- Increase in Private Transactions on Ethereum
- Impact on Base Fees
- Implications for Users
The volume of private transactions on the Ethereum network has significantly increased, consuming 50% of the network's gas and impacting base fee volatility. This article examines the key changes and their consequences.
Increase in Private Transactions on Ethereum
Ethereum has seen considerable growth in network activity, revenue, and address amidst significant changes in the crypto markets over the past year. Research by Blocknative indicates a significant increase in private transaction order flow on the Ethereum network. Currently, private transactions make up 30% of all transactions within the ETH L1 block, despite consuming over 50% of total ETH L1 block space based on gas usage. Users opt for private transactions for MEV protection, especially for complex transactions. These transactions are gas-intensive, consuming more gas per transaction than non-MEV transactions.
Impact on Base Fees
The increase in private transactions and gas usage has influenced Ethereum’s base fees. The 2021 EPI-1559 upgrade altered the dynamic base fees, which vary based on the space’s size. Increased private transactions have resulted in 'vanilla blocks,' leading to volatile base fees. This volatility is a disadvantage for network users as it affects base fees, especially when dealing with major users like Titan, Rsync, Beaver, and Flashbots. For instance, top builders have increased their private transactions throughout the year. Titan increased their gas usage from 3.5 million to 8.5 million through private transactions from March. Other top players, such as Beaver and Rsync, have also increased their usage.
Implications for Users
This surge has significant implications, pushing many users out of the game. This is evident as small builders are reducing gas usage as most struggle to reach the 15 million set by the 2021 EPI-1559 upgrade.
The increase in private transactions on the Ethereum network has led to significant changes in gas consumption and base fee volatility, particularly among major users. These changes have a notable impact on the network as a whole and require careful monitoring and further research.
