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I came across scenario where there is no network fee (gas) charged for transferring utility token from one wallet to another wallet on the same exchange. It means the token was transferred internally.

Is that correct that there is no gas required to transfer token in internal network?

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In a typical (centralized) exchange, all the tokens are held by the exchange, and a separate database keeps track of how many tokens are owed to each individual user. So transferring from one user to another just means adjusting the numbers in that database.

No gas is consumed in such an exchange because no blockchain transaction is taking place.

  • So in such case if we query token balance using etherscan it should not be available – Kartik Modi Jun 7 '18 at 16:18
  • Well, the balance is certainly somewhere. You should be able to see it in Etherscan under an account owned by the exchange. – smarx Jun 7 '18 at 16:23

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