Constructing a Worldwide Financial System Based on Bitcoin
In the ever-evolving world of cryptocurrencies, a new player is making waves – Mezo's Bitcoin-backed stablecoin, MUSD. This innovative digital asset is designed to provide users with liquidity without the need to sell their Bitcoin.
MUSD operates by allowing users to borrow stablecoins against their BTC holdings, acting much like a traditional loan where Bitcoin is locked up in a decentralised smart contract. In exchange, MUSD tokens are minted, providing users with stablecoin liquidity pegged 1:1 to the US dollar, while they retain ownership and custody of their Bitcoin [3][4][5].
At its core, MUSD is a fully collateralised stablecoin, backed 100% by Bitcoin reserves held on-chain under decentralised custody, secured by validators. This setup eliminates the need for centralised intermediaries, offering users the opportunity to borrow MUSD at a low fixed interest rate, starting at 1%, use it for spending or transactions anywhere dollars are accepted, and keep their Bitcoin exposure intact and growing [3][4][5].
Within a circular Bitcoin economy, MUSD acts as a native capital infrastructure, reinforcing Bitcoin's role as the hardest asset. Users can borrow liquidity via MUSD backed by BTC, spend MUSD in daily transactions, and eventually use MUSD to acquire more BTC or other Bitcoin-native financial products. Mezo aims to foster an ecosystem, dubbed "Cathedral and Bazaar", of Bitcoin-native DeFi, SocialFi, and experimental apps that build on MUSD [2][4][5].
This structure promotes a self-reinforcing loop where Bitcoin holders can live off and use Bitcoin's value via MUSD without diluting their Bitcoin holdings, preserving long-term BTC value and utility in the ecosystem. This circular economy allows liquidity to flow without forced BTC sales [3][4][5].
Mezo is built with Tigris, an incentive management system designed to solve the website's mercenary capital problem and reward long-term commitment. The engine for this new economy is MUSD, a dollar-pegged token that is 100% secured by Bitcoin collateral.
A community member recently demonstrated the practicality of MUSD, borrowing MUSD against $8,500 worth of BTC, gaining instant liquidity without selling any BTC. If the price of Bitcoin appreciated, they would have repaid the MUSD loan and been left with more BTC ($8,654) [6].
Tigris allows users to lock their BTC on Mezo to receive veBTC, granting governance rights to vote on network incentives and core protocol upgrades. MUSD serves as the primary medium of exchange in the first full-stack Bitcoin economy, enabling users to trade with capital efficiency, access broader markets, explore complex strategies, generate passive yield, and spend on real-world goods [7].
Users can open a vault, mint MUSD, or lock BTC for veBTC governance on Mezo's website (mezo.org). Mezo was engineered for the path that Bitcoin was built for, demanding self-sovereignty instead of trading private keys for a place within old systems.
In summary, MUSD is a Bitcoin-backed stablecoin that serves as a means for BTC holders to unlock dollar liquidity by borrowing stablecoins on-chain, which can be spent and transacted within a Bitcoin-focused financial ecosystem, enabling a circular Bitcoin economy where liquidity flows without forced BTC sales [3][4][5]. Mezo creates a circular economy built directly on Bitcoin, allowing holders to access liquidity by borrowing against their BTC without selling it.
Users can borrow MUSD, a stablecoin backed by Bitcoin collateral, to gain dollar liquidity without selling their BTC holdings [3][4][5]. By doing so, they can participate in a circular Bitcoin economy, utilizing MUSD for spending or investing in Bitcoin-native financial products [2][4][5].
