Configuration errors, rate-limit failures, and a premature multisig execution push deposits past cap and force MegaETH to freeze the raise at $500 million
MegaETH’s highly anticipated pre-deposit event came to an abrupt halt after a series of technical failures derailed what was expected to be a carefully controlled entry process for verified users. The issues not only disrupted the platform’s Know Your Customer system but also caused the raise to exceed its intended cap, ultimately leading the team to abandon its $1 billion expansion plan.
MegaETH Faces Technical Setbacks During Pre-Deposit
The pre-deposit window was designed exclusively for verified users to secure early MEGA token allocations. However, the event quickly unraveled. According to the team, configuration errors and rate-limit failures caused the KYC system to malfunction, preventing users from completing the verification flow.
Compounding the problems, a fully signed Safe multisig transaction—which had been prepared ahead of time for a later increase in the cap—executed prematurely. This unexpected action allowed new deposits to pass through, pushing the raise far beyond the intended $250 million limit.
MegaETH explained that “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,” highlighting the lack of controlled access during the disruption.
As a result, the protocol froze deposits at $500 million and decided against expanding the sale to $1 billion. The team committed to releasing a full retro and enabling user withdrawals shortly, stressing that “at no point were assets at risk, but that doesn’t matter; we expect higher of ourselves.”
Community Divided on MegaETH’s Response
MegaETH’s transparency received praise from parts of the developer community, while others criticized the platform for what they viewed as preventable missteps. One developer argued that the collapse of the pre-deposit phase was avoidable and pointed to lapses in engineering oversight.
The incident adds pressure as MegaETH positions itself as a high-performance Ethereum layer-2 solution capable of delivering ultra-low-latency processing similar to real-time Web2 applications.
Oversubscribed MEGA Token Auction Sets High Expectations
The breakdown came shortly after MegaETH’s MEGA token auction, held between Oct. 27 and Oct. 30, which was fully subscribed within minutes. The sale offered 5% of the 10-billion-token supply and attracted bids from $2,650 to over $186,000, with optional one-year lockups providing a 10% discount.
The auction ultimately drew over $1.3 billion in commitments, making it one of the year’s largest and most competitive raises. Due to the overwhelming demand, MegaETH introduced a special allocation mechanism to determine individual distribution amounts.
Built by MegaLabs and backed by prominent industry figures including Vitalik Buterin and Joe Lubin, the project is targeting 100,000 transactions per second and sub-millisecond latency. The MEGA token is scheduled for launch in early 2026.
MegaETH’s halted pre-deposit event marks a significant operational setback at a crucial moment for the layer-2 project. Yet, with strong investor interest and ambitious technical goals, the protocol remains under intense industry watch as it works to regain user trust and prepare for its upcoming token launch.
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