite well.

What are Mento's future plans and how does it intend to proceed?

First of all, it used to be mainly used on the Celo blockchain, but now it has partnered with Wormhole, so in the future, not only Celo but also other popular blockchains like Ethereum and Solana will be able to use its stablecoin, greatly expanding its applicability.

Now they have partnered with Wormhole to expand stablecoins to over 40 chains using the NTT standard. In the future, whether it's Ethereum or Solana, cross-border transactions can be directly conducted using Mento's stablecoin. If this step is successful, the coverage will be significantly vast.

Then, we are preparing to launch an upgraded version (V3), the core of which is to make it easier for users to "collateralize assets for stablecoins". For example, if you have cryptocurrencies in hand, you can collateralize them and directly exchange them for stablecoins pegged to the Japanese yen or British pound, thus expanding the possible use cases.

Moreover, it is collaborating with projects like Chainlink and RedStone, which specialize in providing "real-time prices", to ensure that the price of stablecoins is more accurately tied to real currencies, minimizing discrepancies and making it more reliable to use.

Next, we will regularly announce progress updates with these partners, such as Chainlink's data feed price optimization and RedStone's cross-chain price verification, making the system increasingly stable.

In general, there will be more places to use it in the future, money exchange will be more flexible, and it will be more reliable to use, relatively speaking!

Let's take another look at the pros and cons.
Let’s talk about its benefits:

It really can solve problems: unlike some projects that just hype a concept, it can genuinely help people with the hassle of cross-border money transfers and currency exchange, especially for people in small countries, making it very convenient to use.

Reliable, there are users: There are already millions of real users playing with it, not something still being tested in a lab, the maturity is decent, and the cumulative trading volume has exceeded 15 billion dollars, with a trading volume of 6 billion dollars just in May this year, handling more than 200 million transactions daily, indicating that the actual usage is quite high.

Not a monopoly: it relies on the MENTO token to allow everyone to have a say, rather than being controlled by a single company, which is relatively reassuring.

There is also the technology: it uses a mechanism called vAMM, so even if a lot of money is transferred at once, the price won't fluctuate too much (this is known as "small slippage"), which is particularly important when exchanging foreign currencies; otherwise, large transactions can easily result in losses.

Let's talk about the places where problems might occur:

The competition is fierce: In front, there are established giants like USDC and USDT blocking the way, and behind, there are other similar stablecoins chasing after, making it difficult to stand out; there are challenges!

Afraid of being monitored by regulators: this type of stablecoin pegged to fiat currency varies by country policy.

Insufficient funds to "live": Although it is okay for now, compared to the daily trading volume of several trillion dollars in the traditional foreign exchange market, there is still a gap. If you want to transfer a particularly large amount, it may not be possible or the price may fluctuate greatly.

Everyone has a say, but it may be inefficient: decentralized governance sounds good, but sometimes voting and decision-making can be sluggish. Additionally, the longer the MENTO token is locked, the greater the voting power, which may result in a few large holders having more say, while ordinary users have relatively less weight.

There are technical risks: Although there have been no major issues so far, this kind of smart contract system could encounter problems if hackers find vulnerabilities to breach it. It also involves so many stablecoin exchanges, and the system is quite complex!

I think the Mento project is quite good and practical. It doesn't engage in any nonsense; it simply uses blockchain to make foreign exchange and cross-border transfers more convenient. There are now 8 million users, which is not a small number in the crypto space, indicating that there is indeed a demand for it.

But it is not easy for it to develop, as the stablecoin sector has long been dominated by major players. To make a name for itself, it will have to put in some effort. It plans to expand to more blockchains, which is a good idea, but it will definitely face more troubles in terms of technology and security.

If you are doing cross-border business in emerging markets or often sending money abroad, using it might really save you some trouble and money. However, if you want to rely on it to make money through trading coins, then forget it, it's not suitable.

Overall, this project is worth paying attention to, especially its effort to bring foreign exchange onto the blockchain. It might really build a good bridge between traditional finance and the crypto space in the future. However, investing always comes with risks, so it's essential to understand more about it. That's all for today!
#Mento # stablecoin #跨境转账 # blockchain application