MegaETH's MiCA whitepaper reveals tokenomics with 9.5% team allocation, novel sequencer infrastructure features

Ethereum Layer 2 protocol MegaETH has confirmed that a circulating whitepaper formatted to meet the requirements of the European Union's Markets in Crypto-Assets (MiCA) standards is authentic, revealing detailed plans for a regulated public token offering, technical architecture, and a legal framework.

“Confirming this is the mica whitepaper”, founding contributor of MegaLabs, Namik Muduroglu, told The Block.

The document, dated Sept. 24, 2025, notes participants in an upcoming public sale of MEGA tokens must complete mandatory KYC checks, while EU-based buyers must custody proceeds with a MiCA-licensed provider. Token distribution and supply math were also detailed. According to the paper, the MEGA token will carry a surprisingly modest 9.5% allocation to the team, with the protocol positioning the token as the economic engine for a pair of novel infrastructure features, including sequencer rotation and proximity markets.

In total, 70.3% of MEGA's 10 billion supply is reserved across the team, ecosystem reserves, and staking rewards, and about 14.7% allocated to MegaETH's venture capitalist investors. Earlier this month, the Layer 2 blockchain project announced it would repurchase approximately 4.75% of its token supply from early investors.

The heavy allocation to KPI staking rewards — 53.3% — is designed to bootstrap onchain activity but may raise questions about the initial circulating supply and token concentration. Additionally, the paper reiterated details of an English auction for 500 million MEGA tokens, equivalent to 5% of the total 10 billion supply.

Under the sequencer rotation design explained in an X thread , MegaETH will run a single active sequencer that rotates around the globe with the world’s economic day, and operators will compete for windows by staking $MEGA. Selection will weigh stake, past performance, and infrastructure capability. Operators can be slashed for faults, and ranked standbys will take over instantly on failure, the team said. The model is explicitly engineered to track user activity by region and minimize end-to-end latency.

The proximity markets idea ties real-world colocation economics to onchain token mechanics. Market makers and apps will bid for sequencer-adjacent floorspace by locking MEGA, creating a tradable, onchain market for low-latency access. MegaETH said seats will be dynamically allocated and tokenized, with an onchain indexer streaming real-time data so liquidity providers can react in milliseconds. This design aims to tighten spreads and deepen onchain liquidity for DeFi.

MiCA is the EU’s comprehensive rulebook for crypto issuance and services, having passed into full enforcement in December 2024. For projects, MiCA compliance opens legal access to EU retail investors and regulated custodians. But it also imposes investor-protection features, including mandatory disclosures, cooling-off periods, concrete refund mechanisms, and clear liability statements.

MegaETH’s whitepaper leans into that tradeoff.  The document named OKCoin Europe Limited as the MiCA-licensed custody provider, with mandatory KYC, a two-week withdrawal period, and explicit risk warnings throughout the paper.

Protocols seek MiCA alignment to tap Europe’s sizable investor base and to onboard regulated exchanges and custodians. At the same time, some teams worry MiCA’s transparency and KYC mandates will blunt viral retail adoption and complicate token economics.