Token sweeping refers to the process of consolidating and transferring all tokens from sub-address wallets in an account (essentially a single transfer transaction) to a designated account. Simply put, it's like a customer with multiple shops can quickly and easily aggregate all shop revenues together. This feature aids in fund management and operation, enhancing work efficiency. It has become an essential function, especially for centralized platforms such as wallets, exchanges, and asset management platforms. It ensures that centralized platforms have sufficient funds for payments and that internal transactions do not require real-time on-chain settlement.
For example:
If you obtain 100 addresses from Cobo Custody and allocate them to 100 of your users as deposit addresses, and each user deposits 1 ETH, Cobo will record a total of 100 ETH in your Custody wallet. You no longer need to monitor the on-chain balance of these addresses; you only need to use the total balance in the Custody wallet. (In reality, Cobo completes the token sweeping for you, so you don't need to manage the details of token sweeping.)
Frequently Asked Questions:
1. Why is the on-chain balance of the address different from the Cobo Custody wallet balance?
Due to the presence of token sweeping, your deposit addresses should only be used for deposits, and your account should not rely on the on-chain balance of these addresses. This is because Cobo may have already completed token sweeping for these addresses (i.e., transferred the assets from these addresses to a sweeping address). Your total balance should be based on the Cobo Custody wallet balance (if you have questions about the balance, you can export all transaction records for reconciliation).
2. Are all cryptocurrencies subject to token sweeping?
All cryptocurrencies can undergo token sweeping. However, for UTXO model cryptocurrencies (supporting multiple inputs in a single transaction), such as BTC, sweeping is not necessary. For account model cryptocurrencies, such as ETH and all ERC20 tokens, sweeping is necessary.
3. Under what circumstances does token sweeping occur? Is it performed for every deposit?
Token sweeping incurs costs (e.g., the miner fees for ETH sweeping, which may involve 1-2 ETH transfer transactions). Therefore, Cobo has some internal sweeping logic. Token sweeping is triggered when the value of the token to be swept exceeds the value of the ETH miner fee required for this sweeping multiplied by a Cobo coefficient. (The required ETH miner fee may involve two transactions: a. if there is ETH on the user's token address, only one sweeping transaction fee is needed; b. if there is no ETH on the user's token address, Cobo needs to first transfer some ETH to that address, and then transfer the tokens from that address, requiring at least two ETH miner fees: one for transferring ETH and one for sweeping the tokens.) This is also why many exchanges impose a "minimum deposit amount" to consider the cost.