Gate.io Exchange User Commits Horrible $400,000 DeFi Blunder, Losing Tokens Forever

It can be argued that a key barrier to the adoption of decentralized finance (DeFi) applications and seemingly rewarding yield farming opportunities is how difficult it is for the average investor to understand how they work.

A recent irreversible error from a user of popular crypto exchange Gate.io has further shown just how easy it is to lose money in DeFi without expert guidance, or at least basic knowledge of how to execute transactions using DeFi apps.

Spotted by one of SushiSwap’s anonymous developers, Chef Nomi, the error pinpointedly involves the sending of $400,000 worth of USDT from a Gate.io associated address to the SushiSwap token address. These tokens are now non-recoverable.

Sushiswap is a new decentralized finance protocol forked from the leading decentralized exchange platform, Uniswap. Uniswap recently recording a higher trading volume than Coinbase for the first time, but Sushiswap claims it will do a better job.

The protocol has already amassed $700 million in total locked value. The promise is that it will pay liquidity providers 0.25% of generated transaction fees, and also payout 0.05% using the protocol’s governance token, SUSHI. The total yield, 0.3%, is the same as Uniswap but differs since SUSHI is a new token with the potential to appreciate, even before the protocol’s mainnet goes live within two weeks, as the developers promised.

It is apparently on a mission to add liquidity to SushiSwap and receive SUSHI tokens as a reward, that the user sent USDT to the protocol’s token address, instead of designated liquidity pools on the new decentralized exchange.

Gate.io Sushiswap error

When users send tokens to a smart contract address, there’s no way to get them back even if the contract’s owner wanted.

A reversal is only possible if the said contract had implemented a function that allows it to transfer received tokens. Given that Sushiswap did not implement such functionality, the 400,000 USDT deposited to the address is lost and stuck.

Another alternative recovery method that, although unlikely, could be for USDt issuer, Tether, to freeze the funds on the address and re-issue it to the unfortunate user.

See Also: People Are Losing $$$ to a Fake UniSwap Google Ad Phishing Seedphrases.

Update: This article has been updated to state that the error was made by a Gate.io user instead of the exchange. An earlier version suggested that the error was made by a Gate.io employee.

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Author: Wilfred Michael

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Author: Wilfred Michael