MegaETH Cancels $1 Billion Fundraise After Technical Failures Disrupt Token Sale

TLDR

• MegaETH canceled plans to expand its fundraise from $250 million to $1 billion after multiple technical failures disrupted the pre-deposit event
• Configuration errors and rate-limit issues caused the KYC system to fail, blocking verified users from depositing funds
• A multisig transaction was executed too early, allowing deposits to flow in before the intended time and filling the $250 million cap instantly
• The team froze deposits at $500 million and will offer withdrawals to users who want their funds returned
• No user funds were at risk during the technical failures, but MegaETH acknowledged the launch experience was unacceptable

MegaETH has scrapped plans to expand its token sale to $1 billion after a series of technical problems disrupted the pre-deposit event on Tuesday. The Ethereum layer-2 project announced it would stop at $500 million and offer refunds to participants.

The pre-deposit window was designed for verified users to lock in MEGA token allocations. The event was supposed to open in a controlled manner for users who had completed Know Your Customer verification through the platform’s partner, Sonar.

Instead, configuration errors and rate-limit issues caused the KYC system to fail. Verified users were unable to deposit funds as planned.

Early Multisig Execution Creates Rush

A separate problem made the situation worse. A fully signed Safe multisig transaction that was prepared for a later cap increase was executed too early.

This allowed new deposits to flow into the system before the team intended. Users who refreshed the pre-deposit website repeatedly were able to catch the random opening time and deposit funds.

The $250 million initial cap filled almost instantly. MegaETH said people who were spamming the refresh button filled the cap before other verified users could participate.

The team tried to raise the limit to $400 million and then $500 million. By the time these changes took effect, the contract was already oversubscribed.

Pre-Deposit Program Details

The pre-deposit campaign was meant to provide early liquidity for MegaETH’s mainnet launch. Verified users could commit USD Coin in exchange for USDm, the network’s upcoming stablecoin built with Ethena’s framework.

The initial cap was set at $250 million with no individual user limits. Participants would receive reward multipliers tied to the MEGA token later.

MegaETH froze deposits at $500 million after the technical problems became clear. The team canceled plans to expand the raise to $1 billion.

Response and Next Steps

MegaETH confirmed that no user assets were at risk during the technical failures. The team acknowledged the problems were their responsibility.

A withdrawal page is coming for users who want their funds returned. Participants who choose to keep their deposits will retain credit toward the rewards program.

The team plans to publish a full retrospective explaining the event in detail. They will outline steps to prevent similar failures during the next phase of the launch.

Recent Token Auction

The pre-deposit window followed MegaETH’s MEGA token auction, which opened on Oct. 27. That sale offered 5% of the 10-billion-token supply and was fully subscribed within minutes.

Bids ranged from $2,650 to $186,282. The auction included an optional one-year lock-up period that provided a 10% discount.

Project Background

MegaETH is built by MegaLabs, a team backed by Ethereum co-founders Vitalik Buterin and Joe Lubin. The protocol is designed to deliver ultra-low-latency block processing and throughput comparable to real-time Web2 applications.

The project launched its testnet in March. MegaETH is now targeting 100,000 transactions per second with sub-millisecond latency.

The MEGA token is set to launch in early 2026. The team has not announced a new timeline for resuming the pre-deposit program or expanding the fundraise.

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