Ethereum onchain overactivity: Growth inflated by spam rather than genuine demand

Onchain analysis reveals a worrying conundrum: while Ethereum is recording record levels of onchain activity, price indicators and data study suggest that this explosive growth could be largely artificial. Detailed research points to a widespread address poisoning campaign rather than actual user adoption, challenging the bullish interpretation of network metrics.

The enigma of onchain records

The Ethereum network reached a remarkable peak with nearly 2.9 million transactions in a single day the previous week, setting a new all-time high. Normally, such an explosion of onchain activity would have triggered a major ETH price rally, fueled by narratives of growing demand and network congestion. However, the reality of the markets tells a very different story.

As of the current date of January 29, 2026, Ether is trading at around $2,800, down 7.1% over the past 24 hours. This moderate performance stands in stark contrast to the record levels of onchain activity observed, revealing a fundamental mismatch between network metrics and market signals. Bitcoin, on the other hand, also retreated to $84,170, down 5.9% over 24 hours, reflecting broader market caution.

This divergence suggests that market participants do not see increased onchain activity as a reliable indication of growing user demand or improved network fundamentals.

Analysis Reveals Massive Address Poisoning Campaign

According to a detailed analysis by onchain researcher Andrey Sergeenkov, the dramatic increase in network activity is not attributable to increasing adoption, but rather to a coordinated address poisoning operation carried out on a large scale. This malicious technique exploits a classic attack vector: scammers generate wallet addresses that closely mimic those of legitimate users, and then send micro-transfers of stablecoins to create an illusion of activity.

The mechanism is sophisticated but simple to execute: attackers disperse tiny amounts of stablecoins—often less than $1—to thousands of target addresses. These micro-transactions, when they appear in a wallet’s history, create the illusion that similar addresses are legitimate. When a user later copies an address from their history without checking every character, they risk mistaking it for the fake address and sending their real funds to the attacker.

The scale of this operation is staggering: Sergeenkov identified about 80% of the unusual growth of new Ethereum addresses as being directly related to this small-cap spam strategy.

Stablecoins and dust: the mechanics of onchain spam

The onchain analysis breaks down precisely how this campaign works. Sergeenkov found that of the millions of newly created addresses, about 67% received less than $1 during their initial interaction, a profile consistent with automated spam rather than organic user adoption.

In total, out of a sample of 5.78 million addresses, about 3.86 million received what Sergeenkov calls “poison dust” as their first stablecoin transaction. This overwhelming figure reveals that the majority of new network activity is not the product of users discovering decentralized applications or exploring the Ethereum ecosystem authentically.

To trace these operations, Sergeenkov tracked the flows of USDT and USDC under $1 from senders distributed to at least 10,000 unique addresses. The culprits identified were smart contracts programmed to fund massive series of malicious addresses in a single transaction. These contracts then dispersed the micro-amounts across the network, artificially inflating onchain metrics while setting the stage for future fraud.

Low fees, amplified spam

The recent intensification of this spam campaign correlates directly with the drastic reductions in transaction fees that occurred after the Fusaka update in December 2025. Prior to this update, the cost of running millions of micro-transfers would have been prohibitive. Now, with scary fees having fallen to minute levels, what was once a very low-converting scam—relying on the occasional copy-and-paste error—has become an economically viable and scalable strategy.

Sergeenkov notes that attackers have clearly adjusted their business models in response to this new economic reality. The low fees lowered the barrier of entry for massive spam operations, turning micro-costs into a profitable equation even with modest success rates.

This dynamic raises a critical question: how well do onchain metrics reflect the true health of the network or simply the economic viability of spam? Record transactions potentially mask a proliferation of network noise rather than an increase in actual utility.

Impact on the wider market and strategic repositioning

Beyond Ethereum, global financial markets reflect contrasting dynamics. Gold jumped to a record high near $4,675 in early trading in Asia on Jan. 29, boosted by renewed fears of a trade war following Donald Trump’s tariff threats to several European countries over Greenland. This rise in gold reflects a flight to safe havens in the face of geopolitical and macroeconomic uncertainty.

Japan’s Nikkei index fell about 0.7% amid rising bond yields and heightened political uncertainty, including the prospect of early elections. This convergence of negative factors illustrates how macroeconomic turbulence resonates across global markets, including the crypto ecosystem.

The crypto ecosystem beyond onchain noise

Despite the challenges of spam, other developments in the crypto ecosystem are maintaining a constructive trajectory. Ethereum co-founder Vitalik Buterin continues to call for the emergence of “different and better DAOs,” reflecting a long-term vision for decentralized governance.

In the NFT space, projects like Pudgy Penguins demonstrate a significant strategic evolution. Instead of remaining confined to the highly speculative “digital luxury goods” market, Pudgy Penguins has repositioned itself as a multi-vertical consumer IP platform. Its approach is to acquire users through consumer channels—toys, retail partnerships, viral media—before gradually integrating them into Web3 through games, NFTs, and the PENGU token. The ecosystem now includes phygital products that have generated more than $13 million in retail sales and surpassed 1 million units sold, as well as Pudgy Party games and experiences that have surpassed 500,000 downloads in two weeks.

Meanwhile, crypto spot trading volumes were halved to $900 million from $1.7 billion the previous year, reflecting a slowdown in market enthusiasm and increased caution in the face of macroeconomic uncertainty.

Perspective: Beyond onchain numbers

Ethereum’s situation illustrates a fundamental truth in blockchain analysis: high onchain numbers do not guarantee a positive market direction. When a substantial portion of network activity is low-value noise—structured spam rather than genuine usage—raw spikes in transactions look more like a misleading signal than a catalyst for price appreciation.

Until it becomes clearer what proportion of Ethereum’s actual onchain activity reflects engaged users versus coordinated automated attacks, record-breaking metrics will serve more to complicate the interpretation of fundamental signals than to clarify them. The markets, meanwhile, seem to be taking a cautious wait-and-see stance in the face of these onchain data conundrums.