MegaETH retro ICO sparks controversy: benefiting the community or harvesting early?

Author: Golem, Odaily Planet Daily

The real-time blockchain megaETH, focused on enhancing Ethereum's performance, announced today the upcoming launch of a new NFT series: The Fluffle. This NFT series has a total supply of 10,000, with a whitelist price of 1 ETH, and is an untradeable and non-transferable SBT (Soulbound Token). NFT holders will enjoy benefits including a future 5% token allocation, with 50% unlockable on the day of TEG, and the remaining will be unlocked linearly over 6 months. The whitelist details have not yet been announced, but users can currently check their whitelist eligibility on the official website.

megaETH is one of the popular Ethereum scaling solutions in this round, completing a $20 million seed round financing on June 27, 2024, with funding support from institutions and celebrities such as Dragonfly, Robot Ventures, Folius Ventures, and Vitalik Buterin. In December 2024, it conducted a community round financing on the Echo platform, achieving its $10 million financing goal in just 3 minutes, with a valuation exceeding $200 million.

However, the NFT sale event launched by megaETH has sparked intense controversy within the community. On one hand, some players believe that the fundraising odds are extremely high and are actively seeking whitelist spots off-market. On the other hand, some players question whether megaETH's actions are a disguised ICO, taking advantage of the ongoing bull market to harvest the community early. So who is more reasonable? Odaily Planet Daily will outline both viewpoints in this article for readers' reference, not as any investment advice.

Pro: Reasonable Valuation, Worth Participating

There is no doubt that the highlight of megaETH's The Fluffle series NFT lies in the future 5% token airdrop allocation. Therefore, the community generally views it as a "shell sale" activity, where the successful sale allows the project party to obtain 10,000 ETH, currently approximately $27 million (if ETH does not drop). If calculated at a 5% airdrop ratio, the token's FDV would be $540 million.

Adding the previously obtained $30 million financing, megaETH's total financing amount reaches $57 million. Based on the general token estimation of 20 times the financing amount, megaETH's FDV would be $1.14 billion.

However, whether calculated by the NFT pricing at $540 million FDV or by the financing amount estimated at $1.14 billion FDV, community players supporting megaETH believe the valuation remains within a reasonable range and has at least 10 times potential returns. After all, compared to the FDV of previously popular Ethereum scaling solutions like TEG, such as ZKsync ($4.2 billion), Starknet ($19.5 billion), and Blast ($2.7 billion), megaETH's current FDV is indeed not high, and it is even lower than Starknet's current circulating market value of $660 million.

BMAN, co-founder of ABCDE Venture, expressed support for megaETH: "They could have raised more funds but turned down a $1 billion offer from VCs, choosing to use the retro ICO method to give more tokens to the community. I believe this is an attractive opportunity for liquid funds, and it is also one of the most asymmetric opportunities recently. As an investor, I am glad Ethereum has returned to the simple, retro ICO era."

A team member of the NFT project CyberKongz, enzoblue, even boldly stated that anyone who does not want a whitelist can feel free to DM him.

Some community players have seen through the reason behind megaETH's "shell sale." On one hand, using SBT can avoid speculation on the NFT in the secondary market; on the other hand, clearly defining the NFT as "collectibles" reasonably mitigates legal risks while offering the community a private placement price similar to that of VCs in the form of NFTs. megaETH co-founder Bing Xiong also candidly stated in response to community doubts: "We cannot directly ICO the tokens to the community; we can only lower the valuation and give it to the community in the form of NFTs, and whether people buy it depends on their own valuation of the project."

Con: Mainnet Not Launched, Early Harvesting

Of course, in this mixed reality of the cryptocurrency circle, where truth and falsehood are intertwined and innocence relies entirely on eloquence, it is often not enough to just listen to what the project party says to understand their true intentions. Therefore, some community players have raised doubts about megaETH, believing that in the current market environment, a $540 million valuation is still too high, and that the project party is looking to sell tokens before launching the mainnet to take advantage of the liquidity in the bull market for early harvesting.

During this cycle, there is a prevalent phenomenon in the market where project parties consider token issuance or listing as the endpoint, with many projects stopping operations secretly after profiting from token issuance, merely hoping for the tokens to unlock quickly. With past experiences in mind, megaETH's disguised ICO occurring before the mainnet launch, with the real product yet to be delivered, raises concerns about whether there will still be motivation to continue development after securing funds. Is the product worthy of the current valuation? These questions inevitably raise worries, as ultimately, in the current environment of imperfect regulation, the highest constraint rule for Web3 project parties is their own moral standards: is building a priority or is money a priority?

KOL Feng Mi published a lengthy article questioning megaETH's NFT sale activity, stating that megaETH does not genuinely care about community experience. If they truly cared, they should distribute tokens through a fair mechanism (such as game contributions, activity rewards, or even NFT staking), while the project party seems to oppose "meaningless airdrop point systems," but in reality, they are just finding a justification for directly selling tokens.

KOL Feng Wu Xiang also expressed concerns about megaETH's future airdrop ratio, noting that historically, no matter how hard the grinders work, they cannot compete with the pay-to-win big shots. He also mentioned that compared to Monad, which is still focused on ecological construction and values ecological activities, megaETH is obtaining funds through ICO and even no longer requires CEX to provide liquidity for exit, which may not be a good thing for the industry.