Token Migrations: The Hidden Threat to Crypto Holders

When you carefully study a token’s smart contract before buying it and make sure it contains no mechanisms that allow the rules to be changed arbitrarily — you’re doing everything right. But all that diligence can still be useless.

Sometimes, project teams announce a token migration — moving their token to a new network, a new protocol version, or simply a new smart contract. And that’s when things start to get interesting.

At first glance, a migration may look like a harmless technical update. In reality, it often becomes a way to completely rewrite the rules of the game — without asking holders for their consent. Even if the original contract was immutable, a migration allows developers to bypass those very limits.

In this article, I’ll walk you through real examples of token migrations and show the hidden risks they bring — the ones most crypto investors never think about.

Missed Deadline = Financial Loss

The most obvious problem with token migrations is the deadline. When a project announces a move, it usually sets a time limit for exchanging old tokens for new ones. Miss that deadline — and your tokens could turn into digital junk.

Imagine this: back in 2017, you saw potential in TRX tokens, which were then issued on the Ethereum blockchain. You bought some, planning to hold them long term. Then something happened — you went to prison for your political beliefs, fell into a coma after a car accident, or simply lost access to your wallet. Fast forward to 2025: you finally regain control of your funds, only to discover that TRON had migrated from Ethereum to its own mainnet years ago — and the migration window lasted just a few days, from June 21 to 25, 2018. You had to deposit your TRX before June 24, or end up with nothing.

TRON’s case wasn’t the worst one: eventually, the project launched a permanent service for late migrations. But not every project is that generous. The TRON example simply shows how any token whose value depends on continued developer support can quickly become worthless after a single migration decision.

At rabbit.io, we often see users reaching out, hoping to swap old, unsupported tokens. Sometimes we manage to find liquidity and complete the trade — which is a win for both sides. But more often, even we can’t help.

Guaranteed Devaluation

Not every migration forces users to return their old tokens in exchange for new ones.

A good example is the so-called “rebranding” of Maker DAO into Sky Protocol. I’m putting the word “rebranding” in quotes because the changes went far beyond a name update. The new stablecoin USDS, issued by Sky Protocol, includes an address-blacklisting function — something the old DAI stablecoin from Maker DAO never had. That’s not something every user is comfortable with. Still, no one is being forced to give up their DAI and move to USDS.

It’s a different story with the governance token. Technically, holders don’t have to exchange their old MKR for new SKY tokens. But while DAI has intrinsic value backed by collateral, MKR’s value comes entirely from its role in governance. Once the old protocol is abandoned, those tokens lose their purpose.

Until September 18, 2025, users could migrate and receive 24 000 SKY for every 1 MKR. After that deadline, the conversion rate drops by 240 SKY every three months. In 25 years, 1 MKR will be worth 0 SKY through the official migration channel. So if a holder loses access to their wallet for months or years, their assets will simply melt away over time.

Unwanted Smart Contract Functions

When comparing DAI and USDS, one thing immediately stands out: the new stablecoin’s smart contract includes a blacklist function. This means the DAO governing the protocol can block transfers from specific addresses.

Many users see that as a red flag. After all, wasn’t the whole point of leaving the traditional banking system to avoid having someone else decide when and how we can use our money? Yet, that’s exactly the kind of control that’s quietly coming back through the back door.

Take USDT, for instance — the most widely used stablecoin. In most networks, the Tether company has the power to freeze addresses and block transactions. But not everywhere. In some chains, that power simply doesn’t exist.

One such chain used to be Bitcoin Cash SLP. I have no doubt that many users who held USDT there chose it precisely because it gave them full control over their tokens.

However, starting September 1, 2025, Tether officially ended support for USDT on that network. Before that, users were encouraged to swap their Bitcoin Cash-based USDT for tokens on other blockchains. But are those tokens truly equivalent?

On Ethereum, Tron, and most other networks, the USDT smart contract gives Tether the power to block transfers from any address. When you bought USDT on Bitcoin Cash, you didn’t agree to that. But during migration, you’re being pushed into a system with conditions you never consented to.

Yes, there’s still one network where USDT tokens cannot be frozen — the Liquid network. But what happens if Tether discontinues support there too?

Another example of an inconvenient “upgrade” came with the migration of the NEO token from the Neo Legacy network to Neo N3. In the old blockchain, NEO tokens could be transferred without any transaction fee. In the new one, every transaction requires a fee. So, if someone chose NEO because they valued its fee-free transfers, that benefit simply vanished. And no rule needed to be changed in the old contract. The team just introduced new rules and declared the old ones obsolete.

Similar situations occurred during the EOS rebranding to A, and the IOTA project’s move to a new blockchain.

KYC

In 2023, an incident occurred involving wrapped Everscale tokens on the Ethereum network. A partner company of the Everscale team stole 212 million WEVER (ERC-20) tokens. After the theft, Ever DAO declared the old smart contract invalid and launched a migration to a new one.

But to exchange old tokens for new ones, users first had to pass KYC verification — a process meant to ensure that the migrating tokens were not tied to the stolen funds. The thieves were never caught, and the experience for regular users turned into a mess. After all, when they bought those tokens, they never agreed to undergo identity checks.

For those who refused to complete KYC, the team later created a liquidity pool where old tokens could be swapped for new ones — but at a rate worse than 70 to 1.

Forced Blockchain Switch

Another unpleasant side of token migrations is that project teams often decide for their holders which blockchain they will use next. And there have been plenty of such cases:

• In 2019, the Mithril project migrated its tokens from Ethereum to Binance Chain.
• In 2021, the Hydro project discontinued its Ethereum-based token and automatically airdropped the equivalent amount of new Hydro tokens on Binance Smart Chain to all existing holders.

But Ethereum and the Binance blockchains are fundamentally different in how they work. At that time, Ethereum used a Proof-of-Work consensus model, meaning that anyone with a graphics card could technically participate in block creation — making censorship practically impossible. Binance blockchains, on the other hand, operated on a permissioned model. To become a validator, you needed approval from the project’s developers.

So what could holders do — those who bought their tokens in a decentralized network and were then forcibly moved into a centralized, closed system controlled by a small group of people? Nothing. They simply had to accept the new rules.

And from today’s perspective, there’s another twist: one of those Binance blockchains, Binance Chain, has effectively ceased to exist, while Ethereum is still running strong. Was the migration really worth it?

The same pattern has repeated elsewhere. Between 2023 and 2025, the Synthetix project deployed new versions of its protocol across Base, Optimism, and Arbitrum networks — only to later announce its return to Ethereum mainnet, shutting down all L2 deployments.

Conclusion

The value of a cryptocurrency doesn’t always depend on whether its creators are still supporting it. Take Bitcoin, for example — its price has grown a hundred thousand times since Satoshi Nakamoto walked away.

But if you’re holding tokens whose worth depends entirely on the developer’s continued involvement, you need to stay alert. You have to keep track of every update and announcement from the project. And if the team launches a migration, remember — it might not just be a technical procedure. It could be a fundamental change to what your token actually is — and not always in a way that benefits holders.

If a migration has already been announced and you disagree with the new conditions, you don’t have to follow the “official” path and swap your old tokens for the new version. Instead, you can visit rabbit.io and exchange your soon-to-be-obsolete tokens for any of the 10,000 cryptocurrencies available on our platform.