MegaETH and Ethena Launch USDm Stablecoin to Slash Layer-2 Fees

Most Layer-2 chains charge a fee margin on top of sequencer costs, generating revenue at the expense of affordability for users. This creates a tension between growth, which depends on lower fees, and profitability, which depends on sustaining those same margins. As data costs continue to decline and throughput rises, the sustainability of this model becomes increasingly questionable. MegaETH has chosen a different approach with USDm, redirecting the yield from reserve assets to cover sequencer expenses. Instead of charging users additional fees, the network uses this yield to operate its sequencer at cost, enabling transactions to remain consistently inexpensive without squeezing either developers or end-users.

USDm is issued through Ethena’s stablecoin infrastructure, using its USDtb rails. These rails channel reserves into BlackRock’s tokenized U.S. Treasury fund, BUIDL, with Securitize providing the tokenization pathway. This setup gives USDm institutional-grade backing while producing a stable source of yield. For redemption, liquidity is supported by incorporating stablecoins into the reserve mix, helping ensure that USDm can be exchanged smoothly. The first version of USDm is built on USDtb, but the design allows other Ethena-issued assets, such as USDe, to be included over time. This flexibility means USDm can adapt to changing market conditions and liquidity requirements, giving MegaETH a sustainable foundation for the long term.

The yield generated by USDm’s reserves is not held for profit but is instead programmatically redirected to cover the operational costs of running the network. By applying yield to sequencer expenses, MegaETH makes it possible to maintain its promise of real-time, low-latency blockchain performance while keeping transaction costs affordable for its community. This mechanism not only eases the financial burden on users but also ensures that developers can operate without the constraints of volatile or rising fees. As co-founder Shuyao Kong emphasized "USDm means lower fees for users and a more expressive design space for applications. We are excited to work with Ethena to enable a win-win scenario for all stakeholders in our ecosystem."

For everyday users, this translates into predictable and accessible transaction fees, improving usability and lowering barriers to participating in on-chain activity. Developers benefit from a cost structure that no longer forces them to optimize around fee volatility, allowing for more ambitious applications and services to be deployed. The broader network gains as well: a system funded through yield rather than margins aligns incentives across stakeholders, creating a sustainable cycle of growth where affordability and scalability go hand in hand. By grounding the reserves in high-grade, transparent assets such as BUIDL, USDm also strengthens institutional confidence and makes the ecosystem more appealing to partners that demand strong risk management and visibility.

MegaETH’s move highlights a shift in thinking about how Layer-2 economics should function. Instead of relying on each transaction as a direct source of revenue, USDm provides an alternative pathway where financial instruments help subsidize the infrastructure. This reduces dependence on volatile fee markets and encourages growth by prioritizing accessibility. It could serve as an example for other networks facing similar challenges, particularly as blockchain adoption expands and competition intensifies.

By focusing on yield-powered stability, MegaETH is positioning USDm as more than a simple stablecoin. It is both a network utility and a structural innovation that directly addresses one of the most difficult problems in blockchain scaling: balancing growth with sustainable funding. Open questions remain about the scope of backing, regulatory considerations, and the pace of adoption by developers and users. Yet the design represents a significant milestone, showing how financial creativity can be aligned with user-first principles in blockchain development.

MegaETH’s introduction of USDm may influence how other networks think about funding their operations in the years ahead. If it succeeds in demonstrating that yield can sustainably replace fee margins, it will point the way to a new model where transaction costs are no longer a barrier to participation but a predictable, low-friction component of everyday blockchain use. For now, USDm signals MegaETH’s intent to lead with both technical ambition and financial ingenuity, setting an example of how to combine real-time performance with an economic structure built to last.