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MegaETH’s 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 platform’s 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 doesn’t matter; we expect higher of ourselves and there are no excuses,” the team added.
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 MegaETH’s 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.
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MegaETH’s oversubscribed auction recap
The pre-deposit window came on the heels of MegaETH’s 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 year’s 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.
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.
Magazine: MegaETH launch could save Ethereum… but at what cost?
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