Try Quests to earn cryptoTransaction Failure
Introduction
On-chain data reveals that the success rate of transactions on Terra blockchain has recently declined.
Many wonders why?
>Failed transactions on Terra have been on the rise lately. wonder why.
Some argue that the rise of the number of transactions exceeded the capacity of the network and led to an increase in failed transactions.
Others state that the sharp increase of Terra users causes the decline of the success rate as newbies tend to do failed transactions.
And finally, some others point to the failure of transactions caused by arbitrage bots.
This dashboard attempts to contribute to this discussion by testing the following hypotheses:
H1: The more transaction is performed on the Terra blockchain, the more likely it is the success rate decrease.
H2: Newbies has experienced the lower transaction rate that the normal users.
H3: LUNA-UST swaps has lower success rate rather than the other swaps on the same dex.
The graph below also shows that the daily number of transactions on Terra blockchain is steadily growing.
H2
The graph below compares the success rate of normal transactions with the first transactions of new users.
As can be seen the first transactions is more likely to be successful comparing average transactions. Statistical analysis also supports that this difference is statistically significant.
A two-sample t-test was performed to compare success rates in first transactions and normal transactions.
There was a significant difference in success rate between new users (M = 98.36, SD = 1.29) and normal users (M = 98.05, SD = 1.66); t(89) = 8.83, p < 0.001.
H3
There is no straightforward method to test the third hypothesis considering available data.
The terra.swaps table contains only succeeded swaps.
Therefore to shed some lights on the third hypothesis, the relationship between burning LUNA and success rate has been tested.
The graph below shows the daily attempts to burn LUNA over time. It can be assumed that the volume of burning LUNA is correlated with LUNA-UST arbitrage.
The scatter plot below shows how success rate is related to LUNA burning.
The statistical analysis shows that there is a significant negative relationship between the volume of burning LUNA and success rate.
Simple linear regression was used to test if The number of burning LUNA significantly predicted success rate. The overall regression was statistically significant (R2 = 0,11 , F(1, 89) = 10,97 , p = 0,001).
Discussion
Throughout this dashboard, we investigated the cause of a decrease in the success rate of transactions on the Terra blockchain.
Three hypotheses were tested. The findings are as follow:
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The higher number of transactions in a day is likely to lead a lower rate of success rate (supports H1).
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Although the higher number of transactions may correlate with the higher number of new users, the rise of new users cannot be the underlying cause of the low success rate (rejects H2).
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The higher burning of LUNA leads to a lower overall success rate of transactions (supports H3).
If the methodology of this study is scientifically sound, we can conclude that the recent decline of the success rate of transactions is influenced by the growth of transactions on the Terra blockchain and the high number of attempts to burn (Assuming by arbitrage bots).
However, since the two reasons are related to each other, distinguishing each effect is necessary. Further studies should perform this task.
If the main reason for transaction failure on Terra blockchain is a high number of transactions, the mitigate the problem entails technological solutions.
However, if the main reason is arbitrage, the change in metrics and measurement of success rate is necessary since the arbitrage process is instrumental in the stability of UST and we cannot halt this process.