What is the Address Gap Limit in Daedalus?

Question

I saw another question posted about the gap limit, but I can't figure out what it is. Can you explain it, please?

Answer 1

Hierarchical Deterministic (HD) wallets allow for a very very large number of addresses/keys to be derived from a single master seed (mnemonic). However, it is computationally infeasible for wallet software like Daedalus to sync all the addresses, so it is limited by the address gap limit parameter.

By default, this limit is set to 20, so wallet software will check the first 20 addresses of a wallet (i.e. m/1852'/1815'/0'/0/0, m/1852'/1815'/0'/0/1, .... m/1852'/1815'/0'/0/19).

When an address containing UTXOs is found, it will sync another 20 addresses after the last address containing a UTXO. For example, if the highest used address is index number 17, then wallet software will query all addresses up to m/1852'/1815'/0'/0/37.

If you have UTXOs sitting at an address with a high index, you can either derive the key-pairs manually or set the gap limit to a higher number. Note: setting the gap limit too high can be strenuous for your computer depending on specs.