A growing portion of ]Ethereum's](https://yellow.com/tag/ethereum) circulating supply is being rendered permanently inaccessible due to user errors, software bugs, and unintended transactions, with losses now estimated to exceed $3.43 billion in today’s market value.
According to Conor Grogan, head of product at Coinbase, 913,111 ETH - or approximately 0.76% of the current total Ether supply - is considered permanently lost due to issues that make the tokens unrecoverable.
Grogan published the updated estimate on July 21 via his X account, highlighting a 44% increase in lost Ether since his prior tally from March 2023, which placed the figure at 636,000 ETH. The expanded figure adds more failed transactions and inaccessible assets resulting from long-standing technical vulnerabilities in Ethereum smart contracts, broken multisig wallets, and irreversible transfers to null addresses.
The revelation underscores a growing yet often overlooked problem in the Ethereum ecosystem: even as the network matures and billions of dollars in applications are built on top of it, human error and code fragility continue to create irreversible financial consequences.
Historic Losses Continue to Haunt Ethereum Ecosystem
Despite ongoing improvements in wallet interfaces and developer practices, the incidents responsible for the majority of locked Ether have remained unchanged over time. The most notable examples highlighted by Grogan include:
- 306,000 ETH lost due to the 2017 Parity Multisig wallet bug, which resulted in funds being permanently frozen in smart contracts deployed by the Web3 Foundation.
- 60,000 ETH inaccessible due to a coding flaw in the now-defunct Canadian exchange QuadrigaCX, where the private keys to a cold wallet were lost with the death of its founder.
- 11,500 ETH lost during the faulty NFT mint by Akutars, an event in which a critical contract flaw led to permanent locking of user funds.
The only newly added loss in the latest count was an additional 1,000 ETH mistakenly sent to a burn address, further increasing the tally of lost tokens.
Crucially, Grogan notes that his calculations “significantly undershoot the actual lost/inaccessible ETH amount” as they do not account for ETH tied to forgotten private keys, abandoned Genesis wallets, or addresses whose access credentials have been irrevocably lost. These “soft losses” may involve massive sums that remain on-chain and visible, but effectively inaccessible - a phenomenon increasingly seen in older accounts inactive for over a decade.
Burned ETH Adds Billions More to Irretrievable Supply
In addition to Ether lost due to user error or bugs, Ethereum’s fee-burning mechanism implemented via EIP-1559 has destroyed over 5.3 million ETH since its introduction in August 2021. At current market prices, this translates to more than $20 billion permanently removed from the circulating supply.
Combined with the 913,111 ETH lost due to irrecoverable mistakes, the total amount of inaccessible Ether climbs to roughly 6.2 million ETH - equivalent to around 5% of the total current circulating supply of 120.7 million ETH, according to Grogan’s estimates.
EIP-1559, part of the London Hard Fork, altered Ethereum’s transaction fee model by introducing a base fee that is burned for every transaction processed. This reform was designed to make transaction fees more predictable and reduce long-term supply inflation.
As Ethereum continues to process high transaction volumes - especially during peak NFT minting periods or token launches - the burn rate accelerates.
Ethereum's Supply Policy: Flexible but Constrained
Unlike Bitcoin, which is capped at 21 million coins, Ethereum does not have a fixed maximum supply. This flexibility has led to criticisms from some in the Bitcoin community, who argue that supply certainty is essential for sound monetary policy.
However, recent upgrades have dramatically reduced ETH issuance, particularly after the network’s transition from proof-of-work to proof-of-stake via The Merge in September 2022. Under the proof-of-stake regime, the amount of new ETH issued to validators is far lower than under the previous mining model, resulting in what many call “ultrasound money” - a net-deflationary supply trajectory under certain on-chain activity levels.
According to data from YCharts, Ethereum’s supply peaked at 120.5 million ETH in September 2022, just before The Merge. Since then, the network has experienced a modest decline in total supply due to the interplay of low issuance and high burn rates.
By April 2024, ETH supply had dropped by 0.4%. However, a gradual upward trend has resumed since then, with total supply now sitting around 120.7 million ETH, suggesting an equilibrium between issuance and burn has been reached - at least under current activity levels.
The Broader Impact: Scarcity, Valuation, and UX Challenges
While many in the Ethereum community see the reduction in circulating ETH - whether through burns or losses - as potentially bullish for the token’s long-term value, it also highlights ongoing weaknesses in the user experience and contract safety. Inaccessible ETH from bugs and mishandled transactions reflects a maturing but still imperfect infrastructure.
“These losses are not just statistical,” one developer commented anonymously. “They represent real-world financial pain and UX gaps that blockchain hasn’t yet solved.”
Moreover, permanently locked tokens are not the same as burned ones from an economic perspective. Burned ETH is removed systematically and transparently as part of network design, while lost ETH due to bugs introduces unpredictability and trust erosion among users - especially those interacting with smart contracts for the first time.
Ethereum’s modular future, including efforts like account abstraction, ERC-4337 smart wallets, and improved contract auditing frameworks, aim to reduce the rate of such irreversible errors. Yet, as Grogan’s report shows, total losses have continued to grow.
Calls for Greater Accountability and Safer Standards
The rising loss figures are prompting fresh calls within the Ethereum development community for stricter contract testing, mandatory audits for DeFi protocols, and built-in safety rails for large-value transfers.
Some are also advocating for new token standards that include emergency recovery mechanisms or “circuit breakers” to prevent accidental loss.
Nonetheless, implementing such changes involves tradeoffs, including more centralized oversight or added transaction complexity. Ethereum’s design philosophy of permissionless innovation often runs counter to built-in safety features - a tension that has defined its evolution since inception.
With $3.4 billion worth of ETH now confirmed to be forever inaccessible - and possibly much more when private key losses are included - the conversation around Ethereum’s monetary dynamics, smart contract reliability, and user interface safety is likely to gain renewed urgency in development circles and among regulators.