MegaETH Walks Back Its $500M Pre-Deposit After Mounting Errors Trigger a Total Reset

MegaETH is unwinding its pre-launch “Pre-Deposit Bridge” after a series of technical errors and coordination failures derailed the initiative, prompting the project to refund all user deposits. The program was originally designed to seed liquidity for USDm — the stablecoin backing the upcoming Frontier mainnet — but quickly descended into one of the year’s most chaotic fundraising attempts.

The team admitted the rollout “was sloppy,” saying user expectations around a $250 million deposit cap clashed with their internal objective of preloading collateral to guarantee 1:1 USDm conversions at mainnet launch. A new smart contract, currently under audit, will be used to return all funds.

Issues surfaced instantly. At launch, transactions began failing because the contract included an incorrect SaleUUID, forcing a 4-of-6 multisig correction. Meanwhile, Sonar — the KYC provider responsible for validating depositor identities — applied an unexpectedly strict rate limit, cutting off large segments of users. It took the team more than twenty minutes to diagnose and resolve the bottleneck.

When deposits eventually opened, they did so at a random moment. Users actively refreshing the interface were able to fill the $250 million cap within minutes, leaving those waiting on official notices effectively excluded.

In response, the team attempted to raise the cap to $1 billion. But the transaction was executed ~30 minutes early by an external party because Safe multisig transactions become executable by anyone once the required signatures are in place. Attempts to lower the cap — first to $400 million, then to $500 million — failed as deposits continued to pour in faster than the team could update the contract. Ultimately, persistent KYC flow bugs forced MegaETH to shut the entire process down.

Although the project emphasized that no funds were ever in danger, it acknowledged that the sale had become fundamentally unfair. MegaETH said depositors will be recognized in the future, though without offering specifics. The USDm and USDC-to-USDm conversion bridge will reopen closer to Frontier mainnet under a more controlled liquidity-building framework.

The episode increases pressure on MegaETH to demonstrate that the rest of its infrastructure is ready for production and can avoid similar operational breakdowns.