Gap Limit

A hierarchical deterministic wallet can derive an endless sequence of addresses from one recovery phrase, so software restoring that phrase has no way to know how many were ever used. It scans forward and stops after a run of consecutive addresses with no history — that run is the gap limit, commonly twenty by default, though it is a wallet setting rather than a rule of any protocol. The consequence surfaces at the worst moment. If funds were received at an address beyond that gap, because many addresses were generated without being used, a correctly restored wallet can show a zero or partial balance while the funds sit untouched on-chain. The phrase is not wrong and the coins are not lost; the scan stopped early. Raising the limit or forcing a rescan is the fix. Defaults and derivation paths differ between wallets, which is why a phrase that restores as empty in one application may restore fully in another.