MegaETH, an Ethereum Layer‑2 project, announced it will refund all funds raised from its Pre‑Deposit Bridge following operational problems that disrupted the launch of its native stablecoin USDm. The team confirmed the decision publicly on social media platform X.
“We've decided to return all funds raised from the Pre-Deposit Bridge. Execution was sloppy and expectations weren’t aligned with our goal of preloading collateral to guarantee 1:1 USDm conversion at mainnet.” MegaETH stated on their X account.
MegaETH said depositors’ funds will be fully returned through a new smart contract that is currently under audit. Refunds will begin after the review is complete. “Depositor contributions will not be forgotten. All comms, however, need to follow compliance standards,” another post read.
The project explained that all communications must align with disclosure requirements and that refunds will occur shortly after the audit concludes.
Depositor contributions will not be forgotten. All comms, however, need to follow compliance standards.
— MegaETH (@megaeth) November 27, 2025
(i.e. "we must adhere to best practices in our disclosures at this juncture")
The refund process requires a new smart contract, currently under audit. Refunds shortly after.
How the pre-deposit bridge failed
MegaETH opened USDm pre‑deposits on Tuesday with an initial cap of $250 million. The program was intended to seed collateral before the Frontier mainnet beta, guaranteeing a 1:1 conversion between USDC and USDm upon launch.
A technical issue at a third‑party bridge provider made the platform inaccessible for about one hour. Once restored, investors quickly filled the $250 million target in under three minutes.
After that sudden spike in demand, MegaETH said in their X announcement on November 25 that they would raise the deposit limit from $250 million to $1 billion.
Unfortunately our 3rd party provider received too many requests resulting in downtime.
— MegaETH (@megaeth) November 25, 2025
The $250M cap filled within 156 seconds upon resolution.
We've decided to increase the cap to $1B in an effort to give users access to USDm day 1.
Bridge will reopen at 11am EST.
However, a misconfigured multisignature transaction derailed the process. The transaction that controlled contract parameters was configured to require 4‑of‑4 approvals instead of the intended 3‑of‑4. Because of this error, an external account executed the queued transaction 34 minutes earlier than scheduled, reopening the bridge prematurely.
The resulting deposit wave caused total deposits to surpass $400 million, well above the target. MegaETH decided not to move forward with the plan to expand to $1 billion, as stated in their X announcement, after first lowering the cap to $400 million and then raising it to $500 million.
We've encountered unexpected issues throughout the process and are no longer moving forward with the $1B cap.
— MegaETH (@megaeth) November 25, 2025
We will be sharing a retro shortly.
We'll also be including the ability for users to withdraw who no longer wish to participate.
Apologies for the turbulence.
The project said, “Execution was sloppy,” and committed to returning all funds affected by the bridge malfunction.
Refund plan and next steps
MegaETH confirmed in their X post that the refund contract audit is currently underway. Once auditors finalize their verification, refunds will be processed automatically. The team did not provide an exact date but assured users that repayment will happen shortly after the audit concludes.
MegaETH clarified in its statement that the USDm stablecoin remains central to the project’s ecosystem. The team intends to reopen the USDC–USDm conversion bridge ahead of the Frontier mainnet launch. According to the project, this reopening aims “to deepen liquidity, easing user onboarding prior to launch.”
The Frontier mainnet will serve as the beta phase for MegaETH’s Layer‑2 network, which aims to drastically improve blockchain throughput and cost efficiency.
About the MegaETH network
MegaETH describes itself as a next‑generation Ethereum Layer‑2 solution built to scale decentralized applications. While Ethereum handles about 30 transactions per second, MegaETH claims it can support up to 100,000 transactions per second with sub‑millisecond latency and transaction fees under $0.01.
The system uses a proof‑of‑stake architecture linked to a performance‑based reward mechanism. Participants who stake MEGA tokens will gain governance rights through a decentralized autonomous organization (DAO). Both the DAO and the staking system are expected to go live approximately 12 to 18 months after the mainnet launches, according to the project’s roadmap.
Although the refund marks a setback in the short term, MegaETH said USDm remains “integral to the MegaETH economy” and will feature across multiple Frontier applications once the network transitions to mainnet.
Tanya Petrusenko
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