MegaETH's USDm Stablecoin Rethinks Fee Economics with Institutional Yield

MegaETH has launched a native stablecoin, USDm, in collaboration with DeFi protocol Ethena, aiming to align incentives across its network and deliver the lowest transaction fees for users and builders. The stablecoin, issued through Ethena's USDtb rails, is designed to be deeply integrated across wallets, apps, and on-chain services on MegaETH. The initiative represents a strategic shift in how Layer 2 (L2) blockchain networks monetize sequencer fees, which traditionally rely on charging an extra margin on transaction costs. This approach often creates tension between the network and its ecosystem, as higher fees discourage usage, yet are necessary to maintain profitability for the network.

USDm aims to resolve this tension by redirecting value from financial yield—rather than users—to fund the network. The stablecoin's reserves are primarily invested in BlackRock's tokenized U.S. Treasury fund (BUIDL) via Securitize, alongside liquid stablecoins for redemptions. This institutional-grade backing ensures transparent and predictable yield generation. The design also includes flexibility to adjust the collateral mix, potentially incorporating other Ethena-issued products like USDe in the future. This adaptability allows MegaETH to respond dynamically to market conditions while maintaining a stable yield base.

A key feature of USDm is its ability to programmatically direct reserve yields to cover sequencer operations. This mechanism enables gas pricing to be set at cost, ensuring fees remain low and stable for users and developers. As network activity increases, the stablecoin's yield sustains the infrastructure without necessitating fee hikes. This approach supports the development of products and applications that require sub-cent and predictable transaction costs—categories that are otherwise unviable due to higher fees.

The stablecoin’s launch aligns with a broader trend of crypto ecosystems developing proprietary stablecoins. Similar initiatives have been undertaken by MetaMask and Hyperliquid, signaling a strategic pivot from relying on dominant stablecoin offerings like USDC and USDT. Ethena, which provides the underlying infrastructure for USDm, has itself emerged as a major player in the stablecoin space. Its USDe product, a reserve-backed stablecoin, is the third-largest USD-denominated crypto asset with over $13 billion in total value locked (TVL). Ethena's USDtb stablecoin, currently with $1.5 billion in circulation, is notable for its regulatory alignment with the newly enacted GENIUS Act in the U.S.

MegaETH positions itself as a "real-time" blockchain, emphasizing low-latency transactions and high throughput. With a 10-millisecond latency and the capacity to process up to 100,000 transactions per second, it targets applications requiring real-time data processing. USDm is intended to facilitate such use cases by reducing cost barriers, thereby encouraging broader adoption of decentralized applications (dApps) and financial tools on the MegaETH network. The stablecoin’s integration also coexists with existing stablecoins like USDT0 and cUSD, ensuring deep liquidity and flexibility for developers and users.

The launch of USDm highlights Ethena's expansion into stablecoin-as-a-service offerings, a growing niche in the crypto industry. By enabling other ecosystems to issue their own stablecoins, Ethena contributes to a broader shift toward decentralized financial infrastructure. The initiative reflects a larger effort to address challenges in the current stablecoin landscape, including regulatory scrutiny, volatility risks, and the need for institutional-grade backing. USDm's architecture, backed by tokenized Treasuries and designed for seamless integration, underscores the growing convergence between traditional finance and blockchain-based solutions.

Source:

[1] MegaETH Introduces USDm (https://www.megaeth.com/blog-news/megaeth-introduces-usdm)

[2] MegaETH Unveils Native Stablecoin with Ethena Aiming to Keep Blockchain Fees Low (https://www.coindesk.com/business/2025/09/08/megaeth-unveils-native-stablecoin-with-ethena-aiming-to-keep-blockchain-fees-low)