Have you ever found yourself waiting hours for a crypto transaction to be completed or ever paid high transaction fees? Chances are you have experienced blockchain congestion.
Unlike centralized networks which can simply add more capacity to deal with peak load, blockchains naturally limit the number of transactions processed per second due to the fixed block size and interval set by the protocol.
Hence, when demand exceeds fixed capacity, transactions are queued (often referred to as being in the mempool) and wait until they reach the front of the line, or users simply pay higher fees for a faster process. Blockchain congestion impacts not only users but also developers, companies, and service providers leveraging blockchain infrastructure.
What is Blockchain Network Congestion?
A blockchain network suffers congestion when the quantity of transactions sent to the blockchain exceeds its ability to process transactions in reasonable time frames, while also suffering sub-optimal confirmation times.
Structurally, a blockchain is a decentralized ledger that processes transactions and records them to the ledger in blocks. Since each block has a maximum size/space, it has limitations on how many transactions it can handle within predetermined time frames for processing and recording.
When many users attempt to transact at the same time, the blockchain network suffers congestion, which creates a backlog of unconfirmed transactions in the network. The congestion for blockchain networks is no different from what we observe with traffic, which causes delays and congestion for everyone.
Past congestion events have historically demonstrated these shortcomings. For example, in 2017, Bitcoin’s network became highly congested, with transaction fees exceeding $50 during its bull run.
Ethereum encountered similar congestion challenges during the DeFi boom in 2020-2021 and the NFT frenzy in 2021, where gas fees averaged more than $200 per transaction. Even layer-2 solutions and alternative blockchains experience congestion or gas (fee) spikes when user activity grows unusually.
Causes of Blockchain Network Congestion
Congestion on blockchain networks does not occur by chance. It can be attributed to an array of technical and behavioral issues. The more demand for blockchain applications grows, the more evident these limitations become. The most common causes of congestion on blockchain platforms include:
- High Transaction Volume (NFT Drops, Token Airdrops, and DeF)
Some of the more common sources of congestion on blockchains are unexpected spikes in transaction volume and demand rendered during popular events such as
- NFT Drops: Many NFT collections launch simultaneously, which creates congestion as thousands of users try to mint, buy, or bid on NFTs. This spike in transaction requests overwhelms the network.
- Token Airdrops: For example, airdrops that distribute tokens to crypto project wallet holders often can cause increased total user action on the network. Everyone runs to claim their free tokens, causing the network to clog.
- Restricted Block Size or Block Speed
The constraints on decentralized or distributed ledger technology are designed to ensure it is decentralized and secure. When transactions that cannot fit within a block are submitted, they are added to a holding area called a mempool.
As the mempool increases in size, users begin to offer higher transaction fees (gas) to complete their transactions sooner. This causes a bidding war, resulting in delays for users offering lower fees and increasing the average cost of utilizing the network.
- Sub-Optimally Built Decentralized Applications (dApps)
Not all blockchain applications are built in the same manner. Some dApps might contain inefficient smart contract code, use more gas than necessary, or call multiple transactions in order to produce one final outcome.
In a congested environment, poorly optimized dApps only exacerbate the issue by filling the network with unnecessary and overly resourceful transactions that could have been implemented in a more efficient manner.
For instance, a decentralized game might call many contracts just to update a score or move an object, when one function could have done the same task in a clean, streamlined fashion. The inefficiency builds up quickly in an ecosystem of large dApps, and adds to the congestion.
- Bot Activity and Spam Attacks
Bots are another significant cause of congestion on blockchains. Automated scripts (bots) that are used in DeFi to front-run trades, snipe NFT mints, or exploit arbitrage opportunities.
They submit thousands of transactions in milliseconds and pay higher gas fees to get their transactions executed first. This congests the network and raises gas fees for legitimate users.
How Is Congestion Measured?
By understanding blockchain congestion, users, developers, and protocols can gain insight into network health, take advantage of efficient interactions, and tweak their transactions accurately. Typically congestion is assessed with multiple indicators:
- Mempool Size
A mempool is a data structure that stores and maintains on the blockchain, which has a temporary store of all pending transactions that have been submitted and not yet included in a block.
The larger the mempool size, the more users are trying to send transactions, likely simultaneously, and the congestion indicates that the network cannot handle them quickly enough. The mempool during peak DeFi activity or NFT launches on Ethereum can get massive, into the tens of thousands of transactions, resulting in delayed confirmations.
