The Mystery of MegaETH’s $500 Million Pre-Deposit Withdrawal: From “Liquidity Commitment” to Full Refund

What Is MegaETH’s Pre-Deposit Program?

Prior to the mainnet launch, MegaETH introduced a “Pre-Deposit Bridge” program designed to provide early liquidity for its stablecoin, USDm. The official initial cap was set at $250 million to ensure a smooth capital transition during the mainnet rollout.

For most participants, this approach initially seemed both reasonable and appealing. Users would deposit funds in advance, the project would issue USDm stablecoins based on these deposits, and after the mainnet launch, users could complete the asset transfer and begin using their assets. If executed as planned, this sequence (pre-deposit → stablecoin → mainnet) would facilitate a seamless transition and offer early adopters an entry point into the new ecosystem.

Why Did the Project Team Decide to Issue Refunds?

Image: https://x.com/megaeth/status/1994165259171397882

Despite the promising concept, the program faced major challenges from the outset. First, the SaleUUID contract misconfiguration prevented users from completing deposit transactions. The team had to urgently resolve this issue using a 4-of-6 multisig. Simultaneously, the third-party KYC provider implemented an incorrect rate limiting, which blocked many users from passing verification. The team identified and fixed this problem after almost 20 minutes. Even after the system recovered, the deposit window opened unpredictably. As a result, users who refreshed the page rapidly secured the entire $250 million allocation within minutes, while those relying on official notifications missed out almost entirely.

The team then attempted to raise the deposit cap from $250 million to $1 billion. However, an external party executed the multisig transaction roughly 30 minutes early, triggering a sudden influx of funds and causing the system to become unmanageable again. Subsequent attempts to adjust the cap to $400 million and $500 million both failed due to execution errors.

After a series of critical missteps, the team ultimately decided to halt the process and announced full refunds for all users.

What Were the Key Failures During the Process?

• Contract misconfiguration: The SaleUUID error was the root technical issue.
• Poor multisig management: The signature process, intended to be controlled, was triggered externally, resulting in premature cap increases.
• KYC system rate limiting: Overly strict or misconfigured limits prevented some users from completing KYC.
• Disorganized process design and poor user experience: Randomized deposit window openings created unfair competition, favoring users who refreshed the page over those waiting for notifications.

What Does This Mean for MegaETH’s Future and User Confidence?

This pre-deposit incident dealt a significant blow to MegaETH’s reputation. Technical execution, process management, and the commitment to fair user participation all came under widespread scrutiny.

Although the team repeatedly assured users that “all funds are safe and no assets are at risk,” and promised full refunds, the chaotic launch and abrupt suspension of the pre-deposit process have already led many participants to view the project as immature and unstable.

To regain community and investor trust, MegaETH must deliver clear, verifiable improvements on multiple fronts: stricter technical audits, greater operational transparency, faster user support, and a comprehensive review and reinforcement of both KYC providers and contract systems. The market will closely watch the execution of its future roadmap.

What Should Investors and Users Watch For?

• Exercise caution when participating in “presale/pre-deposit + promised liquidity” models. If a project’s contracts, multisig configuration, or KYC process has not undergone a comprehensive public audit, do not place blind trust.
• Before participating, verify that the project has published audit reports, contract code, detailed multisig configuration, and clearly outlined refund and contingency mechanisms. All of these are essential.
• Always maintain risk awareness. Even projects promoted as “industry-leading initiatives” (such as those claiming support from Ethereum co-founders) can encounter critical issues due to process failures or technical vulnerabilities.