Reasons Behind 50% Failed Transactions on Solana in the Past Month

According to aggregated data from Dune Analytics, over 50% of non-vote transactions on the Solana network failed over the past month. What exactly is the reason behind this?

Reasons Behind 50% Failed Transactions on Solana in the Past Month

According to data compiled on Dune Analytics by user @scarn_eth, more than half of non-vote transactions on the Solana network failed within the last month.

Non-vote transactions refer to regular user transactions, not staking or validator voting. These transactions typically involve token transfers, trading activities, or interactions with decentralized applications (DApps) and smart contracts.

At first glance, this statistic might suggest inefficiencies within the Solana network, causing difficulties for users trying to conduct on-chain transactions. However, analysts point out that the majority of these failed transactions are attributed to bots.

Mert Mumtaz, CEO of Helius Labs, an infrastructure builder on Solana, explained:

"The majority of failed transactions are due to bots. This mechanism has been in place since the early days of the Solana network, so there's nothing unusual about it, and user experience remains largely unaffected."

To elaborate, users employ bots to automate trading strategies. These trading bots emerged as a significant narrative in 2023, with Solana being a prime target due to its low fees and high-speed capabilities.

Mumtaz added:

"A failed transaction means the network successfully processed the transaction — fees were paid, states were changed, and it followed the correct procedure — but the application developer intentionally executed a 'revert' action."

This renders bot transactions, or rather spam transactions, economically unfeasible.

Mumtaz further noted that in rare instances where genuine user transactions are canceled, the primary reason is slippage.

Slippage often occurs with projects of low liquidity. Solana's meme coin ecosystem is currently booming, with over 20,000 new tokens appearing daily, according to SolanaFM. Some projects attract significant attention, while others remain relatively quiet, resulting in varying liquidity levels.

A notable instance affected by slippage, as reported by Coin68, involved a trader who bought Dogwifhat at 60% of their capital's peak value. In such cases, it seems preferable for transactions to be canceled due to excessively high slippage rather than executing and resulting in a capital loss.

SOL is currently trading around $172 USD, having declined significantly since peaking at $210 USD earlier this week.

1-day chart of SOL/USDT pair on Binance at 12:55 PM on March 23, 2024