Arbitrum's Enormous Network Activity Spike Is Synthetic, and Here's Why

The spike in activity on Ethereum's Layer 2 network has been massive. If we compared it with the beginning of the year, we will see thousands of percent in spikes in a few weeks, which may seem abnormal, taking into account the relative calmness on the market.

According to Delphi Digital, the main source of increased network activity is airdrop hunters who are not interested in Arbitrum's fundamentals and create synthetic activity on the network only to get rewarded.

Most of the 1.7M cumulative wallets on @arbitrum are classified as “average users” having 1-100 transactions.

354k wallets have made only a single transaction, likely attempting to Sybil attack a potential Arbitrum airdrop.

76k wallets are active with 100-100k transactions. pic.twitter.com/riTF3hC2IY

— Delphi Digital (@Delphi_Digital) December 15, 2022

The majority of wallets on Arbitrum represent average users, who make up to 100 transactions and generally show healthy on-chain behavior. However, more than 350,000 wallets have made only a single transaction, attempting to Sybil attack a potential airdrop.p

A Sybil attack is a targeted action against a blockchain that includes the creation of numerous fake identities to gain a foothold on the network and use it for monetary gain. Usually, large blockchain networks take certain measures to protect themselves from Sybil attacks.

Technically, the growth fueled by airdrops is not something that harms networks in the long term. The sole purpose of marketing campaigns that include airdrops is to attract attention, and a massive spike in network activity during the bear market will most likely do its job.

The popularity of Arbitrum and other L2 networks has been going down drastically after the Merge update and the crisis of the DeFi and NFT industries. Arbitrum, as do other networks released during Ethereum's scalability crisis, aim at reducing transaction costs and increasing processing speeds on the network.

However, the current network activity on the Ethereum network is not irregular and can easily be processed and managed without the help of blockchains like Arbitrum.