Ethereum tokens worth more than $1 billion have been trapped for eternity on account of typos, user errors, and buggy contracts.
This has been revealed by Coinbase’s director of product strategy and business operations, Conor Grogan.
I’ve categorized thousands of instances of Ethereum typos, user errors, and buggy contracts Thus far I’ve found 636,000 ETH worth $1.15B+ that are lost forever: 0.5% of all circulating supply Crypto can be hard sometimes. On the flip side, that’s a lot of ETH that cant be sold.
Among the reasons for the trapped tokens include the Parity Multisig wallet bug, which caused the crypto exchange Quadriga to lose 60K tokens [$108 million] owing to a flawed contract.
In addition, a flawed smart contract rendered $34 million worth of Ethereum permanently inaccessible during Aku Dreams’ much-hyped NFT launch Akutars, a year ago.
Aku Dreams is a 3D avatar NFT collection based on the original character Aku by Micah Johnson, the Major League Baseball player.
Also, there was another incident where “people have collectively sent 24k ETH to a burn address for some reason”. So, in total, Web3 foundation lost 306K ETH which is valued at over $530 million, Grogan added.
To recall, in Jan 2022, a Reddit user who wished to remain anonymous [now-deleted post] was said to have lost close to $500k after sending wrapped Ether [wETH] into a wETH wrapping smart contract.
Typically, users first send ETH to the wETH smart contract address in order to wrap it, and they will then receive an equivalent token in return.
To unwrap it, users must either use the withdrawal function in the wETH smart contract or exchange wETH for ETH on a decentralized exchange like Uniswap.
Here, the anonymous Reddit user transferred the wETH directly into the wETH smart contract address instead, in a bid to receive ETH back.
Actual Lost Figure Of Ethereum Tokens Could Be Much Higher
Unfortunately, this procedure is the equivalent of “token burning,” and it led to the trader’s crypto being lost forever.
Having said that, Coinbase’s Grogan also cautioned that the previously cited figure significantly underestimates the actual amount of lost or inaccessible ETH.
This is because it only accounts for situations in which Ethereum is permanently locked and ignores lost private keys or forgotten wallets, such as the infamous Genesis wallets.