Trading bots render the Dencun upgrade ineffective as Base gas fees surge above $2.
Ethereum marked history this month, rolling out its highly anticipated Dencun upgrade to the mainnet, much to users’ excitement. The upgrade was set to mark a major step in the network’s scaling vision, promising to immediately scale up Layer-2s such as Base and usher in a new era of use cases.
Initially, the upgrade held up to its promise, significantly decreasing gas on Base by 99% and propelling daily transactions on the network fivefold. However, before the L2 could benefit from the exceptionally low fees and subsequent network activity, gas fees went up.
Bots Drive Up Base Gas Prices
Ethereum’s Dencun upgrade greatly rekindled excitement within the Layer-2 ecosystem and propelled platforms like Base to new heights thanks to the low-fee guarantees.
Before Dencun, Base hosted about 440,000 transactions every day. However, this number increased to two million following the upgrade. With growth on the network showing no signs of slowing down, the network was poised for more.
However, things quickly took a turn as gas fees surged 2000% on March 20, peaking at an average of $2 in the face of network congestion. While fees quickly dropped back to their normal $0.2 threshold amid calmer activity levels, they picked up pace again on the weekend, hitting $1.9—an 1100% increase.
Average transaction fees on Layer 2 networks. Source: Dune.
Interestingly, while Base’s fees endured a rollercoaster of fees, gas on other layer-2 networks such as Arbitrum, Optimism, and ZKsync remained relatively consistent, staying below $0.001.
Data sleuth Michael Silberling quickly noticed the discrepancy, linking it to three anonymous contracts engaged in high-frequency memecoin trading. Silberling notes that much of the rush on Base stemmed from automated actors targeting memecoins and likely arbitrage and setting higher than usual gas fes for priority.
According to the expert, the influx of trading bots on the network translated into higher demand and prices for meme coins on Base, leading to high gas fees.
