MegaETH scraps $1B plan after technical failures derail sale

MegaETHs pre-deposit event unraveled on Tuesday after a cascade of technical failures disrupted what was meant to be a controlled opening for verified users.

In an X post, the team said that configuration errors and rate-limit issues caused the platforms Know Your Customer system to fail. The pre-deposit was an early window for verified users to lock in MEGA token allocations.

In addition to the KYC failures, a fully signed Safe multisig transaction — prepared for a later cap increase — was executed prematurely, allowing new deposits to flow in and pushing the raise past its intended $250 million limit.

“The $250M cap is filled by people who were spamming refresh on the Pre-Deposit Website and were able to catch the random opening time,” the protocol said.

MegaETH ultimately froze deposits at $500 million and scrapped plans to expand the raise to $1 billion. A retro and a withdrawal option will be released shortly.

“At no point were assets at risk, but that doesnt matter; we expect higher of ourselves and there are no excuses,” the team added.

Source: MegaETH

MegaETH is an Ethereum layer-2 protocol designed to deliver ultra-low-latency block processing and throughput, comparable to a real-time Web2 application.

Some users praised MegaETHs transparency in explaining what happened, but others were far more critical. AzFlin, a developer and DAO founder, argued that the mistakes could have been prevented if engineers had been more careful.

Source: AzFlin

Related: Aztec launches decentralized and private Ethereum L2 on mainnet, almost

MegaETHs oversubscribed auction recap

The pre-deposit window came on the heels of MegaETHs MEGA token auction, which opened on Oct. 27 and was fully subscribed within minutes.

That sale offered 5% of the 10-billion-token supply, with bids ranging from $2,650 to $186,282 and an optional one-year lock-up that provided a 10% discount.

The auction closed on Oct. 30, ultimately drawing more than $1.3 billion in commitments and becoming one of the years most crowded raises.

Because contributions far exceeded the cap, MegaETH said it would rely on a “special allocation mechanism” to determine the amount each participant ultimately receives.

Source: MegaETH

MegaETH is built by MegaLabs, a team backed by major industry figures including Ethereum co-founders Vitalik Buterin and Joe Lubin.

Following its testnet launch in March, the project is now targeting 100,000 transactions per second with sub-millisecond latency. The MEGA token is set to launch in early 2026.