Ethereum News Today: Ethereum’s New Stablecoin Gambit: Fee Stability or Regulatory Tightrope?

MegaETH, an Ethereum-based scaling solution developed by MegaLabs, has announced the launch of a native stablecoin called USDm in collaboration with decentralized finance (DeFi) protocol Ethena. The stablecoin is designed to operate on a model that replaces traditional sequencer margins with reserve yield to fund sequencer operating expenses, aiming to reduce and stabilize transaction fees for users and developers. According to project details, USDm is intended to align incentives across the chain, ecosystem, and users, particularly in the context of Ethereum’s EIP-4844 upgrade, which reduces data costs and may make fee margins more unpredictable [1].

The first iteration of USDm is issued on Ethena’s USDtb rails, a structure that provides institutional-grade backing and transparent accounting. USDtb reserves are primarily held in BlackRock’s tokenized U.S. Treasury fund (BUIDL) via Securitize, alongside liquid stablecoins for redemptions. At launch, USDm will swap into USDtb rather than provide direct fiat redemptions, with the team indicating that parameters for daily operating expenses will be adjusted over time [1]. Ethena, a top-10 DeFi protocol with approximately $13 billion in total value locked (TVL), brings both scale and regulatory compliance to the partnership, including a potential alignment with the U.S. federal GENIUS Act through its collaboration with Anchorage Digital Bank [1].

MegaETH has already launched its public testnet, which features 10-millisecond block times and the ability to process over 20,000 transactions per second. The project envisions scaling to 100,000 transactions per second while maintaining Ethereum composability. The team emphasized that USDm is not intended for direct token buybacks at this stage, noting that such discussions are premature without an announced token. Furthermore, distributing yield directly to users under current regulatory frameworks is not feasible, so the focus remains on covering sequencer operating expenses initially. As the stablecoin’s revenue grows and the network matures, the team suggested that yield distribution methods could evolve [1].

The introduction of USDm coincides with a broader expansion in the stablecoin market, which saw a total market capitalization exceeding $285 billion in recent weeks. Tether’s USDT continues to dominate, holding approximately 58% of the market. USDm v1 is issued on Ethena’s platform and backed by USDtb, which already has about $1.5 billion in circulation. The move aligns with recent regulatory developments, including the passage of the GENIUS Act in mid-July, which has spurred activity in the stablecoin sector. Other projects, such as decentralized perpetuals exchange Hyperliquid, have also announced plans to launch native stablecoins, indicating a growing trend toward on-chain value capture [2].

MegaETH’s USDm is expected to integrate deeply across wallets, paymasters, dapps, and onchain services, with existing stablecoins like USDT0 and cUSD remaining available on the network. The project also raised $10 million in three minutes via the Echo angel investor platform in December 2023, co-founded by prominent crypto trader Jordan Fish. The team views USDm as a foundational step toward supporting real-time applications, streaming services, and interactive use cases on a low-cost, Ethereum-secured blockchain [1].

Source:

[1] MegaETH Launches Native USDm Stablecoin with Ethena (https://www.theblock.co/post/369786/megaeth-usdm-stablecoin)

[2] MegaETH Labs Unveils MegaUSD Stablecoin for Real-Time Apps (https://thedefiant.io/news/defi/megaeth-labs-unveils-megausd-stablecoin-for-real-time-apps)