As Ethereum $ETH continues to attract institutional interest through exchange-traded funds (ETFs), a significant portion of its balances has been lost due to human errors.
- A total of 912,296.82 Ethereum (Ethereum) coins have been permanently lost, according to public blockchain records.
- The BlackRock ETHA fund topped the incoming investments, raising total inflows to all Ethereum exchange-traded funds (Ethereum ETFs) in the United States to $5.5 billion.
- The self-custody model for Ethereum (Ethereum) does not include any mechanism for asset recovery in case of user errors.
A recent post on GitHub documented that Conor Grogan -head of investment products at Coinbase- reported the permanent loss of more than 912,000 Ethereum (Ethereum) coins due to user errors or protocol failures, representing over 0.76% of the circulating supply of ETH. Grogan collected wallet addresses from public records and smart contract audits, along with community-provided data, excluding incidents involving uncertain loss of private keys, with the analysis including only coins that have been definitively proven to be inaccessible.
The total lost Ethereum (Ethereum) coins amount to 912,296.82 coins
Grogan stated: “To clarify, this figure -which exceeds $3.4 billion- does not accurately represent the amount of $ETH (Ethereum) coins that are actually lost or inaccessible… but only includes cases where the currency has been locked away forever,” adding that this figure “does not include -for example- all lost private keys or forgotten early Ethereum investor wallets (Genesis Wallets).”
The massive losses include 306,000 Ethereum (Ethereum) coins locked in a multi-signature contract belonging to Parity, which was previously used by the Web3 Foundation, along with 60,000 ETH lost due to the collapse of the QuadrigaCX platform, and 11,500 ETH lost by the Akutars group for non-fungible token (NFT) projects due to a smart contract error; Grogan also mentioned that 25,000 ETH were manually sent to a known address for burning coins.
The dataset includes results from researcher Johannes, who documented -with the help of contributions from researchers Tayvano and J6sp5r- the loss of over 12,000 ETH due to typos in wallet addresses.
Grogan continued, explaining that future updates will expand the dataset to cover additional cases such as North Korean losses and cases related to unrecoverable private keys.
Ethereum exchange-traded funds (Ethereum ETFs) are seeing exceptional investment inflows
The total inflows to Ethereum exchange-traded funds (Ethereum ETFs) exceeded $5.5 billion, which received $3.3 billion since mid-April, with this renewed demand following rising yields from Ethereum (Ethereum) and increased futures activity.
The iShares Ethereum Trust (ETHA) from BlackRock led these gains, achieving $489 million on July 17, the highest figure ever recorded. The fund received investments worth $1.25 billion over five trading sessions, raising its total assets under management to $6.94 billion.
Ethereum exchange-traded funds (Ethereum ETFs) in the United States collectively saw inflows of $726.74 million on July 17, surpassing their previous highs. Additionally, the FETH fund from Fidelity and the Grayscale mini fund added $113.31 million and $54.18 million respectively.
The continued loss of Ethereum (Ethereum) coins indicates the robustness of the blockchain transaction settlement protocol and the absence of any mechanisms to compensate for user errors. Unlike traditional financial systems that provide the ability to recover funds or compensation through custodians, the self-custody model of Ethereum makes asset recovery practically impossible once certain errors occur.
With institutional investment now growing through investment products like exchange-traded funds (ETFs), increasing user awareness and enhancing wallet security are more important than ever, and thus prevention of future losses may depend more on developing better tools and standards rather than modifying the protocol itself.
Frequently Asked Questions
Can lost Ethereum (Ethereum) coins be recovered through updates or forks?
No, because the design of the consensus mechanism of the Ethereum blockchain does not allow for selective changes to access without a network split, which requires extensive coordination across the network, a challenge to implement.
Can other blockchain networks implement loss recovery tools without compromising decentralization?
Some newer blockchain networks are testing recovery functions or programmable custodianship models, but these solutions require trade-offs in terms of user control and assumptions about system trust in third parties.
How are lost Ethereum (Ethereum) coins accounted for within monetary policy models or supply tracking?
Lost Ethereum (Ethereum) coins are not officially removed from circulating supply indicators, and are often accounted for in estimating effective supply and scarcity.
Do Ethereum exchange-traded funds (Ethereum ETFs) face specific technical risks due to these losses?
Although the funds use custodians to mitigate risks, failures in operational security procedures related to staking and penalties imposed on auditors for legal breaches (Slashing) and management of private keys can lead to significant losses.