MegaETH retro ICO sparks controversy: rewarding the community or cashing out early?

Written by: Golem, Odaily Planet Daily

megaETH, a real-time blockchain focused on enhancing Ethereum performance, today announced the upcoming launch of a new NFT series: The Fluffle. This NFT collection consists of 10,000 units, with a whitelist price of 1 ETH. These are non-transferable and non-tradable SBTs (Soulbound Tokens). Benefits for NFT holders include eligibility for a future 5% token allocation, with 50% of TEG unlockable immediately upon release and the remainder linearly unlocked over six months. Whitelist details have not yet been fully released, but users can currently check their whitelist eligibility on the official website.

megaETH is one of the popular Ethereum scaling solutions in this cycle. It completed a $20 million seed round on June 27, 2024, backed by Dragonfly, Robot Ventures, Folius Ventures, and Vitalik Buterin, among others. In December 2024, it raised another $10 million in a community fundraising round on the Echo platform, reaching its target within three minutes. Its valuation has since exceeded $200 million.

However, megaETH's latest NFT sale has sparked intense controversy within the community. On one hand, some participants view the fundraising as offering extremely high potential returns and are actively acquiring whitelist spots off-chain. On the other hand, others criticize megaETH for conducting a disguised ICO, attempting to prematurely harvest the community before the bull market ends. So, which side makes more sense? Odaily Planet Daily presents both perspectives for readers' reference and does not constitute any investment advice.

Pro Side: Valuation is reasonable and worth participating in

Undoubtedly, the highlight of megaETH’s The Fluffle NFT series lies in the promised 5% future token airdrop. As such, the community widely views this as a "shell-based token sale." If successful, the project team will receive 10,000 ETH—approximately $27 million at current prices (assuming ETH doesn't drop further). Based on the 5% airdrop allocation, this implies a token FDV of $540 million.

Adding the previously raised $30 million in funding, megaETH's total funding reaches $57 million. Using a standard 20x multiplier on funding for token valuation, megaETH’s FDV would be $1.14 billion.

Whether calculating based on the NFT pricing ($540 million FDV) or projected from funding ($1.14 billion FDV), supporters argue that the valuation remains within a reasonable range and offers at least a 10x upside potential. Compared to previous popular Ethereum scaling projects at their TEG stage—such as ZKsync ($4.2 billion), Starknet ($19.5 billion), and Blast ($2.7 billion)—megaETH's current FDV is relatively low, even falling below Starknet’s current circulating market cap of $660 million.

BMAN, co-founder of ABCDE Venture, publicly supported megaETH: "They could have raised more, but turned down a $1 billion VC offer, choosing instead a retro ICO model to distribute tokens more widely across the community. I believe this is an attractive opportunity for liquidity providers and one of the most asymmetric opportunities recently. As an investor, I'm glad Ethereum is returning to the simple, retro ICO era."

enzoblue, a team member of the NFT project CyberKongz, boldly declared that anyone uninterested in their whitelist spot should DM them directly.

Some community members also see through megaETH’s reasoning behind the "shell-based token sale." By using SBTs, they avoid secondary market speculation of the NFTs. At the same time, defining the NFTs explicitly as "collectibles" allows them to mitigate legal risks while effectively offering the community a private-sale-level price typically reserved for VCs. When questioned by the community, megaETH co-founder Bingxiong stated frankly: "We can’t directly conduct an ICO for the community. This method allows us to lower the valuation and deliver tokens to the community via NFTs. Whether people buy in depends entirely on their own assessment of the project’s value."

Con Side: Mainnet not live, premature harvesting

Of course, in a crypto space filled with truth and deception where credibility often hinges on rhetoric, understanding a project team’s true intentions requires looking beyond words. Some community members have raised concerns about megaETH, arguing that even at a $540 million FDV, the valuation is too high given the current market. Conducting a token sale before mainnet launch appears to be an attempt to harvest early profits while liquidity remains abundant during the bull market.

In this cycle, there’s a widespread perception that a project’s lifecycle ends upon token launch or exchange listing. Many teams cease development after profiting from token releases, spending each day waiting for vesting unlocks. With these precedents, megaETH’s quasi-ICO occurring before mainnet deployment—before any real product exists—raises concerns. Once funds are secured, will the team still have the motivation to continue development? Does the product justify the current valuation? These questions naturally arise. After all, under the current lack of robust regulation, the primary constraint on Web3 teams remains their personal ethics—will they prioritize building or money?

Chinese-speaking KOL Fengmi published a detailed critique questioning megaETH’s NFT sale, stating that megaETH does not genuinely care about community experience. If it did, it would distribute tokens through fair mechanisms—such as gameplay contributions, activity rewards, or even NFT staking. The team claims to oppose "meaningless airdrop point systems," but in reality, this is just a justification for directly selling tokens.

KOL Feng Wuxiang also expressed concern over megaETH’s future airdrop structure, noting that historically, hardworking contributors ("grinders") never outperform big spenders ("whales"). He added that compared to Monad, which continues building its ecosystem and values community engagement, megaETH has already secured funding via ICO and no longer needs CEX liquidity for exit. Such a new paradigm may not be beneficial for the industry as a whole.