MegaETH’s MEGA launch soured by undisclosed fees on Kumbaya

MegaETH liquidity providers (LPs) are furious following yesterday’s MEGA launch after Kumbaya, the network’s flagship decentralized exchange (DEX), reportedly took half of their trading fees, undisclosed.

In total, the DEX took over $375,000 in protocol revenue between April 30 and May 1, according to DeFiLlama data.

Responding to the outcry, Kumbaya said that “updated documentation along with more details on Kumbaya’s fee structure is coming tomorrow.”

Hours later, the team advised that the DEX is “safe to use” following a security alert on its site which had been “flagged by a wave of malicious manual reports,” seemingly from embittered users.

Read more: Crypto hackers snatch over $1B in 68 incidents this year 

Unhappy LPs took to X to voice their anger over discovering the fee split via on-chain data, after the info was reportedly lacking on the exchange’s website.

Another user claimed that Kumbaya “implied for months” that LPs in certain pools would earn points or tokens once MEGA launched via a logo in the UI, which was later quietly removed.

Yet another felt betrayed by Kumbaya’s close links to the MegaETH Foundation, and recommended LPs migrate to competitor Prism. The official MegaETH X account has repeatedly endorsed Kumbaya, even calling it “ecosystem critical” upon deployment in January.

Compared with Uniswap’s share of LP fees, which are significantly lower, or even Prism’s 25%, Kumbaya’s undisclosed 50% split is seen as predatory, capitalizing on the flurry of trading around MEGA’s launch.

On the other hand, contrarian crypto lawyer Gabriel Shapiro argued that “the code *is* the disclosure.” He later added that “the whole merit of defi is that the code is available.”

The MEGA token is down approximately 25% since launch, with a fully diluted valuation of approximately $1.5 billion.

Read more: MegaETH pre-deposit event derailed by congestion and multisig mayhem

Not MegaETH’s first rodeo

The network previously faced embarrassment during a hotly-anticipated “pre-deposit event” in November.

Despite claiming to be “the first real-time blockchain,” with ultra-fast >100,000 transactions per second (TPS) and sub-10 ms block times, the event was beset by a congested KYC process.

This led to many would-be depositors missing their chance as the initial $250 million cap was filled within three minutes.

In an attempt to make things right, the team decided to quadruple the initial cap, queuing a pre-signed transaction in the projects multisig wallet.

However, the transaction was then discovered and executed well ahead of schedule by user chud.eth with an “oops,” before eventually being walked back to $500 million by the team.

“Unfortunately, the party responsible for executing the raise tx was unfamiliar with the specific Safe feature,” the team later admitted.

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