MegaETH's pre-deposit event failed on Tuesday after a cascade of technical outages disrupted what was speculated to be a controlled opening to verified users.
In an X post, the team said that configuration errors and rate limiting issues caused the platform's Know Your Customer system to fail. The pre-deposit was an early window for verified users to secure MEGA token allocations.
In addition to the KYC errors, a totally signed protected multisig transaction – prepared for a later cap increase – was executed ahead of schedule, allowing the inflow of latest deposits and pushing the rise beyond the planned $250 million limit.
“The $250 million cap is being filled by individuals who spammed updates on the pre-deposit website and were capable of catch the random opening time,” the minutes say.
MegaETH ultimately froze deposits at $500 million and scrapped plans to increase the raise to $1 billion. A retro and a withdrawal option shall be released soon.
“At no time were any assets in danger, but that doesn't matter; we expect more from ourselves and there are not any excuses,” the team added.
Source: MegaETH
MegaETH is an Ethereum Layer 2 protocol designed for 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 way more critical. AzFlin, a developer and DAO founder, argued that the errors might have been prevented if engineers had been more careful.
Summary of MegaETH's oversubscribed auctions
The pre-deposit window followed MegaETH's MEGA token auction, which opened on October 27 and was fully subscribed inside minutes.
This sale offered 5% of the ten billion token supply, with bids starting from $2,650 to $186,282 and an optional one-year lock-up period that provided a ten% discount.
The auction ended on October 30, ultimately raising greater than $1.3 billion in pledges and becoming one in all the biggest fundraising events of the 12 months.
Because contributions far exceeded the cap, MegaETH said it could depend on a “special allocation mechanism” to find out the quantity each participant ultimately receives.
MegaETH is being developed by MegaLabs, a team supported by key industry figures including Ethereum co-founders Vitalik Buterin and Joe Lubin.
After the testnet launch in March, the project is now targeting 100,000 transactions per second with latency of lower than a millisecond. The MEGA token is scheduled to launch in early 2026.
