Dencun Update Spurs Rise in Failed Transactions on Ethereum’s L2 Networks

The Dencun update activated in March on Ethereum has led to increased bot activity and a rise in failed transactions on second-layer networks, as noted by Galaxy Digital.

Full report: https://t.co/rNOuRGRHt0

— Christine Kim (@christine_dkim) August 22, 2024

Commenting on the “150 Days Post-Dencun” report by Zach Pokorny, Christine Kim, head of research at the company, highlighted the connection between these two aspects. The upgrade sharply reduced fee sizes for L2 solutions, leading to increased bot activity. These bots significantly contributed to both the rise in transaction numbers and the increase in operation failures.

“Most failed transactions occur from highly active addresses, likely bots,” she emphasized.

The failure rate on Base peaked at 21%, reached 15.4% on Arbitrum, and 10.4% on OP Mainnet.

For bot addresses (with over 100 transactions per day), the figures were significantly higher: 41.6% on Base, 20.87% on Arbitrum, and 12.85% on OP Mainnet.

Among other consequences of Dencun, Kim noted a decline in Ethereum’s revenue. The 150-day moving average post-upgrade fell by 69% compared to the same period before the hard fork.

ETH burning volumes on the L1 blockchain decreased by 84% due to reduced fee sizes.

Back in March, the Dencun update rendered Ethereum inflationary, potentially threatening the narrative of the cryptocurrency as “ultra-sound” money, experts at CryptoQuant pointed out.