A huge chunk of Ethereum (ETH) is permanently lost, and it’s costing billions. Let’s dive into the details.
Millions of ETH Lost to Errors and Bugs
Coinbase’s head of product, Conor Grogan, revealed that a staggering 913,111 ETH – that’s over $3.4 billion! – is unrecoverable due to user mistakes and software glitches. This represents about 0.76% of all ETH in circulation.
Adding to this, another 5.3 million ETH has been burned through the network’s fee-burning mechanism. In total, that’s roughly 6.2 million ETH, or about 5% of all ETH ever issued, amounting to a whopping $23.4 billion in lost value. This number has increased by 44% since March 2023.
Grogan points out that this is likely an underestimate, as it doesn’t include ETH lost due to forgotten passwords or unused old wallets.
The Biggest Mistakes
Three major incidents account for a large portion of the lost ETH:
- A faulty Parity multisig wallet: 306,000 ETH lost.
- QuadrigaCX’s broken contract: 60,000 ETH lost.
- The Akutars NFT mint bug: 11,500 ETH lost.
While there haven’t been any new massive losses recently, smaller errors continue to add up. The risk of losing ETH through mistakes or bugs remains a reality for developers and users alike. Better tools and audits can help, but human error is unavoidable.
The Impact of Lost ETH
Unlike Bitcoin, which has a fixed supply, Ethereum’s supply isn’t constant. The burning mechanism and accidental losses effectively reduce the circulating supply, making the remaining ETH potentially more valuable. This could influence market sentiment and prices, especially if demand remains strong or increases. Ethereum’s transition to proof-of-stake and the London hard fork have also affected its supply, leading to a temporary decrease followed by a slight increase.
The bottom line? Tracking lost ETH is just as important as tracking price and trading volume. It’s a significant factor in understanding the true scarcity and potential value of Ethereum.