Key Points
- Private transactions on the Ethereum network have significantly increased, consuming 50% of Ethereum’s gas.
- The increase in private transactions has led to increased volatility in Ethereum’s base fees.
Increased Private Transactions on Ethereum
Ethereum has seen considerable growth in network activity, revenue, and address amidst significant changes in the crypto markets.
The past year has seen a surge in private transaction order flow on the Ethereum network.
Research by Blocknative indicates a significant increase in private transaction order flow.
Private transactions make up 30% of all transactions within the ETH L1 block, despite consuming over 50% of total ETH L1 block space based on gas usage.
Users opt for private transactions for MEV protection, especially for complex transactions.
These transactions are gas-intensive, consuming more gas per transaction than non-MEV transactions.
Impact on Base Fees
The increase in private transactions and gas usage has influenced Ethereum’s base fees.
The 2021 EPI-1559 upgrade altered the dynamic base fees, which vary based on the space’s size.
Increased private transactions have resulted in “vanilla blocks,” leading to volatile base fees.
This volatility is a disadvantage for network users, as it affects base fees, especially when dealing with major users like Titan, Rsync, Beaver, and Flashbots.
For instance, top builders have increased their private transactions throughout the year.
Titan increased their gas usage from 3.5 million to 8.5 million through private transactions from March.
Other top players, such as Beaver and Rsync, have also increased their usage.
This surge has significant implications, pushing many users out of the game.
This is evident as small builders are reducing gas usage as most struggle to reach the 15 million set by the 2021 EIP-1559 upgrade.
