MegaETH buys back 4.75% equity and token warrants from pre-seed investors

MegaETH, an Ethereum Layer 2 project aiming for "real-time" transaction speeds, has bought back 4.75% of its stake from undisclosed early investors.

The repurchased stake includes company equity and token warrants from pre-seed investors, MegaETH co-founder Shuyao Kong told The Block. The move comes ahead of MegaETH's mainnet and token launch, expected later this year.

The terms of the deal — including total size, financing details, and valuation — remain undisclosed. Kong, however, said the buyback was completed at a valuation above the seed round, when MegaETH raised $20 million at a "9-figure" token valuation (at least $100 million).

When asked why some investors exited before the token launch, Kong said, "We had investors that shut down the fund and tried to close all positions. Since we do not allow secondaries, the MegaETH team was the only available buyer."

The buyback began and closed during the summer, with approval from key stakeholders including Dragonfly and Echo, and was completed in compliance with applicable laws and governance procedures, Kong said.

MegaETH buys back stake

Most crypto project buybacks occur after token generation events, typically through treasury-funded open-market purchases. MegaETH said conducting one before launch helps optimize ownership before going public.

"From day one, we've prioritized aligned-ownership and long-term builders over pass-through capital," said Kong. "When an opportunity arises, we'd rather take supply off the market than let those shares circulate privately. It keeps the cap table clean, the incentives tight, and the mission clear."

MegaETH has previously conducted two community participation rounds — one via Echo, the angel-investor platform founded by crypto trader Jordan Fish (Cobie), and another through The Fluffle, its flagship NFT collection. In the Echo round last December, MegaETH raised $10 million in under three minutes at the same nine-figure valuation as its seed round, while The Fluffle sale brought in over $13 million through non-transferable "soulbound" NFTs.

MegaETH is also planning a public token sale via Cobie's Sonar platform , with registration open from Oct. 15 to Oct. 27. Kong declined to comment on the target raise but said details will be announced soon. MegaETH is currently in the final phase of its testnet, with the mainnet and token generation event expected in the near future.

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