Ethereum Dencun Upgrade Boosts Activity and Transaction Failures on L2 Networks

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by Giorgi Kostiuk

2 years ago

Made with AI

  1. Introduction to Ethereum Dencun Upgrade
  2. Impact on Layer 2 Networks
  3. Divergent Views on Bot Usage


    4. Following the Ethereum Dencun upgrade in March, there has been a significant spike in transaction failures across various Layer 2 networks.

    Introduction to Ethereum Dencun Upgrade

    On August 22, Christine Kim, a researcher at Galaxy, shared insights on the X social media platform regarding the unintended effects of this upgrade. Her analysis is based on a detailed report by Galaxy, titled '150 Days After Dencun,' published on August 21. The Ethereum Dencun upgrade, implemented mid-March, introduces data blobs through EIP-4844, also known as proto-danksharding. This change provides temporary storage for rollup data, hence relieving some of the load on the Ethereum execution layer and reducing transaction fees.

    Impact on Layer 2 Networks

    According to Galaxy’s analysis, the reduced fees have inadvertently led to a surge in transaction activity on Ethereum’s L2 networks. Over the 150 days following the upgrade, daily transactions on L2 networks more than doubled, reaching an average of 6.65 million. However, this increase in transactions has also been accompanied by a rise in transaction failures. The issue particularly affected high-activity addresses driven by bot activity, typically attempting 100 or more daily transactions. On the Base platform, the failure rate reached a staggering 41.6%, while Arbitrum and OP mainnet saw failure rates of 20.87% and 12.85% respectively. Meanwhile, addresses with lower activity saw significantly lower failure rates, with a maximum of only 4%.

    Divergent Views on Bot Usage

    Comparing Ethereum’s Layer 2 networks with Solana showed that Solana also faces high transaction failure rates. According to Coinbase, between 25% and 45% of all non-vote transaction fees on Solana are spent on failed transactions. The use of bots remains a controversial topic: some view them as a source of spam, while others argue that bots provide liquidity and efficiency to markets. Michael Nadeau, founder of DeFi Report, noted that 'bots create liquidity and bring efficiency to markets…on public blockchains, they pay fees.'

    Clearly, the Ethereum Dencun upgrade has brought significant changes to the cryptocurrency ecosystem, especially within Layer 2 networks. The discussion around bot usage remains open, with varying opinions within the community.

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