Ethereum’s Dencun update, implemented in March, has markedly enhanced the economic aspects of Ethereum rollups. However, it has also led to a notable rise in transaction failures within Layer-2 networks. Galaxy Digital’s research identifies this increase in failed transactions as being primarily driven by bot activities.
Why Are Transaction Failures Rising?
Christine Kim, a researcher at Galaxy Digital, shared insights on the Ethereum Layer-2 network’s performance post-Dencun update via the X platform on August 22. Kim pointed out that while the number of transactions on the Ethereum network surged to an average of 6.65 million daily, this growth accompanied a significant jump in transaction failure rates.
The “150 Days After Dencun” report by Galaxy highlighted that the economic incentives due to low transaction fees have spurred bot activities, thereby increasing failure rates in Layer-2 networks. Specifically, the Base network saw a failure rate of up to 21%, Arbitrum at 15.4%, and OP mainnet at 10.4%. For highly active addresses, performing 100 or more transactions daily, these rates were even higher, reaching 41.6% on Base, 20.87% on Arbitrum, and 12.85% on OP mainnet.
How Are Other Networks Affected?
Other networks, including Solana, are experiencing similar issues. According to research published by Coinbase on August 13, failed transactions on the Solana network range from 25% to 45%. Solana’s higher transaction volumes, attributed to bot activities, are believed by some experts to enhance market liquidity and efficiency.
While Ethereum’s update on March 13 aimed to provide temporary data storage for rollup data via EIP-4844, thereby easing the load on the execution layer, these innovations have had unforeseen consequences. Bot activities have surged, resulting in increased transaction failure rates within Layer-2 networks.
Key Takeaways
- Ethereum’s Dencun update improved rollup economics but led to higher transaction failures.
- Bot activities, spurred by low transaction fees, are the primary cause of increased failures.
- Highly active addresses experience significantly higher failure rates.
- Other networks like Solana are also seeing increased bot activity and transaction failures.
The Dencun update, while enhancing certain economic aspects, has introduced challenges that developers and network users must navigate. Understanding the implications of these technological changes is crucial for optimizing network performance and mitigating unintended consequences.