- Kumbaya, the flagship DEX on MegaETH, reportedly took an undisclosed 50% of trading fees from liquidity providers following the MEGA token launch, sparking community outrage.
- The DEX generated over $375,000 in protocol revenue from April 30 to May 1, according to DeFiLlama data, while users allege key details about fee structures and rewards were missing.
- This incident follows previous operational issues for MegaETH, including a chaotic pre-deposit event in November that was hampered by congestion and a multisig wallet mishap.
Liquidity providers on the MegaETH blockchain are furious after discovering its flagship decentralized exchange, Kumbaya, allegedly withheld half of their trading fees without clear disclosure during the recent MEGA token launch. The controversy erupted on May 1, as users analyzed on-chain data to uncover the significant fee split.
In total, Kumbaya accrued over $375,000 in protocol revenue across two days, data shows. Consequently, angry LPs took to social media to voice their frustration over the lack of upfront information. One user claimed the fee details were absent from the exchange’s website.
Kumbaya responded by promising “updated documentation along with more details on Kumbaya’s fee structure is coming tomorrow.” However, the team later had to address a security alert on its site, which it said was “flagged by a wave of malicious manual reports.”
Meanwhile, users felt betrayed by Kumbaya’s close ties to the MegaETH Foundation, which had called the DEX “ecosystem critical.” Compared to Uniswap‘s lower fee share or even competitor Prism’s 25%, Kumbaya’s 50% split was viewed as predatory. Crypto lawyer Gabriel Shapiro argued contrarily that “the code is the disclosure” in DeFi.
This is not MegaETH’s first operational challenge. The network faced embarrassment during a November pre-deposit event, where congestion caused many to miss out. A planned transaction to increase the deposit cap was then executed early by a user, forcing the team to walk it back. The team later admitted a party was “unfamiliar with the specific Safe feature.”
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