A small but important aspect of trading cryptocurrency is the leftover funds that remain in a wallet after a trade order has been executed and filled. These leftover funds, typically a tiny fraction of the token, is known as dust.
Dust occurs when a transaction amount fee is higher than the transaction itself or when a fraction of the token is so tiny it can't be traded, leaving dust or residual traces in the crypto wallet.
For example, in the portfolio below, the user had $49.54 in ETH in their wallet. The user exchanged their ETH for USDT using a market order.
Once filled, the market order of $47.28 USDT sent to the user's USDT wallet, and $2.26 in ETH remained in the user's ETH SmartWALLET. This $2.26 or 0.000905 ETH is the dust left behind from this transaction.
Traders who conduct multiple high-value trades may not notice dust left in their wallets; dust tends to be more noticeable in smaller transactions or after the dust has added up to an amount users can trade.
Some exchanges enable users to sweep for dust; this converts the dust into the native token of the exchange. In cases where sweeping is not an option, allowing the dust to accrue until there is enough to trade or withdraw is another solution.
Leaving dust in a wallet leaves the risk that a user's privacy may be compromised by a cybercriminal using what is known as a dust attack.
A dust attack occurs when a hacker sends small amounts of crypto to the wallet, this can be a small fraction and appear as dust to the user. When the user spends the dust that includes the dust sent by the hackers, the hackers can analyze the other transactions the user has made and develop a profile of the user.