A record jump in activity on the Ethereum network is likely being driven by scam-related behavior rather than genuine user growth, according to analysts at Wall Street bank Citi.
Ethereum has posted a sharp rise in daily transactions and active addresses to all-time highs, but the increase does not appear to reflect healthy network expansion, Citi said in a report published Thursday.
“This transaction trend is often associated with ‘address poisoning’ scam campaigns,” analysts Alex Saunders and Vinh Vo wrote.
The bank’s analysis shows that a significant share of the new activity consists of transactions valued at less than $1 — a pattern more commonly linked to address-poisoning scams than organic adoption. In such schemes, malicious actors send small amounts of crypto from wallet addresses designed to closely resemble those a victim frequently uses, hoping the user will later mistakenly send funds to the wrong address.
Ethereum’s currently low transaction fees make it inexpensive for attackers to generate large volumes of these transactions, inflating headline network metrics without reflecting real demand, Citi said.
The trend was highlighted earlier this week by onchain researcher Andrey Sergeenkov, who found that the recent spike in Ethereum activity is heavily tied to stablecoins. Sergeenkov said stablecoins account for roughly 80% of the unusual growth in new addresses.
His analysis tracked USDT and USDC transfers under $1 and identified senders that distributed small amounts of stablecoins to at least 10,000 unique addresses. The largest of these were smart contracts that sent tiny transfers to hundreds of thousands of wallets, funded by mechanisms designed to batch large numbers of poisoning transactions into a single call.
Despite the burst in onchain activity, ether’s price performance has lagged bitcoin over the same period. ETH has traded largely flat this year, underperforming BTC, which has gained about 2.4%, though ether has slightly outperformed bitcoin over the past six months.
Citi’s analysts noted that Ethereum’s apparent activity surge stands in contrast to Bitcoin, where onchain user activity has continued to drift modestly lower rather than spike. The divergence suggests Ethereum’s recent burst is a network-specific phenomenon driven by “malicious behavior,” rather than a sign of broader growth across the crypto market.
Skepticism around Ethereum’s growth outlook is shared by JPMorgan. In a report published Wednesday, the bank said that while Ethereum’s December Fusaka upgrade led to an immediate drop in fees and a jump in transactions and active addresses, it questioned whether the rebound would be sustained amid rising competition from layer-2 networks and rival blockchains.
