- ETH users use private transactions instead of frontrunning
- Private transactions accounted for 30% of the total volume but consumed 50% of Ethereum gas.
Over the course of the year, the crypto markets have experienced significant changes, developments, and increased volatility.
Amid these market changes, Ethereum (ETH) has seen growth in network activity, volume, and addresses. Likewise, there has been a significant increase in private transaction order flow over the past year.
Ethereum users prefer private transactions
Source: Blocknative
According to research by Blocknative, the Ethereum network has seen a sharp increase in the flow of private transactions.
Data showed that private transactions consumed more than 50% of the total ETH L1 block space based on gas consumption. Despite this, private transactions only account for 30% of all transactions within the ETH L1 block.
Users choose to transfer transactions privately to protect their MEV, especially for complex transactions.
Such transactions are inherently gas intensive and therefore consume more gas per transaction than non-MEV transactions.
Essentially, gas consumption is directly related to the economic value of the block space. Therefore, each unit of gas represents a share of the block’s capacity and economic growth.
Volatility of base fees increases
The increase in private transactions and gas consumption has affected ETH’s base fees. The 2021 EPI-1559 upgrade changed the dynamic base fees, which would change depending on the size of the space.
Therefore, the increased private transactions have affected the base fees and increased volatility. Therefore, private transactions lead to “vanilla blocks”, which makes the base fees volatile.
This volatility is detrimental to network users as an increase in private transactions impacts base fees, especially for large users such as Titan, Rsync, Beaver, and Flashbots.
Source: Blocknative
For example, top construction companies increased their private transactions over the year.
As shown in the graph above, Titan increased its gas consumption from 3.5 million to 8.5 million through private transactions starting in March.
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Other top players like Beaver have increased their usage from 3 million to 7.5 million and Rsync from 2.5 million to 6 million.
This increase is having a huge impact and is pushing many users out of the game. This is evident as small builders reduce their gas usage as most struggle to reach the 15 million set by the 2021 EIP-1559 upgrade.
Source: Blocknative
