MegaETH Pre-Deposit Campaign Faces Major Setbacks

The MegaETH pre-deposit campaign on November 25, initially meant to facilitate liquidity for the upcoming mainnet launch, quickly devolved into chaos due to a major multisig error. As a result, the campaign saw hours of technical difficulties, significant changes in deposit caps, and widespread frustration among participants.

Key Takeaways

A critical multisig error resulted in a 4/4 signature requirement instead of the intended 3/4.
Market sentiment was divided, with around 60% of participants expressing bearish views, and many criticizing the situation as a “clown show” while others highlighted the substantial demand that locked in $500 million.

MegaETH pre-deposit campaign descends into chaos

The 156-Second Frenzy

The MegaETH pre-deposit campaign commenced at 9:00 AM EST for KYC-approved Sonar wallet holders, setting a $250 million cap on USDC bridges from Ethereum. Participants could earn a 2.5% $MEGA airdrop bonus, which sparked significant interest and urgency. However, shortly after the launch, the system encountered severe issues.

Within minutes, third-party APIs were overwhelmed, leading to an hour-long site outage. When the platform reopened at 10:00 AM, the entire $250 million cap was reached in just 156 seconds, with large investors and bots dominating the deposits while retail users struggled to keep up.

The MegaETH Multisig Mishap

At 10:15 AM, the MegaETH team announced plans to raise the cap to $1 billion “to provide users with access to USDm on the first day.” This move was met with backlash from early depositors as it implied a fourfold dilution of their yields without any prior notification or withdrawal options. The team later reassured users at 10:30 AM that the “first wave would remain unaffected” due to multiplier protections and scheduled a bridge reopening for 11:00 AM.

However, a significant mistake occurred during the preparation of the $1 billion transaction on their Gnosis Safe multisig. The team mistakenly set the requirement for 4/4 signatures instead of the intended 3/4. This error enabled anyone to execute the transaction, and by 10:26 AM, just 34 minutes before the reopening, a user identified the mistake and completed the transaction, leading to uncontrollable deposit surges.

Misguided Damage Control

In a state of panic, the MegaETH team made several attempts to adjust deposit caps. By noon EST, they scrapped the $1 billion plan entirely, citing “unexpected issues.” They did enable withdrawals for users wishing to opt-out, but participation remained low, with less than 5% taking action.

Post from MegaETH after the chaos
Source: X

The Aftermath

Currently, about $500 million is locked in contracts controlled by the MegaETH team. While no exploits occurred and the contracts cleared audits from Zellic and Slowmist, the multisig error highlighted serious operational issues within the team. On X, the hashtag #MegaETH trended with over 50,000 mentions. Supporters celebrated the massive demand that absorbed half a billion dollars during a bear market, while critics mocked the situation and called for refunds.

A notable crypto analyst referred to the event as an “insane ride.” With the pre-market price of $MEGA fluctuating between $2 and $3 and the mainnet launch still on track for December, the future of hype around MegaETH remains uncertain amidst the fallout from this chaotic event.