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Ethereum News Today: "MegaETH's $5 Billion Stablecoin Rollout Stumbles Amid Technical Issues and Security Breaches"

Ethereum News Today: "MegaETH's $5 Billion Stablecoin Rollout Stumbles Amid Technical Issues and Security Breaches"

Bitget-RWA2025/11/26 01:20
By:Bitget-RWA

- MegaETH scrapped its USDm stablecoin pre-deposit plan after technical glitches and user exploits caused a $1B cap to surge to $5B within minutes. - KYC system failures and a misconfigured 4-of-4 multisig transaction allowed unauthorized deposits to exceed the initial $250M threshold rapidly. - A suspected crypto whale exploited pre-signed workflows to accelerate allocations, triggering unfair access and forcing a withdrawal mechanism for affected users. - Despite the chaos, MegaETH maintains its 2026 mai

MegaETH, an advanced layer-2 protocol designed for high throughput on

networks, encountered major setbacks during the initial launch of its USDm stablecoin pre-deposit event. The team was forced to abandon its plan to raise the deposit ceiling to $1 billion after a series of technical glitches and user abuses. Originally, the project on November 25, setting a $250 million limit and focusing on verified users who had participated in the oversubscribed MEGA token . Yet, almost immediately after launch, the process was disrupted by website failures and errors in multisig transaction settings, which led the team to halt deposits at $500 million and cancel the $1 billion target .

The problems started when MegaETH's KYC system malfunctioned due to setup mistakes, preventing verified users from accessing the platform

. At the same time, was executed too soon, which allowed deposits to quickly surpass the $250 million cap. An internal review showed that the multisig was mistakenly set to require 4 out of 4 signatures instead of the intended 3 out of 4, which enabled the transaction to go through without proper authorization . This misconfiguration, combined with users repeatedly refreshing the page, caused the cap to be reached rapidly and led MegaETH to offer a withdrawal feature for those impacted .

Ethereum News Today:
To make matters worse, the protocol’s pre-signed transaction process, triggering the cap increase and speeding up the distribution of USDm before the official start. The overall cap was later adjusted to $5 billion, with more than $4.83 billion already distributed, reflecting both high demand and operational weaknesses . The MegaETH team admitted to the mistakes in a public statement, saying, "We hold ourselves to a higher standard and accept full responsibility," while also pledging to implement a retroactive fix and withdrawal process for those affected .

Despite these launch difficulties, MegaETH remains optimistic about its USDm stablecoin, which is created through Ethena's USDtb mechanism and is intended to help cover sequencer expenses on its real-time, Ethereum-based layer-2 platform

. The initiative, Vitalik Buterin and Joe Lubin, is targeting a throughput of 100,000 transactions per second with latency under one millisecond. Those who joined the pre-deposit phase and completed KYC during MegaETH's $1.39 billion MEGA token auction will be considered for future incentives, though liquidity rollout has been sped up due to the exploit .

This episode highlights the complexities of launching large-scale blockchain projects, with some critics suggesting that stricter engineering standards could have prevented the issues

. Still, MegaETH's openness in disclosing the problems has earned some respect, even as users voice concerns about the fairness of early allocations . The project's development schedule remains on track, with a mainnet debut planned for early 2026 .

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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