In an alleged technical error, popular cryptocurrency exchange Bitfinex paid a whopping $23.7 million in gas fees for sending a nominal $100K worth of stablecoin Tether (USDT) to its layer-2 subsidiary platform DeversiFi on September 27.
The highly controversial transaction that saw Bitfinex pay 7,676 ETH, equivalent to $23.7 million, will go down in history as one of the largest gas fees ever recorded on the Ethereum blockchain.
At the time of writing, the Ethereum average gas price was 138.46 Gwei according to Ycharts and 1 Gwei is equal to 0.000000001 ether (ETH), which translates to 0.00000013846 ETH or $0.0003627652.
$23.7 million is nowhere near comparable to $0.0003627652.
According to EtherScan, the transaction by Bitfinex was initiated at around 11:10 UTC on September 27, from Bitfinex’s second-largest wallet to DeversiFi’s wallet.
It is mysterious since the transaction carried an erroneously high fee even though DeversiFi promotes a service to “avoid gas costs and frustration, saving you time and money with every trade or swap.”
DeversiFi revealed that it has already launched investigations to determine the cause of the technical error; it also stressed that no customer funds are at risk.
“No customer funds on DeversiFi are at risk and this is an internal issue for DeversiFi to resolve”, as well as that “operations are unaffected,” DeversiFi added.
Bitfinex also tweeted in a response saying that Bitfinex will not directly shoulder the burden of the gas fee since, in transactions such as this, a third party shoulders the fees.
Similar Past Gas Fee Errors
In June 2020, a similar technical error occurred, at the time, three small to medium transactions registered mysteriously large costs with 0.55 ETH worth of transaction being required to pay as high as $2.6 million fees.
After the incident in June 2020, Ethereum co-founder Vitalik Buterin agreed with the narrative that the high gas fees were a result of human error.
“I’m expecting EIP-1559 to greatly reduce the rate of things like this happening by reducing the need for users to try to set fees manually,” Vitalik said at the time.
However, after the three transactions in June 2020 were concluded, experts confirmed that the transactions were malicious attacks after the victim’s wallet owner reached out to the mining pool that facilitated the transaction. According to investigations, the wallet owner received about 90% of the fees used to cater for the gas fee.These incidents will probably not happen when Ethereum completely switches from the Proof-of-Work consensus mechanism, which depends on mining pools to verify transactions, and therefore leaving a chance for hackers to take advantage of the mining pools.