Coinbase Launches Service to Help Recover Lost ERC-20 Tokens

Coinbase Launches Service to Help Recover Lost ERC-20 Tokens

The world’s second largest cryptocurrency exchange will roll out a feature to help users recover ERC-20 tokens that were mistakenly sent to wallet addresses on the platform.

U.S-based crypto exchange Coinbase has introduced a feature that will help its customers recover more than 4000 unsupported ERC-20 tokens mistakenly sent to wallet addresses on the platform. “ERC-20” is a terminology used to refer to any cryptocurrency developed on the Ethereum (ETH) blockchain, which includes some popular tokens like Polygon (MATIC), Avalanche (AVAX), and Uniswap (UNI).

While Coinbase supports a number of ERC-20 tokens, it does not process all the assets that are sent to its blockchain ledger. Earlier, if a user sent tokens not supported by Coinbase to a wallet address on the exchange, they would get a prompt message saying the assets were successfully delivered on-chain. However, these funds never actually reach the recipient’s wallet, and cannot be recovered because Coinbase operators don’t have access to the private keys that’s needed to reverse transactions.

“It’s been a pain point for customers who sent ECR-20 tokens to a Coinbase receive address. When people accidentally sent these assets, they were effectively stuck up until this point. 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,” said Coinbase’s VP of Engineering Will Robinson in an interview given to TechCrunch.

Coinbase Launches Service to Help Recover Lost ERC-20 Tokens

Only ERC-20 tokens including wETH (wrapped ETH), stETH (staked ETH) and TUSD, that are on the Ethereum mainnet with pricing information available on decentralised exchanges (DEX) can be recovered using Coinbase’s ‘self-service asset recovery tool’. Coinbase is looking to expand the feature to support other ERC-20 tokens, but due to the complex technicality surrounding recovering unsupported assets, the company can’t guarantee which tokens will be eligible for the program in the future.

To recover their lost funds, customers must provide Ethereum transaction ID (TXID) to identify where the amount was sent from and the Coinbase address to which the funds were sent to. Eligible tokens that were mistakenly transferred can be recovered and sent back to Coinbase Wallet or any other self-custodial wallet. The company says its recovery tool is able to send the assets directly to the client’s inbound address without processing them through its centralised exchange infrastructure, thus ensuring that users’ private keys are never exposed.

However, Coinbase has warned customers that the ERC-20 tokens eligible for recovery have not gone through its asset listing review process, and hence users will need to do their own due diligence to determine the “authenticity, safety and security of the assets they choose to recover.”

The feature will be rolled out to all Coinbase users over the next few weeks, but won’t be available for Coinbase Prime or Japan customers. Apart from an Ethereum network fee (gas), the service is free for recovering amounts less than $100, but will charge a 5% fee on transactions valued over $100. This feature is a blessing to many users who’ve been dealing with not being able to recover mistakenly sent funds for a really long while.

At the time of writing, ETH is trading at $1,276 – down 1.1% in the last 24-hours.

Also Read UN Sends Aid in Crypto to Ukraine’s War Refugees

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