Burned pool position NFTs

From time to time, distressed users approach Orca after accidentally burning their pool position NFT, seeking help to retrieve the liquidity associated with it. Unfortunately, it is impossible for Orca to assist in recovering funds tied to a lost or burned NFT. Once the NFT is destroyed, neither the user nor anyone else can recover the liquidity or yields associated with that position.

This is because only the holder of the pool position NFT has the ability to interact with the associated position. Without the NFT, the funds and any generated yields are permanently and irrevocably lost.

Naturally, receiving such upsetting news can leave users feeling angry, frustrated, or distrustful toward Orca, despite the protocol's transparent warnings about the risks of burning NFTs. These emotions often lead to follow-up questions and concerns, which we will address below.

Why can't Orca help me retrieve my funds?

If you burn your Orca position NFT, the tokens and yields associated with that position are permanently lost. This is due to the fundamental mechanics of decentralized finance (DeFi) protocols like Orca, which operate without centralized control or the ability to reverse on-chain actions. Here’s why Orca cannot assist in retrieving your tokens:

1. Your Pool Position NFT represents ownership

   1. Orca pool position NFTs represent ownership of a specific liquidity position within a pool on Orca.

   2. This NFT encodes the information about your position, such as the deposited tokens, amounts, and gives access to any yields associated with it.

   3. If you burn the NFT, you are effectively signaling to the blockchain that you no longer want to claim or own that position. Access to the position and its associated tokens and yields is irreversibly destroyed.

2. Smart Contracts

   1. Orca runs on Solana and operates through smart contracts, which are permissionless and cannot be simply changed to aware ownership of liquidity to a party that no longer holds the associated NFT.

   2. These contracts execute actions exactly as programmed, and once an NFT is burned, the contract has no mechanism to reverse the action or recreate the destroyed NFT.

3. Decentralized and Non-Custodial Nature

   1. Orca is a decentralized protocol, meaning no central entity (including the Orca team) has control over user funds or positions.

   2. This non-custodial structure ensures user sovereignty but also places the responsibility for asset management squarely on the user.

   3. Once you burn an NFT, there is no centralized authority that can intervene to "undo" the action.

4. Burning Is an Irreversible Action

   1. Burning an NFT removes it from circulation by sending it to a null address or executing a contract that destroys it. This action is irreversible by design, to maintain the integrity of blockchain operations.

5. No Access to Private Keys

   1. Orca does not have access to your private keys or any direct control over your assets. Without the NFT, there is no cryptographic proof of your position, and therefore no way to recover the associated tokens.

How can I avoid such situations?

1. Understand the Protocol: Make sure you fully understand the role of a pool position NFTs and its significance in representing your liquidity and yields: your NFT is in effect your receipt for your deposited assets without it you can never reclaim the assets from the pool to which they are deposited.

2. Double-Check Transactions: Avoid accidental burns by thoroughly reviewing any actions involving your NFTs or tokens.

3. Consult Documentation or Support: Before taking any action you're unsure about, consult Orca’s documentation, social channels forums, or seek advice from a member of Orca's Community Support Team.

4. Use Safe Wallet Practices: Ensure you're using wallets with clear interfaces and that you’ve backed up your private keys or seed phrases.

Why didn't Orca warn me to stop this happening?

Both Orca's user interface and documentation include clear warnings against burning the NFT, along with explanations of the consequences. Additionally, the NFT itself is labeled with a warning advising users not to burn it. To further protect users, Orca has reached out to wallet providers and incinerator protocols, requesting that Orca pool position NFTs not be marked as spam. However, it is important to note that Orca has no control over external wallet applications or protocols.

What has actually happened to my deposited tokens?

The tokens still exist on-chain and continue to provide liquidity, meaning the operation of the pool remains unaffected despite the absence of the controlling NFT. However, without the NFT, the tokens and any yield they generate are effectively locked in the pool permanently and cannot be withdrawn. They will remain there indefinitely.

What can I do to recover from this loss?

It’s important to acknowledge that the loss has occurred and that it is irreversible. While this can be difficult to accept, it is crucial to avoid making impulsive decisions or adopting risky strategies in an attempt to quickly recover your losses. Trying to "make it back in one trade" often leads to even greater financial setbacks.

Financial losses, especially those resulting from personal mistakes, can have a significant impact on mental health. If you notice signs that the loss is affecting your emotional well-being—such as persistent stress, anxiety, or depression—it’s essential to address these feelings. Reach out to your personal support networks, such as friends or family, and don’t hesitate to seek professional help from a healthcare provider or counselor if needed.