MegaETH Explained: Why Did Vitalik Buterin Invest in MegaETH?

A new modular blockchain project called “MegaETH” has grabbed the attention of crypto investors.

The project raised $20 million in a seed round led by venture capital firm Dragonfly Capital in late June 2024. What’s more interesting is that influential crypto industry leaders like Ethereum (ETH) co-founders Vitalik Buterin and Joseph Lubin have also backed MegaETH.

What is MegaETH, and what is the hype around it? Let’s find out.

Table of Contents Table of Contents

1. Key Takeaways
2. What is MegaETH?
3. How Does MegaETH Work?
4. Who is the Team Behind MegaETH?
5. Analyst Views on MegaETH
6. The Bottom Line
7. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. What is MegaETH?
3. How Does MegaETH Work?
Show Full Guide
4. Who is the Team Behind MegaETH?
5. Analyst Views on MegaETH
6. The Bottom Line
7. References

What is MegaETH?

MegaETH is designed to be the first real-time blockchain in the world, capable of processing transactions as soon as they arrive and publishing the resulting updates in real time.

The project has big ambitions of bringing web2-level performance to crypto.

MegaETH’s features include EVM compatibility, high transaction throughput, abundant compute capacity, and millisecond-level response times.

“A real-time blockchain is something that the public has yet to experience, making crypto as performant as traditional Web2 cloud computing, and basically instant for all intents and purposes from a user’s POV,” said research firm Revelo Intel in a note.

MegaETH has a modular architecture that allows it to leverage base layers such as Ethereum L1 and EigenDA for security and data availability.

How Does MegaETH Work?

The promise of high throughput and fast transaction execution times is great, but how will MegaETH achieve this?

Solving the Straggler Problem

MegaETH is designed to solve a blockchain scalability issue known as the “Straggler problem,” which occurs when a few slow nodes delay the production of a block.

“Imagine a blockchain that has 100 nodes. A block is finalized only after a majority of them finishes processing the block. For each block, some nodes may experience slowdown, maybe due to a glitch or a technical issue or because they run on lower-end hardware.

“Since all nodes must stay synchronized, the whole process slows down to the speed of the slow nodes,” explained Lei Yang, cofounder of MegaETH.

so many folks ask bro bing: why tf can't Layer 1 scale?

well, it turns out that there's a well-known problem called " The Straggler Problem"

here's an explanation from someone who studied distributed system at MIT for 5 years @yangl1996 pic.twitter.com/wClN7Ldz38

— brother bing / mega-bing / 饼兄 (@hotpot_dao) July 1, 2024

Node Specialization

MegaETH solves the “Straggler problem” via a method known as node specialization that exempts full nodes from conducting transaction execution tasks.

Alongside full nodes, MegaETH is powered by sequencers and provers, similar to the setup seen in layer two (L2) blockchains.

Like in any L2, sequencers on MegaETH are responsible for ordering and executing transactions. MegaETH uses only one active sequencer to eliminate consensus overhead.

Nodes are responsible for validating blocks using proofs provided by provers.

“A key advantage of node specialization is the ability to set the hardware requirements for each type of node independently.

“For example, since sequencer nodes handle the heavy lifting of execution, it’s desirable to run them on high-end servers to enhance performance. In contrast, the hardware requirements for full nodes can remain relatively low because verifying proofs is computationally inexpensive,” said MegaETH.

The table outlines the projected hardware requirements for each type of node in MegaETH:

Who is the Team Behind MegaETH?

MegaETH was co-founded by Yilong Li, Lei Yang, and Shuyao Kong.

Li’s Linkedin profile showed that he graduated from Stanford University in October 2022 with a computer science PhD.

Yang also holds a PhD in computer science from the Massachusetts Institute of Technology.

Meanwhile, Kong is a MBA graduate from Harvard Business School. He worked at ConsenSys for about seven years since October 2017.

Analyst Views on MegaETH

Jack Inabinet, senior analyst at Bankless, said:

“The significant performance improvements targeted by MegaETH over contemporary EVM implementations should provide a major boost to L2 performance and could finally produce a decentralized blockchain capable of handling real-world adoption!”

“Although some contend that MegaETH is best suited as a competitor against an Ethereum ecosystem largely uninterested in scaling its base layer, the optimizations achieved by MegaETH are made possible solely through its ability to outsource security and censorship resistance to existing decentralized networks, like Ethereum and EigenLayer.”

Justin Bons, founder and chief investment officer at Cyber Capital, said:

“As the documentation was abundantly clear about this. MegaETH is intended to scale L2s, not ETH itself! Even if the technology required to scale ETH is identical.The cognitive dissonance of scaling L2s like this & refusing to do the same for ETH itself is mindblowing,” said Bons on X.

3/18) As the documentation was abundantly clear about this:

MegaETH is intended to scale L2s, not ETH itself!

Even if the technology required to scale ETH is identical…

The cognitive dissonance of scaling L2s like this & refusing to do the same for ETH itself is mindblowing!

— Justin Bons (@Justin_Bons) July 1, 2024

“The tech behind MegaETH could scale ETH, but it won’t. Ironically, MegaETH aims to scale an EVM-based chain to over 100k TPS! The irony here is that if we implemented this tech on ETH, we would not need “L2 scaling” at all. That is why MegaETH was a glimmer of hope for me, quickly crushed by the realization of its true purpose,” he added.

Yilong Li, MegaETH co-founder, replied to Bons’ statement that MegaETH’s technology could be used to scale Ethereum L1 instead of L2s, saying:

“Wrong. Many of the MegaETH technologies for scaling L2 don’t apply to L1. The only reason we can implement such aggressive optimizations is that we can leverage the base layers (Ethereum & EigenDA) for security and censorship resistance.”

Wrong. Many of the MegaETH technologies for scaling L2 don't apply to L1. The only reason we can implement such aggressive optimizations is that we can leverage the base layers (Ethereum & EigenDA) for security and censorship resistance.

If you're looking to build a high-perf… https://t.co/fc4w7qsZDR

— Yilong Li (@yilongl_megaeth) July 3, 2024

Crypto research firm Revelo Intel said in a note:

“MegaETH describes itself as Ethereum, but real-time. Speed and scalability have long been a problem with Ethereum, leading to a pivot to rollups. MegaETH takes this a step further by not simply enhancing performance but making it real-time, with millisecond latency and over 100K TPS.

“L2s have been able to beef up their performance by delegating the other functions of blockchain to other providers, including the Ethereum base layer, EigenDA, and more. The MegaETH team examined this methodology to look for ways to build on top of it in what they call a ‘measure, then build’ design philosophy, a sort of min-maxxing approach.”

The Bottom Line

At the time of writing, MegaETH is far from the finished product. Its blockchain is currently in a devnet phase.

The MegaETH public testnet is expected to go live in early fall 2024. But when Vitalik becomes interested in a project, it is usually worth listening to.