Daniel Walker
MegaETH, an Ethereum scaling solution by MegaLabs, is introducing a new stablecoin called USDm. Unlike traditional models where sequencer fees generate profit, USDm is built to redirect reserve yield toward covering network operations, ensuring lower and more predictable transaction costs for both users and developers.
This approach aims to replace outdated sequencer margin structures and align the interests of the blockchain ecosystem with its community.
The first release of USDm will be launched on Ethena’s USDtb rails, providing strong institutional backing. Reserves are held mainly in BlackRock’s tokenized U.S. Treasury fund (BUIDL) through Securitize, with liquid stablecoins available for redemptions.
At launch, USDm will swap into USDtb instead of offering direct fiat redemption, with supply parameters adjusted over time to meet operating needs.
Ethena, already the issuer of the third-largest stablecoin USDe, adds significant scale to the collaboration. With nearly $13 billion in total value locked (TVL) and $1.5 billion worth of USDtb in circulation, Ethena is also advancing toward compliance with the U.S. GENIUS Act via a partnership with Anchorage Digital Bank.
Solving the Sequencer Fee Dilemma
Many Layer 2 networks charge extra on sequencer fees to generate revenue, but this model often leads to friction with users. EIP-4844’s impact on data costs has made these fee structures more unstable, further highlighting the need for alternatives.
With USDm, the reserve income is automatically allocated to sequencer expenses, removing unpredictability and preventing excessive fees. MegaETH views this as the foundation for sustainable ecosystem growth.
Testnet Performance and Mainnet Plans
Earlier this year, MegaETH launched its public testnet, boasting 10-millisecond block times and over 20,000 transactions per second. The team claims the mainnet could eventually handle up to 100,000 transactions per second while keeping fees consistently below a cent.
MegaETH says this performance could unlock entirely new categories of applications, such as real-time streaming and interactive services, without sacrificing Ethereum compatibility.
Yield Distribution and Revenue Strategy
MegaETH noted that other potential revenue sources, like MEV capture, will be disclosed closer to mainnet launch. The team dismissed immediate plans for token buybacks, explaining that yield distribution to users is restricted under the GENIUS Act, making sequencer operating costs the priority.
As one representative put it:
“The point of the stablecoin is to deliver better outcomes for the community. Today, that means OPEX. As yield grows and MegaETH matures, the way that value flows back to users will evolve.”
Deep Integration Across the Ecosystem
Once live, USDm will be embedded into wallets, dapps, paymasters, and onchain services throughout the MegaETH network. Other stablecoins already supported — such as USDT0 (canonical USDT) and cUSD — will remain available for users and developers.
MegaETH’s Vision for Real-Time Ethereum Scaling
MegaETH positions itself as a real-time, Ethereum-secured blockchain featuring a hyper-optimized execution environment. By combining ultra-low latency with Ethereum’s composability, the network hopes to become the foundation for the next wave of scalable Web3 applications.
In December, the project showcased strong investor interest, raising $10 million in just three minutes on Cobie’s angel investor platform Echo.
