What do you expect when you deposit Ethereum to an exchange? You expect the coins to deposit without a glitch. That is not the case with Unocoin.
Several users are suffering the pain of losing their ETH and running behind exchange supports to help and recover the their lost funds. The reason – Unocoin doesn’t have wallet for Ethereum deposit and withdrawals, it has a smart contract.
We reported earlier that the traders who deposited ETH to Koinex and Bitbns from Unocoin were not getting credited because most exchanges, if not all, have a policy
“Deposits from Smart contracts will not be accepted”
In such a case the receiving exchanges have to manually recover the ETH that are sent to them from smart contracts and credit them to the users. It is a time consuming process and a pain for the users who are living in the unknown of when they will receive their funds.
Unocoin, one of India’s first exchanges to buy and sell cryptocurrencies should have by now understood that their smart contract based transactions are not necessarily effective for the people they hope to serve. However nothing has changed and it seems the problem is only increasing.
Not Just withdrawals
The notorious smart contracts are a pain for the traders who are depositing ETH to Unocoin as well. Here’s what the Unocoin Deposit page says “Please note, this is a ETH contract address. Ensure you spend at least 35000 Gas as fee for successful deposit”. But you don’t have a choice to choose Gas Limit when you are doing a transfer from an exchange.
“I lost 0.492 ETH while sending it from WazirX to Unocoin… transaction failed with ‘out of gas’ error”, says a user who emailed the problem to Coin Crunch India.
“Exchanges typically use 21000 Gas limit and it is sufficient for normal ETH transfers, a smart contract requires nearly double the fees”, points Shubham Yadav, the business head and co-founder of Coindelta, a cryptocurrency exchange in India.
Any exchange using 21000, the default gas limit, to send a transaction to smart contract will face this problem. Any user who is making the transfer from another exchange to Unocoin, is more likely to get a failed transaction than a successful one.
“Ofcourse we will refund the funds to the user” Nischal Shetty, founder and CEO of WazirX told Coin Crunch India over a telephonic conversation. “We clearly mention that we will not support withdrawals to Smart contracts, but that does not mean we intend to keep the funds of someone whose transaction failed. However, it requires resources to recover these funds and hence we cannot do it immediately”, Shetty says. The user has been told his funds will be returned in 6-8 weeks, but Nischal says it will be done ‘much’ sooner.
Several hundred, even thousands of transactions take place in an exchange, it requires time and effort to find the one that failed, do the root cause analysis and then refund the amount to the user.
Why use Smart Contracts?
It is the quickest way to transfer incoming funds to a master wallet. Traditionally the exchanges have an interval based automation system to transfer funds from child wallet (User’s wallet) to the master wallet (main exchange wallet). The process is automatic but not as quick.
For this tiny advantage, Unocoin is putting at risk the funds of their users and honestly, paying extra fees unnecessarily.
What is the Solution?
A simple solution is that all the users should use another intermediate private wallet for the transfer. A wallet like Myetherwallet can help.
For Deposits to Unocoin:
- Transfer funds from your exchange to your Private MEW wallet.
- Then transfer them to Unocoin with higher gas limit so transaction doesn’t fail.
For Withdrawal from Unocoin:
- Withdraw ETH to your MEW from Unocoin
- Transfer funds from MEW to your exchange with default gas limits.
Many users have faced this issue and reported it. It is time that Unocoin takes notice and makes changes to support the users.
Have you faced such an issue? Let us know in the comments below.