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Oops: a “rookie” Ethereum DeFi user just burned $1 million in USDT

Oops: a “rookie” Ethereum DeFi user just burned $1 million in USDT

Photo by Sarah Kilian on Unsplash

Late last week, leading Ethereum decentralized finance protocol Curve was forked into a new protocol focused on the community after a number of controversies. As reported by CryptoSlate, this fork has been dubbed “Swerve” (quite the clever name) and has seen success despite it being a fork, garnering hundreds of millions worth of deposits.

By no fault of its own, Swerve has come under the spotlight after a user managed to accidentally send $1 million worth of Tether’s USDT stablecoin to an unaccessible contract, basically burning them.

How a user burnt $1 million worth of Tether’s USDT by accident

While there are many millionaires in the crypto space, not all of them are tech-savvy as they should be.

This much was made clear just recently when a user was attempting to deposit $1 million worth of the Ethereum-based stablecoin USDT into Swerve, presumably to earn the yields the protocol is currently offering of over 100 percent APY.

Unfortunately, he messed up. Instead of sending the capital to the pool, he purportedly sent his coins to the Swerve token contract, where his coins have no purpose. Worse yet, he couldn’t call that contract to claim the tokens.

It’s not the first time this has happened. If you peruse Telegram and Twitter, you’ll likely find many instances of individuals sending a variety of tokens to contracts where they can’t receive the funds. There were discussions on Twitter, in fact, just last week about hundreds of thousands worth of SUSHI to the token contract.

Fortunately for the use, Bitfinex and Tether CTO Paolo Ardoino has swooped in to save the day, recently writing on Twitter:

“Please open a ticket to @Tether_to support service https://app.tether.to. If it’s USDt ERC20 stuck in an address we should be able to recover it, but in order to be sure, please contact our customer support and we’ll try our best.”

Education is needed to send DeFi (and crypto) higher

Even if Tether manages to recover the funds, this unfortunate turn of events signals why education in the crypto space โ€” especially in the complicated land of Ethereum smart contracts and Ethereum โ€” is pivotal.

DeFi commentator “DeFi Dude” commented in the wake of the event:

“This happens daily, just not for $1 million – but not everyone is rich, so it has the same effect regardless of the amount. It’s very sad to see, and even worse when you’re the one that has to tell the person their money is lost forever. More failsafes/education in crypto plz.”

Andrew Kang, the founder of crypto fund Mechanism Capital, believes that education could be a key in unlocking the next growth phase in DeFi.

In a seminal thread he published in July, he wrote:

“The reason for [DeFi’s] acceleration is many-fold: higher on-chain liquidity, more/better dev tools, success case studies, more apps to interoperate with & build on top of, and more community members educating others and ideating.”

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Posted In: , DeFi

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