MegaETH, supported by Vitalik, launches the yield stablecoin USDm, aiming to disrupt the L2 yield model.

The Ethereum Layer 2 protocol MegaETH, supported by Vitalik Buterin, has announced the launch of a new yield stablecoin USDm, aimed at disrupting the traditional L2 profit model that relies solely on transaction fees. The plan will offset sequencer costs through the yield from reserve assets, dropping user costs and expanding application scenarios.

USDm: Created in collaboration between BlackRock and Ethena

USDm is developed in collaboration with global asset management giant BlackRock and the algorithmic stablecoin protocol Ethena.

Ethena: The current total value locked (TVL) reaches 13 billion USD.

Infrastructure: USDm will be deployed on Ethena's USDtb framework.

Reserve flow: Transferred to BlackRock's BUILD, a tokenized US Treasury fund with a market value of 2.2 billion USD and stable returns.

Revenue Model: Offset Sequencer Fees with Reserve Profits

The main revenue of traditional L2 protocols comes from sequencer fees (the gas cost of bundling transactions and submitting them to the Ethereum mainnet).

The innovation of USDm lies in:

1. Reserve assets generate returns → Used to offset sequencer fees

2、drop user transaction costs

3. Release more application design space

MegaETH co-founder Kong Shuyiao stated that this model will bring users lower costs and promote the diversified development of the L2 ecosystem.

Market Background of Yield Stablecoins

Yield stablecoin is a type of digital asset that is pegged to fiat currencies or other assets and provides returns to its holders.

Policy Background: After the passage of the US "GENIUS Act", issuing institutions are prohibited from issuing such stablecoins.

Market opportunities: Ethena's USDe, Sky's USDS, etc. are set to become major beneficiaries.

Demand-driven: Investors seek assets that provide both stability and returns.

Ethereum fee pressure and L2 opportunities

(Source: Token Terminal)

The fees for sequencers have been a long-term point of contention in the Ethereum ecosystem, with some viewpoints arguing that the mainnet should receive a larger share of the transaction fee revenue.

Data: According to Token Terminal, Ethereum generated 1.1 billion USD in fees over the past year, but has dropped sharply since February.

L2 Opportunities: Against the backdrop of dropping fees and increasing competition, attracting users and developers through innovative revenue models will be key for L2 protocols to break through.

Conclusion

The launch of USDm marks a significant attempt at a business model for Ethereum L2 - shifting from solely relying on transaction fees to utilizing the income from reserve assets to reduce costs and improve efficiency for users. With the backing of BlackRock and Ethena, along with the rapid growth of the stablecoin market, MegaETH may gain an advantage in the L2 competition, bringing new growth momentum to the Ethereum ecosystem.