Whenever a cryptocurrency is sold on an exchange, there's a chance that a tiny amount of it will get left behind, which can be annoying. This "crypto dust" often costs more to move than it is worth, so there's no point trying to get rid of it. Outside of an exchange, however, crypto dust can be used as a tool for wallet tracking, a technique for advertising, or as preparation for a phishing attack.
Cryptocurrencies can be subdivided into very tiny pieces. Ethereum's smart contract code cannot divide units into pieces smaller than 1, so developers chose to make every number 18 digits long to avoid (significant) rounding errors during math operations, with the decimal being mostly cosmetic. At the same time, blockchains are totally transparent, providing anyone with access to a block explorer the ability to spy on each other's transactions and crypto holdings, no matter how small.
Sometimes, crypto holders will send tiny amounts of tokens to "dust" one (or thousands) of other s' wallets in what is called a "dusting attack", an example of which was recently reported by malicious phishing attack links, and now nobody trusts crypto dust ments.
Dusting Attacks Were Recently Used For Denial-Of-Service
Recently, the Uniswap decentralized exchange app. This was the first and only time when a dusting attack has successfully been used to offensively disrupt service for other s, and the victims s were soon un-banned by the DeFi developers.
Aside from the Tornado Cash incident, dusting attacks don't have any obvious effects, but they are still sinister. They are mainly used to learn which wallets are owned by the same person for the purpose of targeting them with phishing attacks, or even blackmail. Crypto wallets are "pseudonymous", so it is possible to use a dusting attack combined with blockchain analysis and social engineering to figure out who owns a set of crypto wallets, especially if they shares NFTs on their social media s, which outs them as the owner of the wallet(s) that owns the NFTs.
When the subject of wallet dusting or dusting attacks comes up it is usually as a surveillance technique to "de-anonymize" someone's wallet, often to prepare to launch a phishing attack, but sometimes to discern a real-world identity and do much worse. While not directly harmless, dusting today is almost always done with sinister intent, and most s will never know they were dusted at all, so it helps to always leave cryptocurrency dust behind after every transfer.
Sources: Blockworks