MegaETH announced that it will return all funds deposited into its Pre-Deposit Bridge. The Ethereum Layer 2 scaling solution reversed a pre-launch campaign intended to preload collateral for USDm, the native stablecoin of the network’s upcoming Frontier mainnet.
The team said the execution of the event “was sloppy,” while noting that user expectations around an initial $250 million cap became misaligned with its goal of guaranteeing 1:1 USDm conversion at launch.
MegaETH Pulls the Plug
According to the project, the refund process will be handled by a new smart contract currently under audit, with reimbursements issued once the review is complete. MegaETH detailed a series of technical and operational failures that unfolded during the pre-deposit process, beginning with transactions failing at launch due to an incorrect SaleUUID, which required a 4-of-6 multisig update, and compounded by strict rate limits applied by Sonar, the KYC provider, that blocked large portions of user traffic.
Once service was restored, deposits opened unexpectedly early, and the $250 million cap was filled within minutes by users who were refreshing the page. Meanwhile, others who were relying on official communication were unable to participate. A subsequent decision to raise the cap to $1 billion was derailed when an incorrectly configured 4-of-4 multisig transaction allowed an external party to execute the cap-increase approximately 34 minutes early, reopening deposits and pushing contributions past $400 million.
Attempts to reset the cap to $400 million and later to $500 million failed as inflows outpaced transaction confirmations, prompting the team to halt the process entirely. MegaETH stressed that no funds were at risk and that depositor contributions “will not be forgotten,” but said all communications must follow compliance standards. The project confirmed that USDm remains central to its ecosystem and that the USDC-USDm conversion bridge will reopen ahead of the Frontier mainnet to build deeper liquidity and ease user onboarding.
Another Pre-Deposit Controversy
A similar incident surfaced last month during Stable’s pre-deposit rollout, which offered a point of comparison for MegaETH’s current reset. Stable, a Layer 1 blockchain focused on stablecoin transactions, faced scrutiny during the first phase of its pre-deposit campaign after on-chain data showed that most deposits were made by a small cluster of large wallets before the official opening.
The $825 million cap for Phase 1 was reached in about 22 minutes. This eventually prompted allegations of front-running and insider involvement from community members who said the early inflows left little room for retail participants.