Citi: Ethereum’s Record Transaction Surge is ‘Fake’ — Scams Drive Activity
Citi analysts report that Ethereum’s new all-time high in daily transactions is 80% driven by ‘address poisoning’ scams rather than organic adoption.
The Receipt
The record-breaking activity on Ethereum this month is a mirage. Citi bank analysts reported today that the network’s surge to 2.9 million daily transactions is primarily driven by “address poisoning” campaigns rather than organic user growth. The market reacted swiftly; ETH slid 7.6% to $2,961 as traders digested the reality that the post-upgrade activity boom is largely artificial.
The Discrepancy
On paper, Ethereum looks robust. Daily active addresses nearly doubled to 1.3 million following the December 3 “Fusaka” upgrade, which slashed fees by over 60%. But Citi’s data separates signal from noise: a staggering 80% of this growth comes from stablecoin transfers under $1. These aren’t micro-payments. They are “dust.” Tiny amounts sent by scammers to bait wallets into copy-pasting the wrong address for future transactions.
The Mechanism
The mechanics are industrial. Independent researcher Andrey Sergeenkov identified smart contracts specifically deployed to “poison” histories at scale. One contract alone dusted 690,000 wallets in 48 hours. The Fusaka upgrade, intended to make Ethereum cheaper for users, inadvertently made it profitable for attackers to broadcast millions of spam transactions. Security firm Cyvers detects over one million poisoning preparations daily.
“The victim sees a ‘familiar’ address in transaction history, copies it without full verification, and sends real funds to the attacker.”
The Human Cost
The sophisticated vanity addresses, matching the first and last characters of a victim’s legitimate counterparty, are effective. On December 20, a single trader lost $50 million in USDT after mistakenly copying a poisoned address. Another user lost $510,000 last week. The volume of attacks suggests these high-value captures are covering the costs of the mass-spam campaigns.
Institutional Outlook
The findings dampen the bullish narrative surrounding Ethereum’s deflationary supply. JPMorgan analysts noted separately that while Fusaka provided a short-term activity boost, the network still faces structural pressure from L2s like Base and Arbitrum. With mainnet activity dominated by low-value spam, the “yield” from transaction fees remains suppressed, challenging the economic sustainability of the current fee model.
