M0: Building the Layer-Zero of the Tokenized Dollar

Most stablecoin news is a brand story (USDT vs. USDC vs. PYUSD). M0 is a platform story and this week, the Switzerland-based team announced a $40M Series B led by Polychain and Ribbit (total funding $100M), after its network supply grew 215% since January and passed $300M in July.

What M0 actually is

Most stablecoins are built on an a monolithic stack (proprietary, or white-label from issuers like Paxos): a single, branded token with one issuer that controls the reserves and the rules. M0 flips that model — it’s a platform for others to issue stablecoins that share liquidity, while letting builders control the money logic (who can mint/hold/transfer, compliance filters, yield/rewards, etc).

At its core, M0 is a coordination layer that lets permissioned actors generate $M, a stablecoin “building block” that other projects wrap and extend into their own application-specific dollars.

Who uses it today: MetaMask (mUSD), Noble (USDN), Usual (USD0), KAST (payments), and Playtron (Game Dollar) are building on M0’s stack. 

Example — How Metamask’s mUSD is being issued: MetaMask’s stablecoin, which we we covered last week, is being launched with Stripe’s Bridge as the U.S. licensed issuer /orchestrator and M0 as the on-chain infrastructure and liquidity layer. 

Why this matters — Composability without chaos

M0 treats dollars as financial primitives rather than finished products. This means stablecoins can be customizable per use case, but fungible at the base layer. That’s how you scale stablecoin utility without splintering liquidity, or forcing everyone onto the same brand. 

Let’s get under the hood

Decoupled architecture: reserves vs. programmability:

M0 separates custody of reserves from token logic. Licensed entities hold and manage the backing assets (cash, T-bills), while developers control how their stablecoins function: who can mint, hold, or transfer; which compliance filters apply; and whether there are yield or loyalty mechanics.

This preserves innovation while aligning with new stablecoin regimes like the U.S. GENIUS Act and Europe’s MiCA, which require auditable, full-reserve operations. (See the MetaMask–Stripe’s Bridge + M0 structure we discussed last week) 

$M: the base money primitive

At the center of M0’s design is $M, the system’s base money primitive. $M is an ERC-20 token, backed one-to-one by approved assets like cash and short-term U.S. Treasuries, held by regulated custodians.

It isn’t meant to be a consumer brand in its own right. Instead, you can think of it as the raw material of digital dollars. Projects like MetaMask with its planned mUSD can wrap $M into their own branded stablecoins, inheriting the same liquidity base and reserve backing without having to rebuild the infrastructure from scratch.

How $M works on-chain

Dual balances: Each account can hold two types of balances. A static balance works like a normal stablecoin—just digital cash that doesn’t change. A rebasing balance, on the other hand, grows automatically over time through continuous compounding.

Access to this earning mode isn’t open to everyone; it’s determined by M0’s Two-Token Governance (TTG), which decides who qualifies. This ensures yields are distributed fairly and within rules set by the community.

M0 also embeds financial safeguards into its protocol. A contract manages minting and burning of $M, ensuring the on-chain supply never exceeds off-chain reserves. Two synchronized rate models enforce financial balance: the MinterRateModel sets the borrowing cost (capped for safety), while the EarnerRateModel governs yield to approved rebasing balances, both calibrated so that total earners’ payouts cannot exceed what minters contribute. Any surplus yield flows into a Distribution Vault, and allocated to governance incentives.

Custom stablecoins

Developers can launch M0 Extensions—app-specific stablecoins—with their own compliance filters, yield distribution logic, upgradeability, and chain support.

Liquidity for these extensions originates from issuers minting $M, which is then wrapped into tokens like mUSD, USDN, or USD0.

A shared liquidity network

All extensions sit on one unified liquidity base because they can always be unwrapped back to $M. This prevents fragmentation: each new issuer adds to the pool instead of splitting it. For integrators—exchanges, wallets, custodians, and on/off-ramps—that means supporting a single rail while benefiting across all extensions.

Stacking up vs. other shared liquidity frameworks:

Rain: Turning Stablecoins Into Everyday Money

Rain announced a $58 million Series B round led by Sapphire Ventures, bringing its total funding to $88.5 million—a striking escalation given that Series A closed just five months earlier. Participants include Dragonfly, Galaxy Ventures, Samsung Next, Lightspeed, Norwest, and Endeavor Catalyst. 

Rain’s platform allows fintechs, banks and marketplaces to embed stablecoins throughout their operations: from money-in and storage to spending and payouts, all through a single API that bundles cards, wallets, rails and compliance; globally.

Rain is part of a powerful new wave making stablecoins genuinely usable. That wave spans the stack: front-end players like RedotPay, which enables stablecoin card payments, and MoonPay, which focuses on non-custodial onboarding and Mastercard debit cards; through to back-end providers like BVNK, which handle settlement, payouts, and fiat access for enterprises.

The timing couldn’t be better. With regulatory frameworks such as the U.S. GENIUS Act and Europe’s MiCA now in force, enterprise demand is accelerating. Rain reports its transaction volumes have climbed 10× since January 2025, with partners like Nuvei, Avalanche, Dakota, and Nomad driving adoption across retail purchases, B2B spend, and payroll.

Other Stories Worth Your Time

Google’s L1 for banks (GCUL) — Google Cloud shared fresh details on its “credibly neutral” Universal Ledger with Python smart contracts; CME is piloting ahead of 2026 services. This is a direct play at institutional tokenization rails vs. Stripe/Circle ecosystems. 

Aave launches “Horizon” for institutions — Aave Labs’ new platform lets funds post tokenized Treasuries/funds (Centrifuge, VanEck, Hamilton Lane, WisdomTree, etc.) as collateral to borrow USDC/RLUSD/GHO; Chainlink Onchain NAV feeds underpin risk.

Mastercard expands USDC/EURC settlement; Circle plugs into Finastra — Acquirers across EEMEA can settle in USDC/EURC; Circle also integrates with Finastra, which processes >$5T/day in cross-border flows for banks. This is real distribution for fiat onchain settlement. 

China weighs RMB stablecoins for trade — State Council to discuss offshore RMB stablecoins as part of RMB internationalization; Hong Kong’s issuer regime went live Aug 1 with first licenses expected by early 2026. Signal that trade finance tokenization may not be USD-only. 

Rain adds Dinari USD+ support — LATAM-focused stablecoin pay-ins/outs now include yield-bearing USD+ (Dinari)

BofA: tokenization & stablecoins pressure money market funds — Expect $25–$75B more T-bill demand from stablecoins over 12 months; bigger near-term competitive threat is to MMFs, pushing them to tokenize shares. 

Meta-signal: on-chain data to public chains — U.S. government publishes GDP prints on multiple L1s via Chainlink and Pyth — a symbolic but important step that normalizes public-chain data infrastructure for finance.