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.
Related: Ethereum devs and L2 leaders go all in on based and native rollups
Fees on Ethereum
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.
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