Ethereum's onchain boom hides a sad reality: the true face of growth

Ethereum set a new all-time high for onchain activity last week, with nearly 2.9 million transactions processed in a single day. But before we celebrate, there’s one question that deserves an answer: if onchain growth is so extraordinary, why does the price of ETH remain flat and disappointing? The answer, according to the most recent analysis, reveals that much of this boom is not the result of real user demand, but of a massive campaign of automated scams.

The onchain paradox: record transactions, but the price does not follow

The numbers look impressive. Average fees on Ethereum have remained close to recent lows, validator exit queues have plummeted to zero, and the number of transactions has hit an all-time high. In previous market cycles, such a combination would have sparked a familiar narrative: growing demand, increasingly valuable block space, upward pressure on ETH.

Ether, however, was trading around $2,780 on Monday (according to the most recent data), down 0.7% on the day and still lagging the CoinDesk 20 index. This contrast between explosive onchain activity and disappointing price performance suggests that something is not quite right with the numbers.

When “onchain spam” inflates data: the poison dust trick

Onchain data researcher Andrey Sergeenkov has shed light on this mystery by identifying the true nature of much of this growth: an industrial-scale address poisoning operation.

The mechanism is simple but insidious. Attackers generate wallet addresses that eerily resemble legitimate ones and then send microscopic stablecoin transfers—often less than $1—to potential victims’ wallets. These “dust” transfers insert the fake addresses into the transaction history, where wallets usually only show the shortened prefixes and suffixes.

When users subsequently copy an address from that history without verifying every single character, they can unintentionally send real funds to the attacker’s address. What should be a routine gesture becomes a costly mistake.

The Telltale Link: Onchain Spam Is Driven by Stablecoins

Sergeenkov’s analysis of onchain data uncovered something surprising: around 80% of the unusual growth in new Ethereum addresses is tied directly to stablecoins. Digging deeper into interactions with these tokens, it found that 67% of newly engaged addresses received less than $1 as an initial transfer—a pattern consistent with automated dust, not organic onboarding.

In absolute numbers, about 3.86 million out of 5.78 million addresses in the analyzed sample received what Sergeenkov classifies as “toxic dust” as their first onchain interaction with stablecoins.

To track the source of this activity, Sergeenkov monitored USDT and USDC transfers below the dollar and isolated senders who distributed powder to at least 10,000 unique addresses. The largest of these were smart contracts programmed to send small amounts of stablecoins to hundreds of thousands of wallets, funded by specific functions designed to power large batches of poisoning addresses in a single transaction. These addresses then spread across the network, inflating the number of transactions and creating new addresses.

When low costs make the impossible possible: the role of the Fusaka update

The origin of this explosion of spam onchain activity may lie in a recent and significant change: the Fusaka update, implemented in early December, drastically reduced transaction fees on Ethereum.

Prior to this update, large-scale spam was economically difficult to justify. Now, with reduced fees, attackers have found that making millions of micro-transfers of “powder” has become convenient. What was a marginal and unlikely strategy—based on the hope that a limited number of users would make gross mistakes—has turned into an economically viable and scalable operation.

In other words: the upgrade that was supposed to make Ethereum more efficient inadvertently made it cheaper for criminals to conduct scams on a scale never seen before onchain.

What does all this mean for the market?

The context significantly complicates the positive reading from Ethereum’s onchain activity records. Yes, low fees and a smooth flow can indicate underlying technical resilience. But they also make it cheaper to launch spam on a mass level.

If a significant share of onchain activity is low-value noise—micro-transfers built around scam schemes—then spikes in transaction numbers say much less about the real demand for block space, the strength of decentralized applications, or the health of Ethereum as a whole.

For the moment, the market seems not to be convinced. ETH’s flat prices suggest that investors are seeing beyond the raw numbers. Until it becomes clearer how much of Ethereum’s onchain activity reflects real users and genuine applications, compared to automated attacks and coordinated spam, these transaction spikes will remain more of a misleading indicator than a credible catalyst for the price.

The broader market landscape: caution and volatility

While Ethereum struggles with the paradox between technical growth and price weakness, the rest of the markets maintain a more cautious tone:

Bitcoin It trades at $83,690, down 0.58% in the last hour and 6.38% in the last 24 hours, reflecting a broader correction and downward pressure across the sector.

Ether It continues its disappointing performance, trading at $2,780, down 1.04% in the last hour and 7.90% in the last 24 hours.

Gold It hit a new all-time high near $4,675 in early Asian trading, fueled by trade war fears and the need for safe-haven assets, while Trump threatens tariffs on eight European countries concerning Greenland.

Nikkei 225 corrected by 0.7%, while yields on 40-year government bonds reached new highs, amid rising political uncertainty and global tariff tensions.

Voices from the ecosystem

In other industry news, Vitalik Buterin, the founder of Ethereum, renewed his call for “different and better DAOs,” suggesting that the future of decentralization requires more sophisticated governance structures.

In the NFT space, Animoca Brands’ Yat Siu emphasized that NFTs are by no means dead—it’s the wealthy crypto collectors who continue to lead the market. Pudgy Penguins emerges as one of the strongest NFT-native brands in this cycle, transforming itself from mere speculation into a true multi-vertical IP platform with over 13 million retail sales and over 1 million units sold.

Meanwhile, spot crypto trading volumes slowed sharply, halving from $1.7 trillion last year to $900 billion, reflecting a significant cooling of market enthusiasm and a more cautious sentiment among investors amid global macroeconomic uncertainties.