Ethereum Layer 2s See the increase in failed transactions

Dencun’s March 2024 update was a major milestone for Ethereum, but it also brought unforeseen challenges, especially for Layer 2 networks.

Christine Kim, a researcher at Galaxy, noted that this update inadvertently led to an increase in transaction errors on these networks.

Ethereum’s Layer 2 networks are facing challenges

Kim’s August 21 analysis, titled “150 Days After Dencun,” revealed that since the fee reduction update, there has been a noticeable increase in failed transactions and bot activity on layer 2 networks.

The report highlighted that after the activation of EIP-4844, Ethereum L2 daily transactions more than doubled, growing by 6.65 million in 150 days. However, this increase in transaction activity has also been accompanied by a higher failure rate, which Kim attributes to bot activity driven by lower fees.

Most transaction errors are related to very active addresses, which are probably bots. L2’s low fees may be encouraging this increase in bot activity. For average users with normal transaction volumes, failure rates are only slightly higher than they were before the Dencun update.

The research showed that Arbitrum, Base and OP Mainnet have found noticeable increases in the ratio of failed transactions. Base saw its failure rate increase to 21%, Arbitrum to 15.4% and OP Mainnet to 10.4% within 150 days of Dencun. On the other hand, low-activity addresses with five or fewer daily transactions had a maximum failure rate of 4.02% across all networks.

The OP Mainnet error rate for these addresses has decreased since March 13, 2024, while the Base rate has only increased slightly. Interestingly, Arbitrum’s failure rate for low activity addresses increased by 545% after Dencun.

According to the researcher, the reduction in cumulative transaction costs and the increase in failures between high-activity addresses suggest that bot activity is likely driving the increase in failure rates in these accumulations.

Solana faces similar problems

Transaction failure rates aren’t just limited to Layer 2 networks. In fact, the popular Layer 1 network, Solana, also has a high transaction failure rate.

In its recent report, Coinbase claimed that of all Solana non-voting transaction fees, between 25% and 45% are spent on failed transactions.

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