MegaETH halts $1B fundraising plan due to technical failures

MegaETH has run into problems that forced the team to pull back from an expansion of its token sale.

Summary

• A misconfigured multisig and overloaded KYC APIs were some of the issues that caused repeated failures during launch.
• Rate-limits on Sonar’s infrastructure contributed to the breakdown.
• No funds were at risk, but the user experience failed, prompting MegaETH to pause expansion.

According to a Nov. 25 series of posts on X, MegaETH said it is no longer pursuing its plan to increase its pre-deposit cap from $250 million to $1 billion after a string of technical issues disrupted the event. 

The Ethereum layer-2 project said the experience “was not acceptable” and confirmed that a withdrawal page is coming for users who want their funds returned.

$1B raise halted after cascading failures

MegaETH described the incident as a mix of configuration errors, slow coordination around multisig updates, and separate failures from its KYC partner, Sonar.

These issues combined to create a launch window that opened earlier than planned, blocked deposit attempts, and led to a rush of activity that filled the initial $250 million cap almost instantly.

Once the team tried to lift the limit, new problems followed. A mismatched sale identifier in the pre-deposit contract required a 4-of-6 multisig fix, while Sonar’s rate limits caused extended downtime.

By the time fixes were deployed, the system reopened at a random moment, allowing users who kept refreshing the page to deposit before others even knew the window was live. 

Attempts to expand the cap to $400 million and then $500 million came too late, with the contract already oversubscribed before each limit took effect.

Pre-deposit goals, user fallout, and next steps

The pre-deposit campaign was designed to supply early liquidity for MegaETH’s mainnet launch by letting KYC-verified users commit USD Coin (USDC) in exchange for USDm, the network’s upcoming stablecoin built with Ethena’s (ENA) framework.

The initial cap was set at $250 million with no individual limits, and participants would later receive reward multipliers tied to the MEGA token.

The breakdown has prompted a wave of refund requests, although participants will still keep credit toward the rewards program. MegaETH said it will publish a full retro to explain the event in detail and outline how the team will prevent similar failures during the next phase of the launch.