Matter Labs, the team behind Ethereum layer 2 scaling solution zkSync, has confirmed that 921 Ether (ETH) worth $1.7 million is currently stuck in one of its new smart contracts, GemstoneIDO.

However, the firm claims the funds to be “safe” and to have found an “elegant” solution for rescuing the funds, which accumulated during the Gemholic token sale.

Initially stating that the funds wouldn’t be “stuck forever,” Matter Labs said in its most recent tweet that it had found an “elegant solution” to “unfreeze” the GemstoneIDO contract and transfer the funds out.

@GemholicECO, who ran into a problem with their smart contract on zkSync Era, has reached out to us for support, which we provided.

We’d like to give the community an update and further context on their issue in full transparency, as we always have and always will.

— zkSync ∎ (@zksync) April 7, 2023

Matter Labs identified the issue to have stemmed from the .transfer() function in the GemstoneIDO smart contract, which is part of a project run by the GemholicECO ecosystem.

Matter Labs said that the issue could have been prevented had they deployed the contract on a testnet first.

“Unfortunately, the contracts were deployed on Era mainnet without having been tried on the testnet or local node, which would have immediately caught the problem.”

The faulty function came from zkSync Era, a new type of Ethereum Virtual Machine (EVM) zero knowledge proof rollup that executes smart contract much faster than on the base layer.

The team however stressed that zkSync Era is not EVM-equivalent, meaning that it is compatible with the EVM at a bytecode level. This means some functions work differently in the new environment.

“This is a deliberate design choice with specific upsides and trade-offs,” they said.

In justifying its design choice, Matter Labs said zkSync Era could process some transaction types between 10 to 1,000 times cheaper than other EVM rollups.

Nontheless, Matter Labs held themselves accountable for the mistake and assured members of the zkSync ecosystem that they’ll continue resolve similar issues relentlessly.

“With this comes great responsibility and inevitably the occasional friction and today was one of these instances. When there are problems our team will continue to be on alert and be relentless in resolving issues.”

zkEVMs are complex systems that are in the process of maturing. Even though zkSync Era is still in Alpha, we’ve already got a thriving ecosystem.

— zkSync ∎ (@zksync) April 7, 2023

Several members of the CryptoCurrency subreddit, however, expressed their frustration on the matter:

“Another example of why a chain shouldnt be rushing its mainnet launch. Always remember this guys, EVM compatible =/= EVM equivalent.”

“I’m all in for seeing Zero Knowledge tech becoming more and more relevant in the crypto space. However, these chains also have to take into consideration the fact that people’s funds are at stake,” said another.

Related: zkSync Era launches with Uniswap and Sushi — First zkEVM on mainnet

Transaction failures of the GemstoneIDO contract can be seen on the zkSync explorer page, which also shows the 921 Ether is stored in its smart contract.

Matter Labs launched zkSync Era on mainnet last week, promising that decentralized exchanges Uniswap and SushiSwap would be live in a matter of days. That hasn’t happened yet, however, projects including Argent, Celer Network and MetaMask are live on the network now.

Updated 1:37am UTC time on April 7: This article has been updated to add comments from Matter Labs most recent post on the incident.

Magazine: Ethereum is eating the world — ‘You only need one internet’