The Dencun update for Ethereum in March significantly changed the economics of rollup systems but also led to a rise in failed transactions in Layer-2 networks.
Rise in Failed Transactions
Galaxy Digital researcher Christine Kim highlighted the changes in Ethereum Layer-2 networks post-Dencun update on the X platform on August 22. Kim noted that the number of transactions on the Ethereum network doubled to an average of 6.65 million daily, but this increase also brought a significant rise in transaction failure rates.
Impact of Bot Activity
Galaxy’s report titled “150 Days After Dencun” emphasized that bot activities increased due to low transaction fees, raising the failure rates in Layer-2 networks. According to the report, the transaction failure rate in the Base network reached up to 21%, while it was 15.4% in Arbitrum and 10.4% in OP mainnet. For addresses with high activity, performing 100 or more transactions daily, these rates rose to 41.6% on Base, 20.87% on Arbitrum, and 12.85% on OP mainnet. On the other hand, for addresses with low activity, performing five or fewer transactions daily, the transaction failure rates remained much lower, recorded at a maximum of 4%.
General Analysis
Problems related to bot activities also affect other networks like Solana. According to research published by Coinbase on August 13, 25% to 45% of transactions on the Solana network are failed transactions. Solana’s higher transaction volumes compared to Ethereum are associated with bot activities. DeFi Report founder Michael Nadeau argued that bot activities create liquidity in markets, increasing efficiency, and should not be considered spam. The introduction of data blocks, also known as proto-danksharding, aimed to provide temporary data storage for rollup data via EIP-4844, thus alleviating the load on the execution layer. However, these changes led to an increase in bot activities and, consequently, higher transaction failure rates in Layer-2 networks.
The results of the Dencun update for Ethereum confirm that low transaction fees led to an increase in bot activities, which resulted in higher failed transaction rates in Layer-2 networks. This issue not only affects Ethereum but also other networks like Solana.
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