MegaETH Suspends $1 Billion Fundraising Efforts Due to Technical Issues

MegaETH has encountered significant challenges that have led the team to retract their plans for expanding their token sale.

Key Takeaways

MegaETH has stopped its plan to raise $1 billion due to various technical malfunctions.
Problems included configuration errors, poor multisig coordination, and failures with their KYC partner, Sonar.
The pre-deposit campaign aimed to provide liquidity for MegaETH’s mainnet launch but is now facing numerous refund requests from participants.
Users will still retain credits towards the rewards program, and MegaETH plans to release a retrospective report to outline the issues and improvements for the future.

MegaETH pulls $1B raise after launch breakdown

On November 25, MegaETH announced via a series of posts on X that they are halting their efforts to increase their fundraising cap from $250 million to $1 billion, following a host of technical failures that disrupted the token sale. The Ethereum layer-2 project acknowledged that the experience “was not acceptable” and stated that a withdrawal option will be made available for users looking to reclaim their funds.

Fundraising Halted Due to Technical Failures

MegaETH attributed the disruption to a combination of configuration mistakes, slow coordination in multisig updates, and challenges stemming from their KYC provider, Sonar. These issues resulted in an early opening of the launch window, which blocked deposit attempts and created a rush of activity, rapidly filling the initial cap of $250 million.

Once the team attempted to lift the cap, it faced additional complications. A discrepancy in the sale identifier within the pre-deposit contract demanded a 4-of-6 multisig correction, while Sonar’s limitations led to extended downtime. By the time the necessary fixes were implemented, the system reopened at a random time, enabling users who constantly refreshed the page to deposit funds before others even realized the window was active. Efforts to increase the cap to $400 million and then $500 million were too late, as the contract was already oversubscribed before these limits could take effect.

Pre-Deposit Goals, User Fallout, and Future Plans

The goal of the pre-deposit campaign was to provide initial liquidity for MegaETH’s mainnet launch by allowing KYC-verified users to contribute USD Coin (USDC) in return for USDm, the network’s upcoming stablecoin developed using Ethena’s (ENA) framework. The initial cap of $250 million had no limits on individual contributions, and participants were set to receive reward multipliers associated with the MEGA token.

The incident has generated a surge of refund requests, although participants will still retain credits towards the rewards program. MegaETH has stated that they will issue a comprehensive report to clarify the situation and detail how they plan to avoid similar issues in future phases of the launch.