Controversy arises over megaETH's retro ICO, should the community benefit or reap early profits?

Original | Odaily Planet Daily (@OdailyChina)

Author|Golem(@web3_golem)

![megaETH retro ICO sparked controversy, is it to benefit the community or to harvest early?]?(https://img.gateio.im/social/moments-e3cf88e96e198826be2489f7200212b9)

MegaETH, a real-time blockchain focused on improving Ethereum performance, announced today the upcoming launch of a new NFT series called The Fluffle. The total supply of this NFT series is 10,000, with a whitelist price of 1 ETH. The NFTs are non-tradable and non-transferable SBT (Soul Binding Tokens). NFT holders will enjoy the benefit of 5% token allocation in the future, with 50% of TEG unlockable on the same day and the remaining amount linearly unlocked within 6 months. The whitelist details have not been disclosed yet, but users can currently check their whitelist eligibility on the official website.

megaETH is one of the hot Ethereum scaling solutions in this round. On June 27, 2024, it completed a $20 million seed round of financing, 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 of financing on the Echo platform, achieving the $10 million financing target in 3 minutes, and the valuation has exceeded $200 million.

However, the NFT launch event by megaETH has sparked intense controversy in the community. On the one hand, some players believe that the fundraising odds are too high this time and actively whitelist outside the venue, while others question whether megaETH’s move is a disguised ICO and take advantage of the bull market to harvest the community before it ends. So who is more reasonable? Odaily Planet Daily will sort out the two perspectives in this article for readers’ reference, not as any investment advice.

Zhengfang: Reasonable valuation, worth participating

Undoubtedly, the highlight of megaETH’s The Fluffle series NFT is the future 5% token airdrop distribution, so the community generally sees it as a “shell borrowing and selling coins” activity. The successful project party will receive 10,000 ETH, which is currently equivalent to approximately 27 million US dollars (if ETH does not continue to fall). If calculated based on a 5% airdrop ratio, the token’s FDV is 540 million US dollars.

If the previous $30 million financing is added, megaETH’s total financing amount reaches $57 million, which is calculated as 20 times the financing amount based on the general token estimation. The FDV of megaETH is only $1.14 billion.

But whether it is the $540 million FDV calculated based on NFT pricing or the $1.14 billion FDV estimated based on financing amount, community players supporting megaETH believe that the valuation is still within a reasonable range and has at least 10 times or more potential return. After all, compared to the previous hot Ethereum scaling solutions such as ZKsync ($4.2 billion), Starknet ($19.5 billion), and Blast ($2.7 billion) in terms of FDV at the time of TEG, megaETH’s current FDV is indeed not high, and even lower than Starknet’s current circulating market value of $660 million.

ABCDE Venture founder BMAN voiced support for megaETH: “They could have raised more funds but turned down a $1 billion offer from VC, choosing the retro ICO approach to distribute tokens to a broader community. I believe this is an attractive opportunity for liquidity and also the most asymmetric one recently.”

As an investor, I am glad to see Ethereum returning to the simple and nostalgic era of ICOs.

Team member enzoblue of the NFT project CyberKongz even made a bold statement, saying that if there are people who don’t want to be on the whitelist, feel free to DM.

Some community players have also seen through the reason for megaETH’s “shell-selling”. On the one hand, by using SBT, it can avoid speculation of NFT in the secondary market; on the other hand, it clearly defines NFT as “collectibles”, which reasonably avoids legal risks and gives the community the private placement price, which is similar to VC, in the form of NFT. When facing doubts from the community, the co-founder of megaETH, Bing Xiong, also said, “We cannot directly ICO the token to the community, we can only lower the valuation in this way and give it to the community in the form of NFT, and whether to buy or not depends on the valuation of the project in their hearts.”

Counterargument: Harvesting before the mainnet is launched

Of course, in this world of true and false, where everything is mixed up and one’s innocence relies solely on eloquence, it is often necessary to understand the real thoughts of the project party, not just what they say. Therefore, some community players have questioned megaETH, believing that the valuation of $540 million is still too high in the current market environment, and that the project party is trying to harvest in advance by selling coins before the mainnet is launched, taking advantage of the ample liquidity in the bull market.

During this cycle, there is a phenomenon in the market that project parties issue coins/listing as the end point. Many projects even stop operating directly after profiting from issuing coins, and they only hope for the tokens to be unlocked as soon as possible. With the lessons learned, megaETH’s ICO happened before the mainnet was launched, and the real product has not yet been implemented. After receiving the funds, will there still be motivation to continue the development? Does the product deserve the current valuation? These questions are inevitably worrisome. After all, in the current situation of imperfect regulation, the highest constraint rule for Web3 project parties is their own moral level. Is it ‘Build first’ or ‘Money first’?

Chinese KOL in the Chinese-speaking region has recently published a lengthy article questioning the NFT sale activity of megaETH. They believe that megaETH does not genuinely care about the community experience. If they truly cared, they would distribute tokens through fair mechanisms such as game contributions, activity rewards, or even NFT staking. The project appears to be against ‘meaningless airdrop point systems,’ but in reality, they are just using it as an excuse to sell their own coins directly.

KOL Fengwuxiang is also worried about the subsequent airdrop ratio of MegaETH. After all, Liver Emperor has never been able to beat the big guys who spend a lot of money. At the same time, it is mentioned that compared to Monad, MegaETH is still working on ecological construction and attaches importance to ecological activities. MegaETH raised funds through ICO and no longer needs CEX to provide liquidity for exit. This new paradigm may not necessarily be a good thing for the industry.