Second-layer solutions have become the preferred alternative to Ethereum (ETH) in this year of 2021, in the face of the craze encountered by decentralized finance (DeFi) and non-fungible tokens (NFT). Indeed, this strong interest has led to a drastic increase in transaction fees on Vitalik Buterin’s network.
Polygon, the blockchain that shadows Ethereum
Polygon (formerly Matic) is a commit chain of Ethereum offering a similar ecosystem, without suffering the high transaction fees. Its goal is to move transactions away from the main Ethereum network in order to reduce the load it bears.
Since May, Polygon has been steadily attracting new users, eager to take advantage of the growing DeFi ecosystem on the network. The network’s main DEX, QuickSwap now ranks 10th in volume among decentralized trading platforms, with more than $90 million exchanged daily.
Arbitrage bots make trouble on Polygon
Unfortunately, all is not well on Polygon. Indeed, since May, last year the network has witnessed a significant spam of transactions, causing the network to be used at more than 90%. Indeed, the network records on average between 4 and 8 million daily transactions, against just over 1 million for Ethereum.
In a report published on October 15, researchers at Flipside Crypto attributed this immense amount of transactions to arbitrage bots. According to the data presented, 2 of these bots are responsible for 30% of the transactions sent on Polygon.
As a reminder, an arbitrage bot will take advantage of a price difference on a given asset between 2 exchange platforms. For example, if 1 ETH is worth $3,000 on Uniswap and $2,900 on Sushiswap, the bot will buy ETH on Sushiswap before reselling it on Uniswap and make a profit of $100, not counting transaction fees.
Polygon invaded by too many transactions: why?
With an average cost of 0.02 MATIC per transaction, it is very cheap for these bots to spam the network. Despite this, one question remains: why spam the network?
Regarding this question, researchers at Flipside Crypto have outlined a theory:
“The likely theory is that the owner simply wants to spam the contract so that others cannot get ahead of the real transaction. As a result, someone has a bot flooding a block with noise to protect themselves from front running, instead of using priority fees to ensure they are always first in the block.”
A theory challenged
For our part, we contacted the developer Raphael Westphal, who is used to the Polygon blockchain and its workings.
According to him, the justification for this spam is quite different:
“The Polygon blockchain uses a modified version of the Ethereum client geth. However, it has not yet deployed the update to version 1.10 of geth, which introduces the ordering of transactions in a block, ie the order of transactions in a block is the order of arrival at the validator. As a result, transactions are currently not ordered on Polygon, and the best way to win an arbitration against other bots is to spam the chain in order to increase the chances of having the transaction closest to the arbitration to be performed.”
According to him, it is thus not about creating noise to avoid front running. The objective of this spam is to ensure that one of the hundreds of transactions sent for a given arbitrage arrives in first position at the validator, so that it is included in the block before the others.
Other developers have also picked up on this detail, such as moneyoriented, which has just raised the issue publicly via the Polygon github:
“Currently, transactions with the same price are not sorted. As a result, arbitrage bots have to send thousands of trades for a single arbitrage opportunity. This is the main reason why there is so much spam in the Polygon network. Ethereum had the same problem and it has been solved since go-ethereum v1.9.19. I think Polygon can also have this functionality to reduce spam.”
Which solution will Polygon opt for?
Faced with this explanation, it would seem that the most effective way to stop this constant spam would be to implement the new version of geth, in order to schedule transactions.
However, Polygon’s reaction was quite different, and it seems that scheduling is not a priority for the network developers. Indeed, they preferred to increase the minimum transaction fees from 1 to 30 gwei per gas, in order to limit spam by making it more expensive.
“In order to reduce the number of spam transactions in the network, we are increasing the minimum gas price to 30 gwei, from the current (default) value of 1 gwei for our foundation nodes.”
While this change has indeed reduced spam on Polygon, it has not been welcomed by all users. In fact, all users will now have to spend more on transaction fees due to spammy bots, even though a simple upgrade to Geth 1.10 would have solved the problem without impacting fees.
Despite this, the Polygon network still has a lot to live up to. Indeed, the cost of transactions on Ethereum remains extremely high compared to those that run on Polygon.