This Noob Just Lost $1,000,000 USDT Forever to a Horrendous DeFi Mistake
With “DeFi” still arguably the hottest topic in the crypto space at this time, there is a continued reminder that potential investors must still spend quality time and perhaps money to understand how things work in that corner of the industry.
The reminder was reiterated once again in the hour leading up to press time, with an unknown user depositing over $1,000,000 worth of USDt to the smart contract address for decentralized finance protocol, Swerve.Finance which launched just four days ago.
Swerve.Finance is a fork of more popular DeFi protocol, Curve, promising to improve on core areas where the latter presumably failed.
According to its website, Swerve fixes issues such as fake-out deployment, questionable pre-mining, founder controlling majority of the governance vote, suspect team proposals, and unfair allocation of tokens to the community of liquidity providers and users.
Swerve also promised to payout ySWRV tokens to liquidity providers, which can, in turn, be staked in the Swerve DAO to earn $SWRV. It is understandably in search of these profits that the unknown user sent 1,010,808 USDT ($1,012,418) to the Swerve contract address instead of supplying the tokens to a liquidity pool that pays out the promised reward.
The nature of smart contracts means that users can never recover tokens sent to the address, even if the contract’s owner wanted.
In fact, a reversal is only possible if the said contract had implemented a function that allows it to transfer received tokens. Given that Swerve did not implement such functionality, the 1,010,808 USDt deposited to the address is stuck and not recoverable.
Perhaps 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. The chances of that happening seem rather unlikely.
However, this is the second-high profile deposit of USDt tokens to a DeFi protocol’s smart contract address. Coinfomania reported last week that a Gate.io user mistakenly transferred $400,000 worth of USDt to SushiSwap’s smart contract address.
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