The exchange platform Bitfinex came close to disaster, shelling out 7,676 ETH in transaction fees during a deposit. In total, the $23 million spent on this transaction marks a new record fee for Ethereum (ETH).
Bitfinex on the verge of bankruptcy
On Monday 27 September, the Ethereum community was surprised to see a surprising transaction.
Indeed, 7,676 ETH in fees were backed by a transaction that moved “only” 100,000 USDT from the Bitfinex 2 wallet to the DeversiFi 2 wallet. In total, this represents a total of $23 million in fees, or 23 times the amount moved by the transaction.
Unsurprisingly, this transaction was verified, validated and included in block 13307440, and the miner who was lucky enough to validate it walked away with a juicy windfall. Unfortunately for Bitfinex, this means a 23 million dollar hole in its cash flow. A situation that we can imagine being rather unpleasant.
An error in the management of Ethereum fees
The day after the events, the platform DeversiFi published a post mortem going back over the course of events.
According to the information reported, an error was present in the EthereumJS library used in the interface of the DeversiFi application. The error was in the handling of fees for EIP 1559 transactions.
Thus, in a small number of cases, the calculated fees were not the right ones. Fortunately, for most average users, this only resulted in a transaction error, as they did not have enough funds. Obviously, this was not the case on the side of Bitfinex, which had more than enough ETH 7,676 for its transaction.
“Coupled with the fact that Ledger hardware wallets can sometimes display fees in a non-human readable way, this may have removed a critical human security check.”
Fortunately, DeversiFi’s teams got in touch with the people behind this library as well as Ledger’s teams to resolve the various issues that led to this crazy transaction.
All’s well that ends well
Soon after the transaction, DeversiFi’s teams realized that the miner was making regular deposits of his earnings to Binance. They then contacted the exchange, which was able to pass on their details to the miner.
Once in contact, the miner agreed to return the funds to Bitfinex. In total, the miner returned 7,626 ETH across 3 transactions, keeping 50 ETH ($146,000) as a reward for the return.
“The blockchain is immutable. But the revolution we are part of is defined by our values as humans. Thank you to the miner of block 13307440 who we can confirm is returning the 7,626 ETH that was mistakenly paid today as a transaction fee.”
This is not the first time such an event has occurred on Ethereum. In June 2020, 23,000 ETH, or more than $5 million, had been spent on fees across 3 separate transactions. Unfortunately for that case, the funds had not been returned.