A Zoom on MegaETH, the blockchain that raised $9.2 million in seconds

What is MegaETH?

MegaETH is a layer 2 blockchain developed by MegaLabs, designed to enhance Ethereum’s performance and user experience. With a technical capacity of over 100,000 transactions per second (TPS) and latency under one millisecond, MegaETH aims to address Ethereum's current limitations, particularly in scalability and performance, while maintaining full compatibility with the Ethereum Virtual Machine (EVM).

Inspired by Vitalik Buterin’s 2021 “Endgame” article, MegaETH is built on a modular architecture with specialized node roles to ensure fast and reliable transactions, even under high demand. By adopting the concept of a "real-time blockchain," MegaETH seeks to offer a user experience akin to Web2 systems while retaining the advantages of decentralization.

Since its launch, MegaETH has received support from influential ecosystem figures such as Vitalik Buterin and Joseph Lubin, and raised $20 million from investors including Dragonfly Capital. On December 13, 2024, MegaETH officially announced successfully raising $10 million in just a few seconds via the Echo platform.

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The First Real-Time Blockchain

MegaETH is positioned as the first “real-time blockchain.” According to their documentation, this infrastructure processes transactions as they arrive without waiting for block formation. MegaETH immediately publishes transaction updates, offering rapid finality and drastically reducing user waiting times.

The Limitations of Traditional Blockchains

In traditional blockchains like Ethereum, transactions are grouped into blocks, which are created at regular intervals (approximately every 15 seconds for Ethereum). These blocks are validated by validators, with every node performing identical tasks to maintain network operations.

This model requires a trade-off between performance (capacity and latency) and decentralization. To simplify, a blockchain can impose higher hardware requirements on nodes to improve overall performance, but this reduces decentralization and potentially network security.

In essence, blockchains are often constrained by the need for all nodes to communicate and execute local computations before confirming a transaction. These confirmation delays lead to several issues for users and developers:

• Limited Application Domains: Applications requiring rapid interactions, such as gaming or trading, suffer from delays, offering a subpar user experience.
• DeFi Challenges: Excessive delays can prevent traders from seizing real-time opportunities, especially for order execution or slippage.
• High Costs: Network congestion forces users to pay high transaction fees to ensure their transactions are processed quickly.

MegaETH’s Solution

MegaETH aims to eliminate these issues by offering an architecture different from current systems. As mentioned earlier, the network processes transactions as they arrive, stores data directly with its service provider (EigenDA), and publishes updates to the main layer instantly.

• Immediate Transaction Processing: Transactions are ordered, executed, and validated as soon as they are submitted, without waiting for block formation. This ensures near-instant finality.
• High Throughput and Low Latency: MegaETH can theoretically handle demand spikes without slowing down, supporting up to 100,000 TPS. Note: This figure is from MegaETH's documentation and will require mainnet deployment to confirm.
• EVM Compatibility: MegaETH is fully compatible with Ethereum, simplifying application migration and developer onboarding.

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MegaETH’s Technological Architecture

To meet the needs of a real-time blockchain, MegaETH relies on a unique hybrid architecture. Unlike traditional blockchains where every node performs identical tasks, MegaETH introduces specialized roles for nodes. This enables efficient task distribution, enhancing overall performance while maintaining network security and robustness. Here are the three types of node roles:

Sequencer:

• The sequencer manages transaction ordering and execution.
• A single active sequencer is used to simplify and speed up transaction processing.
• It ensures low latency and rapid finality by directly integrating updates onto Ethereum via EigenDA.

Full Nodes:

• These nodes update the blockchain state by validating data provided by provers.
• Unlike the sequencer, they do not participate in transaction execution, reducing their hardware requirements.

Provers:

• They validate blocks asynchronously by producing cryptographic proofs.
• Their role is critical to ensuring the security and integrity of transactions published on Ethereum.

For data availability, MegaETH uses EigenDA, a modular Data Availability solution, to ensure that all transactions are stored and available for future validation. This integration lightens the load on nodes while maintaining transparency.

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MegaETH Raises $10 Million via Echo

After raising $20 million from investors such as Dragonfly Capital and Vitalik Buterin, MegaETH announced on Friday, December 13, that it successfully completed another funding round. This time, the fundraising was conducted via Echo, a unique platform democratizing early-stage investment access for qualified investors.

In just a few seconds, MegaETH raised $10 million, setting a record for the Echo platform. Initially, MegaLabs (the company behind MegaETH) planned to raise $4.2 million, achieving this target in 56 seconds with over 10,000 subscriptions per second. Consequently, the project decided to add $5.8 million, which was raised in just 70 additional seconds.

According to reports from The Block, this fundraising round is the largest in Echo's history. In total, 3,200 investors participated, with an average contribution of $3,140 per person.

Learn more about how Echo works in our analysis.

Key Features of Echo

• Collective Investments: Users can join private groups led by investment leaders, where opportunities are shared with the entire community.
• Uniform Conditions: All participants, including group leaders, invest under the same terms (pricing, vesting, etc.).
• Fund Management: Deposits are made in USDC via the Base blockchain, ensuring reliable and fast infrastructure.
• Security and Decentralized Management: Each investor is provided with a non-custodial wallet automatically created via Privy, ensuring full control of funds.

Since its launch, Echo has funded several promising projects, including Ethena, Monad, Sphere, and recently MegaETH. These funding rounds stand out for their speed and massive community adoption:

• MegaETH: $10 million raised in seconds, demonstrating exceptional project appeal.
• Initia: $2.5 million raised in under two hours with over 800 participants.
• Usual Money: $1.5 million raised in just seconds.

In October 2024, Echo announced reaching a total of $20 million raised since its inception. This impressive figure highlights the growing demand for transparent, community-driven solutions in early-stage crypto investments.

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Conclusion and Opinion

The platform created by Cobie, aka Jordan Fish, echoes the ICO era of 2018. The current cycle has seen the rise of new early-stage investment solutions in crypto projects. Platforms like Echo and Legion are highly sought after by the crypto community, eager for returns and opportunities to invest alongside venture capital funds and institutional investors.

Notably, projects increasingly prefer these platforms over traditional fundraising methods. This trend makes sense:

• Free marketing;
• Fundraising from an existing community;
• Perceived fairness.

Cobie's initiative is particularly compelling as the "leaders" of investment groups only profit when their community profits and are required to invest under the same terms as the group members. MegaETH appears to have embraced this vision for its fundraising efforts.

Disclaimer: Artem, CEO of OAK Research, invested in this project via Echo. The analysis remains independent, though we find the solution intriguing and believe it may interest you.