The token is stuck in the contract! How to recover Tether’s USDT?

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This article comes from: The Block, the original author: Yogita Khatri

Odaily Planet Daily Translator | Azuma

Editor’s note: Sending digital currency to the wrong address by mistake is the same as transferring money to the wrong bank account. However, because the bank is a centralized system, when an error is found, the bank can promptly ask for help to solve the problem. But in the world of digital currency, when the digital currency is issued by mistake or the system is stuck, can this kind of help work? Tether set a good example.

On the evening of September 14, users discovered that the tokens in the USDT pledge pool of Rose Finance, a liquid mining project on the TRON chain, could not be released normally. Rose Finance officials subsequently stated that they had contacted the audit company Know Chuangyu and Tether officials, hoping to solve this problem.

Tronscan browser, there are still nearly 7 million USDT cards in the contract address.

Whether the funds can be unfrozen normally, Tether’s “USDT recovery mechanism” may give the answer.

Precedent

In fact, Tether just handled a similar incident for a Swerve Finance (Curve fork project) user last week. The user mistakenly transferred 1 million USDT to Swerve’s contract address and found that he could not withdraw it, and at one time thought that he would never get the funds back. Subsequently, this incident attracted the attention of Paolo Ardoino, the chief technology officer of Tether. Under his leadership, Tether successfully recovered and returned 1 million USDT to the user through the “recovery mechanism”.

Before helping the user restore 1 million USDT, Tether officials contacted Mr. Fahrenheit, the host of the Discord channel of Swerve Finance. Mr. Fahrenheit released a message sent by the director of Tether as follows:

“Mr. Fahrenheit, I would like to contact you on behalf of Tether. Recently, a user contacted us. Due to misoperation, he directly transferred 1 million USDT to Swerve’s contract address (0xb8baa0e4287890a5f79863ab62b7f175cecbd433). Before we take any remedial measures , I want to confirm two points to you: 1. The funds are not recoverable under any normal use; 2. We will blacklist the address while restoring the funds. I want to confirm This will not have any impact on Swerve’s operations.

Obviously, Tether decided to help the user recover their assets after getting an affirmative answer from Swerve. As for the contract address being blacklisted, Mr. Fahrenheit said: “This is only a technical blacklist. Our token contract address will never be able to transfer tokens out, so being blacklisted has no effect.”

The “recovery mechanism” only supports two public chains

It is actually not uncommon for users to send funds to the wrong address by mistake, resulting in these tokens being inaccessible forever.

Paolo Ardoino, Chief Technology Officer of Tether, said: “When users contact us about such incidents, we will start investigating. If necessary, we may be able to help these customers recover their tokens. We will use various blockchain analysis tools to check The original sending address is investigated, and the user needs to prove the ownership of the sending address… It is Tether’s sole discretion whether to help. We cannot guarantee that it will succeed, but we will always abide by the rules and the law.”

Ardoino further explained the working principle of the “recovery mechanism”. Tether itself cannot transfer funds from the stuck address, but there is a code in Tether’s Ethereum and Tron smart contracts that allow the issuance of The party freezes the stuck tokens, then destroys the tokens, and then issues the same amount of new tokens, and finally realizes the restoration of user funds, such as the Swerve Finance user case mentioned above. However, Tether cannot do this on the other six public chains that support USDT-Algorand, EOS, Liquid Network, Omni, OMG Network and Solana.

In fact, Tether often receives and resolves such requests. Ardoino revealed that Tether helped 12 different users withdraw their funds in one day last week. So far this year, Tether has helped users recover approximately 5 million USDT, of which only 250 USDT has been recovered for the smallest sum.

Do other stablecoins also have a “recovery mechanism”?

Is Tether’s “USDT Recovery Mechanism” unique? Josh Hawkins, Senior Vice President of Global Corporate Communications at Circle, revealed that USDC, the second largest stablecoin by market capitalization, does not have a similar mechanism, so there is no similar “reversibility”.

Gemini said that there is no similar mechanism for GUSD. As of the posting, Paxos (BUSD, PAX, HUSD) has not yet responded to this.