Mezo USD (MUSD): How It Works and Risks

Mezo USD, or MUSD, is a stablecoin designed to track the US dollar. It is issued through Mezo’s Bitcoin-backed borrowing system: users deposit BTC as collateral and borrow MUSD against it. Unlike a token that represents ownership in a company or protocol, MUSD is intended to be a dollar-denominated asset for borrowing and transfers. Its stated backing and redemption model are meant to support a one-dollar value, but that target is not a guarantee that MUSD will always trade at exactly one dollar. The project describes MUSD as fully backed by Bitcoin, with the collateral held in collateralized debt positions (CDPs). MUSD is listed as issued on Mezo, Ethereum and Base. Public sources do not establish that every version has identical redemption routes or functionality, so check the network and token details before using a particular version.

To create MUSD, a borrower deposits BTC into a CDP and takes out a loan denominated in MUSD. The Bitcoin collateral is intended to remain worth more than the debt it secures. Mezo describes system-wide collateralization above 110% and a typical user position above 150%; these are figures about the design, not a promise that every position will stay above those levels. If a position falls below the system’s minimum collateral ratio, it can be liquidated. This mechanism is intended to preserve backing for outstanding MUSD, but liquidation can mean a borrower loses collateral. Bitcoin’s price can move quickly, and collateral values, loan balances and applicable rules may change. The project says MUSD can be redeemed for BTC. Before borrowing or relying on redemption, users should review current requirements, fees, timing and available methods in Mezo’s own materials.

MUSD’s main stated role is as the borrowed dollar-denominated asset in Mezo’s Bitcoin-backed finance system. A holder may use it to transfer value or interact with applications that support MUSD on the relevant network. The project’s description also positions MUSD as a medium of exchange, but actual acceptance depends on the application, merchant or service involved. MUSD is not the same as holding dollars in a bank account, and its intended peg does not remove the risks of a crypto asset. Check that a platform supports the exact MUSD version and network you hold before depositing or sending tokens. A transfer to an incompatible network or address may be difficult or impossible to recover. If you borrow MUSD, understand that the debt remains while the BTC collateral secures it; using the borrowed tokens elsewhere does not remove the obligation to manage or repay the position.

MUSD is listed on Mezo, Ethereum and Base. Its reported circulating and total supply were both about 29.49 million MUSD as of 2026-11-05; no maximum supply is listed. Supply can change as users borrow or repay through the system, so these figures are a snapshot rather than a fixed limit. On the same date, MUSD traded at about $0.99, with a market capitalization of about $29.2 million and fully diluted valuation of about $29.2 million. Those market figures change over time and do not establish that each token can be redeemed immediately or without conditions. The market price can differ from the intended one-dollar value. Before transferring tokens, check which network you are using and confirm that the receiving wallet or application supports that specific version. Do not assume tokens on different networks are interchangeable without a supported transfer method.

MUSD has risks beyond ordinary price movement. Its peg may weaken if market confidence, liquidity or redemption access falls short of expectations. The collateral system also depends on Bitcoin’s value and on the rules and operation of Mezo’s contracts; rapid BTC declines can trigger liquidations. Smart-contract errors, network interruptions, governance or parameter changes, and problems with cross-network transfers may affect access to funds. The project’s stated collateral ratios do not remove these risks or guarantee an individual borrower’s position will avoid liquidation. For storage, use a wallet that supports MUSD on the network where your tokens are held, protect your recovery phrase, and verify the network and token contract using reliable project information before adding or sending tokens. Self-custody means you are responsible for safeguarding access. Never share your recovery phrase or sign a transaction you do not understand.