MegaETH faces crypto exec backlash after early strategy U-turns

MegaETH, a high-profile Layer-2 on Ethereum that drew backing from Vitalik Buterin and later attracted $1.4 billion in public-sale bids, is now facing criticism from crypto founders and partners who say months of work around its testnet, NFTs and rewards no longer matched what they expected.

The criticism comes after a fast buildup. MegaETH was pitched as a real-time blockchain for Ethereum apps, with 10-millisecond block times, high throughput and a focus on apps that need faster execution than typical L2s.

And that message helped build a wide early community.

• MegaLabs, the company behind MegaETH, raised $20 million in a June 2024 seed round led by Dragonfly Capital, with backers including Buterin, Ethereum co-founder Joseph Lubin and others.

• In December 2024, MegaETH raised another $10 million. The first $4.2 million tranche sold out in 56 seconds, and another $5.8 million followed shortly after.

Creators economy

Then came the community campaigns. MegaETH launched The Fluffle, a 10,000-unit soulbound NFT collection priced at 1 ETH each, and its own site said the NFTs represented at least 5% of the MEGA token supply.

By launch, token allocation trackers listed Fluffle holders at 2.5% of total MEGA supply, with another 2.5% tied to Terminal, MegaETH's mainnet campaign.

• Half of the Fluffle allocation was also set to vest over time rather than arrive fully at launch.
• That doesn't by itself prove MegaETH broke any Fluffle terms, but it does explain why some NFT builders and users are now focused on the gap between the early 5% framing and the later split across Fluffle and Terminal.

That NFT frustration became public through Shiro, the creator behind Netizens, an NFT project built around MegaETH.

Shiro said in a June 18 post on X that MegaETH's team reached out in October and asked them to launch something on the chain because the team was "not satisfied with the NFT projects that were already on the chain."

As Shiro argued, Netizens was supposed to be a catalyst for new culture and adoption on MegaETH, but the relationship deteriorated after due to the "constant disorganization and inconsistent communication made everything incredibly difficult."

Shiro added that Terminal, MegaETH's points program, had been presented as Netizens' "flywheel" and that the Netizens community was pushed toward it before the program was later shut down.

Shiro also claimed MegaETH later said it had no plans for NFTs after Terminal ended.

• MegaETH's public Terminal pages confirm the program ended, but don't publicly confirm that statement about future NFT plans.

Stanislav Cifka, founder and CEO of MegaETH-based trading-card game Showdown TCG, also pitched in the discussion, replying to Shiro's X post that his team had worked with MegaETH for 18 months and had a similar experience.

Similarly, Alexei Falin, co-founder and CEO of NFT marketplace Rarible, replied to Cifka in an X post, saying that Rarible had also worked with MegaETH and that the effort was a "total waste."

Falin said Rarible spent "so much time helping the team polish the testnet," before mainnet took longer than expected and MegaETH "gave up on NFTs."

The thread turned the issue from one creator's complaint into a broader builder dispute. And the consensus was that teams spent time preparing around MegaETH's testnet and early ecosystem plans, then saw parts of the launch path change after their communities were already involved.

Warning signs

But the NFT dispute wasn't the first time MegaETH's launch process ended differently from what users expected.

In November 2025, MegaETH opened a pre-deposit bridge for USDm, its stablecoin. The goal was to preload collateral so users could get 1-to-1 USDm conversion at mainnet.

But the campaign failed even before the token was launched after contract, KYC and operational issues disrupted the pre-deposit process.

• MegaETH said it would return all funds, admitted that the execution "was sloppy" and that expectations weren't aligned around its goal of guaranteeing 1-to-1 USDm conversion at mainnet.
• Users got their funds back, but the planned conversion didn't happen.

After mainnet and token launch, Terminal became the next pressure point. Terminal was MegaETH's points program for ecosystem activity.

It mattered because MegaETH's token materials tied 2.5% of total MEGA supply to the mainnet campaign, and users could reasonably connect that campaign to future token rewards.

• But as The Coinformer reported in May, MegaETH ended Terminal after about three weeks, cutting short an initially planned eight-week season.

As MegaETH explained, it decided to "conclude the season early" after reviewing data, but it didn't disclose which metrics drove the decision, and eligible users were moved into a USDM rewards pool instead of a longer points campaign tied to app activity.

Token launch and activity numbers add pressure

MegaETH's native token MEGA went live on April 30 after the project hit the first threshold for its KPI-triggered token launch.

• But the token didn't hold that early momentum, and CoinGecko data shows MEGA now trades about 76% below its April 30 all-time high.

And the questions didn't stop at price. In May, The Coinformer reported that DefiLlama, a DeFi data tracker, adjusted MegaETH's total value locked after finding inflated data.

DefiLlama's founder said the platform had removed "some TVL" from a chain that had been inflating it. While the post didn't name MegaETH directly, community replies linked the change to MegaETH.

• As of press time, MegaETH hasn't made any public statement directly addressing the posts from Shiro, Cifka or Falin.