Analysts at the investment bank Citi are warning about an unprecedented rise in fraudulent activity within the Ethereum network. According to their observations, the sharp increase in the number of transactions and active addresses on the blockchain may not be due to a real surge in the network’s popularity, but rather large-scale scam campaigns, particularly through so-called “address poisoning.”
This is reported by Business • Media
Mechanics of Address Poisoning and Transaction Anomalies
According to Citi, most new transactions in the Ethereum network have a value of less than $1, which is characteristic of fraudulent schemes. Malefactors send small amounts of cryptocurrency from addresses that visually resemble those with which users frequently interact. The goal of such actions is to trick the victim into accidentally copying a fake address from their transaction history and transferring a larger amount to it in the future.
Low fees in the Ethereum network allow for thousands of such transactions, artificially inflating key on-chain metrics and creating the illusion of high activity without real demand. However, experts believe that such spikes in activity do not reflect the true state of the network.
“Most new transactions in the Ethereum network have a value of less than $1. This pattern, according to analysts, is characteristic of fraudulent schemes.”
Lack of Impact on Ethereum’s Price and Comparison with Bitcoin
Despite the record level of on-chain activity, the price dynamics of Ethereum do not show significant changes. Since the beginning of the year, the price of this cryptocurrency has remained almost unchanged at around $2927. This situation, according to Citi, contradicts expectations for healthy growth in the network.
In comparison, the Bitcoin network is experiencing a gradual decline in on-chain activity without sharp fluctuations. This difference, according to analysts, indicates that the spike in activity in Ethereum is a “network phenomenon” caused by “malicious behavior,” rather than a sign of broader growth in the cryptocurrency market.
Earlier, it was reported that the average number of transactions in the Ethereum network reached a historical maximum; however, experts warn that such records may be a result of fraudulent activity rather than genuine user interest.