- Gas Price
Gas price is the amount of money users are prepared to pay or transaction costs in order for it to be processed by the validators (miners or stakers). Gas price is measured in Gwei on Ethereum.
As the demand for block space increases and exceeds supply, users will increase the gas price they are willing to pay so that the validators know to prioritize their transactions. In essence, gas prices go up when the network is becoming congested.
- Average Block Time
Average block time refers to the average elapsed time between blocks being mined (PoW) or validated (PoS). Slower-than-usual block times can cause a decreased rate of transaction confirmations, which causes congestion. Average block times for common coins:
- Bitcoin: ~10 minutes
- Ethereum (PoS): ~12 seconds
- Solana: ~0.4 seconds
- Transaction Throughput (TPS)
TPS (transactions per second) is the number of transactions a blockchain can process in a second. TPS is a direct definition of the processing ability of a blockchain. Once transaction volume exceeds TPS, a backlog will form. The TPS for some coins are:
- Bitcoin: ~7 TPS
- Ethereum: ~15–30 TPS
- Solana: 2,000+ TPS (theoretical)
- Polygon PoS: ~65 TPS
| Metric | What It Measures | Indicator of Congestion | Outcome |
| Mempool Size | Pending transactions | High | Longer wait times, fee spikes |
| Gas Price | Transaction fees per unit gas | High | More expensive transactions |
| Block Time | Time to create/validate block | Slower than usual | Slower network throughput |
| TPS | Processing speed | Lower TPS relative to volume | Backlog and delays |
Effects of Network Congestion
Congestion on blockchain networks is a serious operational issue with real monetary impacts across cryptocurrency ecosystems. These impacts may include:
- Transaction Confirmation Delay
One of the main drawbacks is that the transaction(s) are delayed to be confirmed. There can be a sense of urgency when performing certain tasks such as cross-border payments, trading, minting of NFTs, etc. Congestion could mean you miss opportunities or, worse, lose transactions completely, price slippage, etc.
In September 2024, the Bitcoin network became congested to the point that the average time between having transactions confirmed reached over 2000 minutes (33+ hours). Users were stuck and could not complete basic transactions in a timely manner.
- Higher Transaction (Gas) Fees
Congestion results in increased transaction fees sometimes referred to as gas fees. Whenever demand exceeds supply, users bid higher fees for priority service in the queue for miners or validators.
For instance, during the peak of the Board Ape Yacht Club’s Otherside NFT mint, which happened in May 2022, the gas fees on Ethereum rose to over $400 per transaction, while users paid more than $157 million in gas fees alone. The spike almost made it impossible for small users to participate unless they wanted to pay a premium.
- Failed Transactions Due to Outbidding
If the network is congested, transactions with lower gas fees will simply never be processed and lie in the mempool until they are dropped or cancelled. This can also become a risk mode when your Bitcoin is on the line and seconds matter.
The risks of failed transactions can result in lost funds, invalid smart contracts, and frustrated users, particularly in DeFi sites where milliseconds can make the difference between winning and losing.
- User & developer frustration
Running into congestion regularly can result in a lack of confidence from users and can deter developers from building on a congested blockchain. Developers can leave a blockchain.
For example, Electric Capital’s report in 2023 stated that developers and users migrated to other chains like Avalanche, Polygon, and Solana as most of their dApps failed to launch on Ethereum because of cost and congestion.
Solutions to Blockchain Network Congestion
Congestion affects the biggest blockchains within the ecosystem (like Bitcoin and Ethereum) the most, especially when demand peaks. Below are some different solutions to managing congestion and increasing scalability:
- Layer 2 Scaling Solutions
Layer 2 (L2) solutions operate above layer 1 chains and mostly handle the transaction workload off-chain before eventually committing the proof back on-chain. L2 solutions are great because they have significantly lower cost and are faster while still using the security of their base layer.
According to L2Beat, Arbitrum One, a layer-2 solution, takes over 40% of all Ethereum Layer 2 activity, with daily volumes over $500 million. It batches thousands of transactions in a single proof back to Ethereum.
- Sharding
Sharding is a Layer 1 scalability solution that splits the blockchain into smaller pieces, or “shards,” which allows for parallel processing of transactions. This significantly improves throughput and lessens the strain on the network. The NEAR protocol already has dynamic sharding in place and was benchmarked up to 100,000 TPS when stress-tested.
