Introduction to MegaETH’s New Economic Core
MegaETH is revolutionizing the economic landscape by launching the USDm stablecoin, an innovative asset that leverages yield from institutional-grade reserves to subsidize network operations. This bold move aims to permanently decouple revenue from user fees, creating a more sustainable and equitable ecosystem.
Partnership with Ethena
In a recent announcement on September 8, MegaETH revealed its partnership with Ethena to roll out USDm, a native stablecoin designed to finance sequencer operations without relying on transaction markups. This strategic collaboration enables MegaETH to create a new economic core, one that prioritizes the needs of its users and applications.
The Problem with Traditional Layer-2 Design
Most blockchain networks capture value by charging margins on sequencer fees, a model that grows more volatile as throughput scales and data costs compress. This approach can stifle ecosystem growth, as high fees can make it difficult for applications to thrive. MegaETH’s USDm stablecoin is built to solve this fundamental flaw in layer-2 design.
A New Model for Progressive Blockchain Economics
By shifting the burden away from users and relying on reserve yields to finance network operations, USDm creates a more stable and sustainable ecosystem. This structure is meant to make fees both stable and negligible, allowing applications to flourish without being hindered by excessive costs. As co-founder Shuyao Kong noted, “USDm means lower fees for users and a more expressive design space for applications.”
Institutional-Grade Backing
USDm’s v1 reserves are primarily allocated to BlackRock’s tokenized U.S. Treasury fund through Securitize, providing institutional-grade backing and a predictable yield stream. This strategic allocation ensures that the stablecoin is built on a foundation of stability and security. While the stablecoin launches with a foundation in USDtb, its reserves can evolve to include other Ethena products like USDe as market conditions dictate.
The Choice of Ethena as a Partner
The choice of Ethena as a partner was strategic, given its reputation for USDe, the third-largest USD-denominated crypto asset. Ethena brings its institutional-grade USDtb rails to the partnership, boasting approximately $1.5 billion in circulation. USDtb represents a pioneering effort in regulatory compliance, developed in collaboration with Anchorage Digital Bank with the upcoming GENIUS Act in mind.
Ensuring Transparency and Settlement
USDtb’s reserves are predominantly held in BUIDL, with Ethena and Securitize enabling 24/7 atomic swaps between USDtb and the underlying treasuries. This ensures tight settlement and transparency, providing users with a high level of confidence in the stability and security of the USDm stablecoin. As the crypto landscape continues to evolve, MegaETH’s partnership with Ethena and the launch of USDm are poised to make a significant impact on the future of blockchain economics. For more information, visit bitpulse.