A spike in activity across the Ethereum network is being driven primarily by scam-related transactions rather than genuine user adoption, according to analysts at Citi.
Ethereum has seen daily transactions and active addresses climb to record highs in recent weeks, but the surge does not reflect a meaningful improvement in underlying network usage, the Wall Street bank said in a Thursday report.
“This pattern of activity is frequently linked to ‘address poisoning’ scam campaigns,” analysts Alex Saunders and Vinh Vo wrote.
Citi’s analysis shows a heavy concentration of transactions below $1, a hallmark of address-poisoning activity rather than organic growth. In these campaigns, attackers send small amounts of crypto from wallet addresses that closely mimic those commonly used by victims, increasing the risk of funds being sent to the wrong destination in subsequent transfers.
Ethereum’s low transaction fees have lowered the cost of executing such attacks, allowing malicious actors to generate large volumes of transactions that inflate headline network metrics without signaling real demand, the analysts said.
Onchain researcher Andrey Sergeenkov highlighted the trend earlier this week, noting that stablecoins account for roughly 80% of the unusual rise in new Ethereum addresses. His research tracked sub-$1 USDT and USDC transfers and identified senders that distributed small stablecoin amounts to at least 10,000 unique wallets.
The largest of these senders were smart contracts that pushed tiny stablecoin transfers to hundreds of thousands of addresses, funded through functions designed to batch large numbers of poisoning transactions into single executions.
Despite the increase in onchain activity, ether’s price has lagged bitcoin over the same period. ETH has traded largely flat so far this year, underperforming BTC, which has gained around 2.4%, though ether has slightly outperformed bitcoin over the past six months.
Citi noted that Ethereum’s activity surge stands in contrast to Bitcoin, where onchain usage has continued to trend modestly lower rather than spike. The divergence suggests Ethereum’s recent burst of activity is a network-specific issue driven by “malicious behavior,” rather than a sign of broader growth across the crypto market.
JPMorgan has echoed a cautious view on Ethereum’s outlook. In a report published Wednesday, the bank said that while the network’s December Fusaka upgrade triggered an immediate drop in fees and a jump in transactions and active addresses, it remains uncertain whether the momentum can be sustained amid competition from layer-2 networks and rival blockchains.