- Shifts in Consensus Mechanism
Changes in consensus mechanisms could increase throughput and lower energy consumption. For instance, Solana’s proof of history timestamps transactions so that they can be collated and verified without needless time, permitting extremely high throughput without compromising trackability.
How Users Can Tackle Congestion
Many blockchain users will likely experience blockchain congestion often if they use popular networks like Ethereum and Bitcoin. Thankfully, here are some practical ways for users to get around blockchain congestion:
- Leverage Layer 2 Solutions and/or Sidechains to avoid Congestion
One of the many ways to avoid congestion on the blockchain is to use Layer 2 networks and/or sidechains. Layer 2 solutions like those offered by Optimism and Arbitrum can take your transactions off the main blockchain while batching them to settle with the main chain. This allows you to bypass congestion and make transactions faster and cheaper.
- Time Your Transactions to Off-Peak Hours
Blockchain networks don’t work uniformly 24/7. Naturally, they will exhibit more congestion on the most active days, especially during US and European business hours. If you’re hoping to avoid transaction delays and save on gas fees, then plan transactions during low-activity times. Use tools like the Etherscan Gas Tracker or Ethereum Gas Station to help identify appropriate times to send transactions.
- Adjust Gas Fees Yourself or Use Your Wallet’s Estimator
Most crypto wallets (MetaMask and Trust Wallet included) allow users to manually specify their gas fees or opt for an automated estimator to see suggested prices. If a transaction is not time-sensitive, setting a lower gas fee and waiting for the network to settle can be worth a while.
- Take Advantage of Gas Fee Optimization Tools
Many third-party tools help users save money on transaction fees. Some of these tools are Blocknative, GasNow, and TxOptimizer. They offer gas price forecasting, transaction batching, and even real-time alerts to help users get the best prices for their transactions.
- Combine Multiple Transactions Into One
Batching transactions is another smart way to reduce blockchain congestion and gas costs. Some wallets and dApps let users aggregate multiple actions, like token swaps or token transfers, into one transaction. This will lower the number of transactions on the blockchain and can save users quite a bit of money on gas fees.
- Use Scalable Blockchains as Alternatives to Ethereum
Ethereum is the most utilized smart contract platform; however, it is synonymous with congestion. In cases of high traffic, users can consider other Layer 1 blockchains like Solana, Avalanche, Fantom, Algorand, and Near Protocol.
Conclusion
Blockchain network congestion affects many decentralized systems. From simple transfers to complicated smart contracts, it contributes to longer confirmation times/intervals, high fees, and ineffective throughput capacity.
While numerous scaling solutions are currently being created, network congestion indicates the limitations of decentralization, security, scalability, and how they relate to one another. Overall, a better understanding of congestion will enable both users & developers to navigate the crypto ecosystem better, enabling better use of transaction strategies during congested periods.
FAQs
- What can create blockchain network congestion?
Blockchain congestion occurs when transaction demand is greater than a network’s processing ability, resulting in longer waits and larger fees. This can happen because blocks have limited size constraints (e.g., Bitcoin’s maximally 1-4MB blocks or Ethereum’s about 15 million gas limit per block, all depending on the computational gas prices).
- How do Layer 2 solutions assist in congestion reduction?
Layer 2 (L2) solutions like rollups, state channels, and sidechains are able to process transactions off-chain and later settle proofs for the transaction(s) on the main chain, which assists with reducing demand on Layer 1 (this could be Ethereum as an example), increases throughput, and decreases fees.
- How does sharding fix the issue of scalability?
Sharding is when the blockchain fragments into a smaller chain or shard that can process many transactions in the same time frame while maintaining separation. Sharding on Ethereum plans to use Danksharding, which can combine sharding and rollups to improve efficient processing and data availability.
- Why did Ethereum move from the proof of work (PoW, through The Merge) to utilizing a proof of stake (PoS) as a consensus mechanism?
PoS reduces energy usage by 99% or more and allows for faster transactions (2-3x).
- Will congestion on a blockchain ever be completely fixed?
There is no single solution to congestion that will solve congestion for good, but hybrid approaches of L2 + sharding + PoS + fee optimizations will dramatically help increase the scalability of blockchains.
