If the key reason the supply of USDm grows is through an Aavethena+ mega loop, I don't see how the stablecoin benefits the ecosystem in the long term. Users need a reason to hold USDm other than an aave loop, it subsidizing sequencer costs, and the yield generated from it are used for MEGA buybacks. Fees are already low enough on L2s, they aren't really subsidizing anything and buybacks haven't been super beneficial for the majority of protocols that have implemented them.
You need some novel utility like with USDH, you gain access to markets on Hyperliquid that you can't with USDC or USDT.
The loop will bring liquidity but how will the ecosystem grow if the majority of users are either lending on Aave or running the loop?
I know you mentioned the incentives campaign, which I think will help. And seeing someone like bread saying they are going to be mindful of where they deploy incentives is great to hear. But the majority of incentive campaigns protocols and new ecosystems run have not ended well recently
The MEGA/Proximity Markets dynamic is the part I keep coming back to. Most L2 tokens are governance tokens with a thin narrative — MEGA actually has HFT firms bidding real money to be first in the sequencer queue. That's not a made-up demand sink; that's the same economics that drove co-location fees at NYSE. The zkSync comparison is fair warning though. Beautiful tech, terrible TGE timing, and months of unlock pressure destroyed the narrative. The difference here is MEGA TGEing into a moment where Bitcoin is reclaiming $80K and ETF inflows are back — macro tailwind is the variable that changes the outcome more than tokenomics does. The KPI-3 mechanic with the reset provision is the one I'd watch most carefully. If it misses once, the narrative breaks fast.
If the key reason the supply of USDm grows is through an Aavethena+ mega loop, I don't see how the stablecoin benefits the ecosystem in the long term. Users need a reason to hold USDm other than an aave loop, it subsidizing sequencer costs, and the yield generated from it are used for MEGA buybacks. Fees are already low enough on L2s, they aren't really subsidizing anything and buybacks haven't been super beneficial for the majority of protocols that have implemented them.
You need some novel utility like with USDH, you gain access to markets on Hyperliquid that you can't with USDC or USDT.
The loop will bring liquidity to the ecosystem. It will create an initial demand for borrowing so lenders also end up earning yield.
See it as a bootstrap, not the end result.
The loop will bring liquidity but how will the ecosystem grow if the majority of users are either lending on Aave or running the loop?
I know you mentioned the incentives campaign, which I think will help. And seeing someone like bread saying they are going to be mindful of where they deploy incentives is great to hear. But the majority of incentive campaigns protocols and new ecosystems run have not ended well recently
Very good post! I could play the TGE and I got very happy. However, I’m following MEGA action price and it’s not being the best one.
I think they will have their moment to shy but now the market is very bad.
The MEGA/Proximity Markets dynamic is the part I keep coming back to. Most L2 tokens are governance tokens with a thin narrative — MEGA actually has HFT firms bidding real money to be first in the sequencer queue. That's not a made-up demand sink; that's the same economics that drove co-location fees at NYSE. The zkSync comparison is fair warning though. Beautiful tech, terrible TGE timing, and months of unlock pressure destroyed the narrative. The difference here is MEGA TGEing into a moment where Bitcoin is reclaiming $80K and ETF inflows are back — macro tailwind is the variable that changes the outcome more than tokenomics does. The KPI-3 mechanic with the reset provision is the one I'd watch most carefully. If it misses once, the narrative breaks fast.