Flipside Crypto takes a look into what is going on with Polygon transactions.
Since May, there’s been a lot of talk about Polygon “flipping
” Ethereum — at first in terms of transaction count (at its peak, there were 8M transactions per day happening on Polygon, compared to 1.2M TPD on Ethereum) and just last week
in terms of active user count — rising to a record high of 566,516 active addresses
on Saturday, surpassing Ethereum for the first time.
However, it’s also been reported in a Polygon forum
that the network has been under a spam attack since May, which has been inflating network utilization numbers by 90%. Every block was full of users sending meaningless transactions and just paying for the gas fees.
With 1 gwei in gas price, or 0.000000001 MATIC / gas, and a 20 million gas limit per block, it only costs around 0.02 MATIC to spam an entire block on Polygon, or $1,000 for an entire day.
So it’s cheap to flood a whole block — but still, what’s the incentive?
This article sheds light on the mechanism happening behind these spam transactions, and the profits at stake. Our research suggests that increasing gas fees to 30 gwei could be very effective in this case.
Access Polygon data here
Identifying the Sender
On average, the top 10 DApps in terms of weekly transaction count add up to 3 million transactions per week, or 420k transactions per day. With 4M-6M transactions happening on the whole network daily, the top 10 applications account for less than 10% of the total network - so where are the rest of the transactions coming from?
With a simple query we were able to find the top 10 addresses in terms of total transactions. The top two contracts, “0xa81ce04168e41a47f68a975d67a00fbef729af9b
” and “0x84e5bc3df0df0f543648f250443c6f4077218312
,” have been interacting with 2 million transactions daily — which accounts for roughly 30% of the network’s total transaction count.
Source: Polygon dashboard
Looking at the details of their transactions
, we can see that these two contracts are arbitrage bots. They are the target of millions of transactions every day, and initiate thousands of daily transactions to DEXes themselves.
Identifying the Recipient
For example, in the above trade, this contract sent out 0.153 MATIC worth 0.23$ and receive back 4.33 MATIC worth 6.5$
An arbitrage bot is a bot that captures the different exchange rates between platforms to make profit. For example, if Uniswap has 3700$ / ETH and Sushi has 3600$ / ETH, you can simultaneously buy on Sushi and sell on Uniswap to capture the 100$ difference.
We now have the full picture: spam attack transactions act as the trigger for these arbitrage bots to make their own transactions on DEXes.
By plotting the total transactions sent out by these bot contracts, we can see that they make around 2,000 – 4,000 transactions per day, which is nothing unusual.
Source: Polygon dashboard
We don’t know the contract’s code so we cannot explain why it needs so many input transactions versus just 2,000–4,000 trades per day.
The likely theory is that the owner just wants to spam the contract so others cannot front-run the real trade. So someone has a bot that floods a block with noise to protect from front running, as opposed to using priority fees to ensure they are always first in the block. But is it really cheaper to buy a whole block than to just pay exorbitant prices to be first?
How much is this spammer making?
By tracking the contract creator
we can see that the bot was initially funded with 14 ETH
(~$3,775) and made multiple transactions back for a total of 218.5 ETH (equivalent to ~$825,000 at the time of writing
) that was bridged back to Ethereum.
That’s an average of $6,800 a day in profits over the past 120 days — which is how long the bot has been running.
Increasing Transaction Fees
On Oct. 5, 2021
, the network’s co-founder recommended increasing the minimum transaction fee from 1 gwei to 30 gwei - raising the cost of spamming an entire day to $30,000 to disincentivize spam transactions from happening.
Shortly after the adjustment, the spam transactions dropped 75% from 2M to just 500k TPD. Polygon’s daily transactions also dropped 50% from 6M to just over 3M TPD. This is clearly shown in the graph above.
As shown in the graph above, the network’s utilization rate
also dropped down from 90% back to 60% which is a healthier rate. This leaves a lot of room for others to build on Polygon.
It’s worth noting that even with the 75% drop, spam transactions still account for 16.7% of the network’s daily transactions. This means bots are still spending around $5,000 a day at the current gas price, or 83% of their daily profit, to keep this operation going.
This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators.
This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice.
The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap.
CoinMarketCap is not responsible for the success or authenticity of any project, we aim to act as a neutral informational resource for end-users.