Jacquelyn Melinek1 year
Coinbase, the second-largest crypto exchange globally, has launched a new tool to help its customers recover more than 4,000 unsupported ERC-20 tokens sent to its ledger, the company exclusively told TechCrunch.
“ERC-20 token” is technical terminology for any cryptocurrency created using the Ethereum blockchain. While Coinbase supports hundreds of cryptocurrencies, there are thousands that it doesn’t. The ERC-20 self-service asset recovery tool allows customers to recover different kinds of tokens sent to a Coinbase address.
“It’s been a pain point for customers who sent ERC-20 tokens to a Coinbase receive address,” Will Robinson, vice president of engineering at Coinbase, told TechCrunch. “When people accidentally sent these assets, they were effectively stuck up until this point.”
In the past, if you sent assets not supported by Coinbase to a user’s address on the exchange, you’d get a message saying the assets were successfully delivered on-chain, but they didn’t actually go to the receivers’ wallets. Usually, these assets are unrecoverable because internal operators don’t have access to the private keys needed to reverse transactions.
Such transactions make up a “small fraction of the total transfers” Coinbase receives, but from an individual user’s point of view, such an error could make for a “very bad day,” Robinson said. Coinbase has more than 108 million verified users across over 100 countries with $101 billion assets on the platform, according to its website.
Many tokens that are ERC-20 tokens on the Ethereum mainnet that have pricing information on a decentralized exchange or other venue can be recovered, Robinson said. “We make no quality representation of these assets, as they haven’t gone through our review process, but we’re facilitating the returns that accidentally sent it in the first place.”
To recover funds, customers must provide their Ethereum transaction identification for the lost assets and the contract address of the lost asset. The recovery tool only works for select ERC-20 tokens sent into Coinbase. “For supported assets, there’s nothing to be done here,” Robinson said. “The problem doesn’t exist in the same way, because Coinbase users have access and can send them back themselves.”
The feature will be rolled out over the next few weeks, but is not available for Japan or Coinbase Prime users. There’s no recovery fee for amounts less than $100, but those worth more than $100 will be charged a 5% fee — aside from the separate network fee, which applies to all recoveries, Coinbase said.
In the long term, support for other asset recoveries beyond ERC-20 tokens could be a reality, but “no firm commitments” exist today, Robinson said. “This is a direction we know is important to users and want to drive forward.”
I am a seasoned cryptocurrency and blockchain enthusiast with a deep understanding of the technological intricacies that underlie this rapidly evolving industry. Having closely followed developments in the crypto space, I possess a wealth of knowledge on various blockchain platforms, tokens, and the associated technologies that shape the landscape.
Now, let's delve into the concepts mentioned in the provided article:
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Coinbase:
- Coinbase is the second-largest cryptocurrency exchange globally, playing a pivotal role in facilitating the buying, selling, and trading of various cryptocurrencies.
- The platform boasts over 108 million verified users across more than100 countries, handling assets totaling $101 billion, according to the information available on its website.
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ERC-20 Tokens:
- ERC-20 refers to a specific token standard on the Ethereum blockchain.
- ERC-20 tokens adhere to a set of rules and standards, enabling seamless interaction and compatibility within the Ethereum ecosystem.
- The article highlights Coinbase's support for hundreds of cryptocurrencies but notes that there are thousands of ERC-20 tokens it doesn't support.
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ERC-20 Self-Service Asset Recovery Tool:
- Coinbase has introduced a tool to assist its users in recovering unsupported ERC-20 tokens sent to its ledger.
- The tool addresses a common pain point where users mistakenly send ERC-20 tokens to a Coinbase address, leaving them stuck.
- Previously, if unsupported assets were sent to Coinbase, users received a message indicating successful delivery on-chain, but the assets didn't reach the intended wallets.
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Technical Challenges and Solutions:
- The recovery tool requires users to provide Ethereum transaction identification for lost assets and the contract address of the lost asset.
- Coinbase acknowledges that such transactions constitute a small fraction of total transfers but can be a significant issue for individual users.
- Internal operators at Coinbase traditionally lacked access to private keys necessary to reverse such transactions.
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Recovery Process and Limitations:
- The recovery tool is specific to select ERC-20 tokens sent to Coinbase, and it won't work for supported assets.
- Users can facilitate the recovery process by providing necessary information, and the tool will be rolled out gradually over the next few weeks.
- The feature is not available for Japan or Coinbase Prime users.
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Fees and Future Directions:
- There is no recovery fee for amounts less than $100, but a 5% fee, in addition to a separate network fee, applies to amounts exceeding $100.
- The article mentions the potential for expanding support to recover assets beyond ERC-20 tokens in the future, although no firm commitments exist at present.
In summary, Coinbase's introduction of the ERC-20 self-service asset recovery tool addresses a crucial pain point for users who mistakenly sent unsupported tokens to their Coinbase addresses. The article emphasizes the technical challenges involved and provides insights into the recovery process, fees, and potential future developments in asset recovery support.
