Recent studies indicate that cryptocurrency users have faced significant losses in ETH due to errors in handling tokens. A total of 913,111 ETH has been lost, equivalent to $3.4 billion.
User Errors and ETH Losses
According to Coinbase director Conor Grogan, 913,111 ETH have been irretrievably lost due to user errors, accounting for 0.76% of the total ETH supply. Such errors may include sending ETH to unrecoverable addresses, smart contract mistakes, or multisig wallet failures.
Examples of ETH Losses
One example is the Parity wallet used by the Web3 Foundation, which implemented multisig functionality. The contract governing access to these funds was destroyed, resulting in approximately 306,000 ETH ($95 million at the time) being frozen. The now-defunct Canadian crypto exchange QuadrigaCX had stored around 60,000 ETH in poorly documented wallets. Additionally, the Akutars NFT project suffered two key smart contract bugs, resulting in $34 million becoming unrecoverable.
Real Scale of Token Losses
Thousands of users have also sent ETH to burn or null addresses due to typos in address inputs. According to Grogan, 25,000 ETH have collectively been sent to burn addresses. He also notes that the $3.4 billion likely undershoots the actual amount of lost ETH, as it does not account for lost private keys. As of now, approximately 5.3 million ETH tokens have been burned following EIP-1559, introduced during the London hard fork in 2021.
In conclusion, losses of ETH due to user errors remain a significant issue in the cryptocurrency space. It is essential to understand the risks involved in managing tokens and to take measures to mitigate them.
