Chiara Bianchi
Ethereum Layer 2 protocol MegaETH has verified the authenticity of a circulating whitepaper formatted to meet the European Union’s MiCA (Markets in Crypto-Assets) standards. The document outlines plans for a regulated public token offering, technical infrastructure, and legal compliance framework.
Founding contributor Namik Muduroglu of MegaLabs confirmed to PRIME, “This is the MiCA whitepaper,” establishing the document as the official blueprint for MegaETH’s upcoming initiatives.
The whitepaper, dated September 24, 2025, specifies that participants must complete mandatory KYC checks, while EU-based buyers are required to custody proceeds with a MiCA-licensed provider. Token distribution is carefully structured:
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Team allocation: 9.5%
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Staking rewards: 53.3% to encourage on-chain activity
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Ecosystem reserves and other allocations: 70.3% collectively
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Venture capitalist investors: 14.7%
MegaETH plans to repurchase roughly 4.75% of tokens from early investors, aiming to optimize supply dynamics. An English auction for 500 million MEGA tokens (5% of total supply) is also scheduled.
Sequencer Rotation: Redefining Network Performance
The protocol introduces a sequencer rotation system, where a single active sequencer circulates globally following the world’s economic day. Operators stake MEGA to compete for sequencer windows, with selection criteria based on stake size, past performance, and infrastructure capability. Faulty operators can be slashed, while standby operators take over immediately. This system is designed to track user activity regionally and reduce latency across the network.
Proximity Markets: Linking Real-World Infrastructure and On-Chain Liquidity
MegaETH’s proximity markets concept allows market makers and applications to bid for sequencer-adjacent floorspace by locking MEGA, creating a tradable, on-chain market for low-latency access. Seats are dynamically allocated and tokenized, with an on-chain indexer streaming real-time data, allowing liquidity providers to respond within milliseconds. This mechanism aims to tighten spreads and increase DeFi liquidity.
MiCA Compliance and EU Market Access
The whitepaper emphasizes MiCA compliance, the EU’s comprehensive crypto regulation effective December 2024, granting legal access to EU retail investors and regulated custodians. MiCA also enforces investor protection measures, including mandatory disclosures, cooling-off periods, refund mechanisms, and clear liability statements.
MegaETH designated OKCoin Europe Limited as the MiCA-licensed custodian, enforcing KYC verification and a two-week withdrawal period, with risk warnings provided throughout the whitepaper.
Balancing Compliance and Adoption
Aligning with MiCA opens MegaETH to Europe’s large investor base and regulated exchanges but introduces tradeoffs. Teams must navigate KYC requirements and increased transparency, which may slow viral retail adoption and complicate token economics.
MegaETH’s approach reflects a strategic blend of regulatory compliance and technical innovation, positioning the Layer 2 protocol for secure, legally compliant growth in the EU market.
