Why $100,000 Tether Transfer Cost $23.7M in Fees
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Why $100,000 Tether Transfer Cost $23.7M in Fees

9 months ago

DeversiFi has offered a post-mortem of the fat-fingered error — but thankfully, disaster was averted after the mining pool gave the funds back.

Why $100,000 Tether Transfer Cost $23.7M in Fees

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In an industry inundated with stories about ransomware, nine-figure hacks, and regulators' cries for greater investor protection, it's nice to be reminded that cryptocurrency is still small enough to be a community where people look out for each other.

Which is why the occasional heartwarming tale of people doing the right thing despite extraordinary financial incentives otherwise is always welcome. 

So it was with the Poly Network hacker's return of $612 million in August, and so it was late on September 27, when an as-yet-unidentified Ethereum mining pool gave the decentralized cryptocurrency exchange DeversiFi back the vast majority of the 7,676 ETH — worth $23.7 million — it accidentally spent on a single transaction valued at about $100,000 a day earlier.
DeversiFi tweeted Monday evening:
"The blockchain is immutable, but the revolution we are part of is defined by our values as humans. Thank you to the miner of block 13307440 who we can confirm is returning 7,626 ETH that were incorrectly paid today as a tx fee."

DeversiFi offered a 50 ETH return fee after the miner replied to an email passed on by its exchange and quickly returned the funds.

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What Went Wrong

In a post-mortem of the "fat-fingered" error published late on September 28, DeversiFi CTO Konrad Strachan dives deep into the technicalities of what happened and why.

The problem was threefold, he said: An issue with the Ethereum EIP-1559 upgrade that would only affect very fat wallets — others would just see a failed transaction — combined "with the fact that Ledger hardware wallets may sometimes display fees in a non-human readable manner."

The EIP-1559 upgrade, known as London, changed the way Ethereum transaction fees — known as "gas" — are determined. It replaced manually bidding on the fee offered to miners to pick up a transaction with an automated bidding system based on network congestion.

Strachan said DeversiFi is working with EthereumJS maintainers to fix what he described as a "defect in the library."

It also communicated with Ledger and has, for its own part, instituted "safety and sanity checks were also added to ensure gas fees associated with transactions could not exceed unrealistic thresholds to protect against user error, extreme network fee spikes and as an additional layer of protection against any future coding error."

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