Dev Offers $2.5M Bounty to Recover $27M in Lost Tokens

In a costly mistake, a crypto developer accidentally sent $25 million in Renzo tokens to an incorrect Ethereum address and is now offering a $2.5 million bounty for help retrieving them. The developer mistakenly transferred 7,912 ezETH tokens—each worth over $3,400—into a Safe Module rather than a Safe wallet. The misstep has left the funds frozen and inaccessible due to an ERC-20 contract bug that prohibits recovery.

The tokens ended up in a contract address labeled “CoboSafeAccount,” which now holds around $27 million in Renzo Restaked ETH (ezETH), slightly more than the initial deposit due to recent gains in Ether’s price. Despite holding the keys to this wallet, the developer is unable to recover the tokens due to limitations in ERC-20 transaction handling and the lack of a transfer function in the CoboSafeAccount contract.

How Did This Happen?

Renzo is a liquid restaking protocol on Ethereum’s layer 2, EigenLayer, allowing users to earn staking rewards simply by holding ezETH instead of directly staking ETH. With $1.6 billion in restaked value on the platform, the protocol has attracted significant interest, but this incident has raised concerns over its contract design.

The developer’s mistake highlights a longstanding issue with ERC-20 contracts. The problem, as explained by blockchain security expert Dexaran, is rooted in ERC-20’s limited transaction handling protocols, which lack failsafe defaults and error-handling mechanisms that could prevent such incidents. Dexaran, who developed the ERC-223 standard to address these issues, remarked that Ethereum developers have yet to adopt improvements for secure transaction handling, which could have prevented this costly error.

Will Renzo Step In?

To recover the funds, some in the community believe the solution lies with Renzo’s developers, who could potentially modify the ezETH contract to enable recovery. As owners of the ezETH contract, Renzo’s team could update it to allow the developer to access the frozen funds. However, gaining the cooperation of a billion-dollar protocol is no small task.

The developer has offered a bounty worth 10% of the lost funds—equivalent to $2.5 million—for any assistance in recovering the tokens. Some community members have suggested offering this bounty to Renzo directly, while others recommend social pressure to encourage the team’s intervention. One potential workaround involves adding a delegate to the CoboSafeAccount to execute transactions, but this method has yet to yield results.

A Cautionary Tale for Crypto

This incident serves as a reminder of the risks associated with handling high-value assets on decentralized platforms, where technical errors can result in substantial losses. The ERC-20 standard, which underpins countless tokens on the Ethereum network, lacks the error-handling mechanisms necessary for such high-stakes transactions. While Dexaran’s ERC-223 standard offers improved transaction handling, its adoption remains limited.

The case has sparked a broader conversation around the need for enhanced security in Ethereum’s contract standards, particularly as more assets move onto decentralized platforms. Whether Renzo will intervene remains uncertain, but the developer’s misfortune underscores the importance of secure and user-friendly transaction standards in the evolving crypto space.

The developer’s $2.5 million bounty for retrieving $27 million in lost Renzo tokens highlights the challenges of managing digital assets on decentralized platforms. As the community awaits Renzo’s response, this incident may prompt renewed calls for more secure Ethereum standards and better failsafe mechanisms to prevent such costly errors in the future.