Refund address

A refund address is designated up front, usually alongside the destination address, so a platform has somewhere to send funds back if a trade cannot be completed as planned. It shows up most often on instant swap services and coin conversion sites, where a user submits crypto to a deposit address generated by the platform and receives a different coin in return. If the exchange rate expires, the network gets congested, the deposited amount falls outside the accepted range, or the destination details turn out to be invalid, the platform cannot simply reverse the original transfer, since blockchain transactions are final. Instead it creates a brand new transaction sending the coins back to the refund address the user provided.

Non-custodial swap services rely on this mechanism because they never hold customer funds in an account the way a centralized exchange does; each trade is a one-off transfer, so a fallback destination has to be captured before the funds ever move. Some platforms let the refund address differ from the sending address entirely, which is convenient but also risky: entering the wrong network format, the wrong coin's address, or an exchange's internal deposit address by mistake can make a refund impossible to deliver and the funds unrecoverable.

• Refunds are new on-chain transactions, so they usually carry their own network fee, sometimes deducted from the returned amount.
• If the shortfall is smaller than the fee needed to send it, some platforms will not process a refund at all.
• Always double-check the refund address format matches the coin's network before confirming a swap.