Post-Dencun Ethereum L2s Face Increased Transaction Failures Due to Bot Activity, Galaxy Research Reports

The March upgrade, through EIP-4844, introduced proto-danksharding, which enabled temporary data storage for rollups, reducing the strain on Ethereum's execution layer.

The Ethereum Dencun upgrade in March inadvertently led to an increase in transaction failures across layer-2 (L2) networks, according to Galaxy Research.

Following the activation of EIP-4844, the average daily transaction volume on Ethereum L2 networks doubled to 6.65 million in the 150 days post-upgrade. However, this uptick also correlated with higher failure rates in transactions, largely attributed to bots exploiting the lower fees.

A Galaxy researcher highlighted this finding in an Aug. 22 post on X, discussing the impact of data blobs introduced by the upgrade.

The report by crypto investment firm Galaxy, titled “150 Days After Dencun,” was published on Aug. 21. Failed transactions and bot activity on layer-2s increased significantly after the upgrade, which reduced fees.

“The majority of the failed transactions stem from high-activity addresses, likely bots. Low fees on L2s could be driving increased bot activity,” the researcher noted.

According to the report, the failure rate reached as high as 21% on Base, 15.4% in Arbitrum and 10.4% on OP mainnet.

Addresses engaging in 100 or more transactions daily encountered even higher failure rates, reaching 41.6% on Base, 20.87% on Arbitrum and 12.85% on OP mainnet.

In contrast, addresses with lower activity, making five or fewer transactions a day, faced much lower failure rates, with a maximum of 4% across the observed networks.

These challenges are not unique to Ethereum L2s. A Coinbase report on layer-2s from Aug. 13 revealed that Solana also has a high transaction failure rate, with 25% to 45% of non-vote transaction fees being spent on failed transactions.

However, DeFi Report founder Michael Nadeau argues that bot activity is not inherently harmful, asserting that bots create liquidity and improve market efficiency while paying transaction fees on public blockchains.

The March upgrade, through EIP-4844, introduced proto-danksharding, which enables temporary data storage for rollups to reduce the strain on Ethereum’s execution layer.

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