DeFi Traders Are Gaming Ethereum for Higher Profits, Researchers Say

Published on by Coindesk | Published on

Decentralized finance has been clogging the Ethereum network, but not in the way most analysts would have guessed.

An architectural quirk in the most-used software version of Ethereum, Geth, has led to an uptick in the practice of spamming the network to secure trade profits over the last six months, according to Certus One co-founder Hendrik Hofstadt.

Transaction spamming is one of many reasons the average Ethereum user fee has increased some 800% since May, according to Coin Metrics.

These bots wait for large trades on DeFi platforms such as Uniswap.

Higher rewards for miners, higher profits for traders.

That's about a week's worth of typical Ethereum fees for useless transactions.

The majority of these trades occurred since March 12's "Black Thursday," when DeFi platforms saw record volumes.

For trading firms, this translates into more fees overall but arbitrage profits into the hundreds of thousands, according to addresses provided by Hofstadt.

Hofstadt said miners could keep doing business as usual if they value the extra pocket change from DeFi traders more than helping out the network in general.

Total network fees per day on Ethereum has increased 1,077% since May 5 from $162,200 to $1,909,000 on a seven-day rolling basis, according to Coin Metrics.

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