Ethereum is experiencing unprecedented onchain activity, yet the subdued price movement of ETH indicates that this increase might not represent genuine user demand. Last week, the network achieved a remarkable milestone by processing nearly 2.9 million transactions in just one day, setting an all-time high. This impressive feat occurred alongside average fees remaining close to recent lows and validator exit queues diminishing to zero. Historically, this combination has fueled a well-known narrative of increasing demand, constrained blockspace, and escalating pressure on ETH supply. This time, the price action reveals a contrasting narrative. On Monday, Ether was trading at approximately $3,180, reflecting a decline of about 0.7% for the day, and continuing to trail behind the overall momentum of the CoinDesk 20 index.
Andrey Sergeenkov has indicated that the recent uptick in activity could be attributed to a large-scale address poisoning campaign. This involves scammers inundating wallets with minuscule stablecoin “dust” transfers, effectively embedding lookalike addresses into transaction histories. As a result, transaction counts are inflated, yet they do not accurately represent authentic user demand. In address poisoning attacks, scammers create wallet addresses that closely mimic legitimate ones, subsequently sending small, often sub-$1 stablecoin transfers to unsuspecting victims. These dust transactions embed counterfeit addresses into a user’s transaction history, where wallets generally showcase only abbreviated prefixes and suffixes. When users subsequently copy an address from that history without meticulously verifying each character, they risk inadvertently sending real funds to the attacker’s lookalike address, transforming what seems like a standard operation into a significant financial blunder.
Sergeenkov’s analysis indicates that the recent surge in Ethereum activity is significantly linked to stablecoins, which represent approximately 80% of the notable increase in new addresses. In examining first-time stablecoin interactions, he discovered that approximately 67% of newly active addresses received initial transfers of less than $1, indicating a trend more aligned with automated dusting than genuine onboarding. In total, approximately 3.86 million of the 5.78 million addresses in the sample were identified as receiving what he categorizes as poisoning dust during their initial stablecoin transaction. In an effort to pinpoint the origin of the activity, Sergeenkov monitored transfers of USDT and USDC below the $1 threshold, focusing on senders that disseminated dust to a minimum of 10,000 distinct addresses. The most significant of these were smart contracts that distributed small amounts of stablecoins to hundreds of thousands of wallets, backed by a mechanism intended to finance large groups of poisoning addresses in a single transaction.
The addresses subsequently spread throughout the network, leading to an increase in transaction counts and the creation of new addresses, while also setting the stage for copy-paste errors that could ultimately lead to significant losses. Sergeenkov reports that attackers seem to be ramping up address poisoning tactics, as significantly reduced transaction fees since early December, attributed to the Fusaka upgrade, have made it economically feasible to execute millions of low-value “dust” transfers. This shift transforms what was once a low-probability scam, dependent on a few major errors, into a viable strategy. The context adds layers of complexity to the optimistic interpretation of Ethereum’s record metrics. While low fees and smooth throughput might indicate technical resilience, they concurrently lower the cost of running spam operations. If a significant portion of activity consists of low-value noise, then increasing transaction counts provide limited insight into the demand for blockspace, decentralized applications, or Ethereum as a whole. The current sentiment in the market suggests skepticism regarding whether record usage will lead to improved fundamentals. Until there is greater clarity on the extent to which Ethereum’s activity is driven by genuine users as opposed to automated attacks, the soaring transaction numbers appear to be more of a deceptive indicator than a true catalyst.