The USDm stablecoin, built with Ethena and backed by tokenized treasuries, will use its yield to subsidize Ethereum sequencer fees.
MegaETH, an Ethereum layer-2 protocol backed by Vitalik Buterin, announced the upcoming launch of a yield-bearing stablecoin that might give it a different business model than traditional L2s, which drive revenue through transaction fees.
The stablecoin, USDm, is being developed in partnership with Ethena, an algorithmic stablecoin protocol with $13 billion in total value locked (TVL). It will launch on Ethena’s USDtb infrastructure, which channels reserves into BlackRock’s BUIDL — a tokenized US Treasury bill fund with a $2.2 billion market cap and steady yield, according to RWA.xyz.
Yield from the stablecoin’s reserves will reportedly be used to offset sequencer fees, the Ethereum gas costs a layer-2 incurs when publishing batches of transactions to the main chain.
The proposed model might lower the need for sequencer fees, instead drawing on yield from an alternative source. In a statement, MegaETH co-founder Shuyao Kong said that the USDm stablecoin would “lower fees for users” and allow for “more expressive design space for applications.”
Yield-bearing stablecoins are digital assets pegged to another asset, such as a fiat currency, and that generates yield to holders.
The supply of yield-bearing stablecoins has surged following the passage of the GENIUS Act in the United States, which bans issuers from offering yield-generating stablecoins. Ethena’s USDe and Sky’s USDS have been among the main beneficiaries of the strict rules.
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Sequencer fees have caused controversy, specifically in the Ethereum ecosystem, where some believe the network should demand more of the fee pie.
According to Token Terminal, Ethereum has collected $1.1 billion in fees in the past calendar year. However, the amount of fees collected has plummeted since February.
