Why Decoding Ethereum Transactions Is Hard

and How Loop Decoder Helps

Nastya

Nastya

Have you ever tried programmatically figuring out exactly what happened in an Ethereum transaction using just a transaction hash? While it might seem simple at first, the reality can be much more complicated depending on your use case.

Simplest Scenario

Normal Scenario

Number of contracts

1 well‑known contract

Many unknown contracts & third‑party libraries

Needed ABIs

1–2 static ABIs

Dozens of ABIs, fetched dynamically, unknown in advance

Interactions

Minimal 

Includes token transfers, calls to other contracts, multicalls etc

Typical examples

Transfers of a single token

DEX swaps, NFT marketplace trade, bridge, deposits etc

This quick comparison highlights how decoding complexity grows when you move from a single‑contract world to the wild, multi‑contract reality of most on‑chain activity.

Let’s take a closer look at why getting context about EVM transactions is hard in the first place.

What's the Problem?

Missing Context

When you query an RPC endpoint, you only receive raw blockchain data. Without extra context—such as which smart contracts were involved or which tokens and NFTs moved—you can’t really understand what happened. In short, RPC data alone isn’t enough to interpret a transaction.

Complex Smart Contracts

Smart contracts—including tokens and NFTs—can be surprisingly tricky. They may use proxies (contracts that delegate calls to other contracts), custom logic, or non‑standard patterns. Some are unverified, so their ABI—the interface you need to decode them—isn’t publicly available. Without these details, decoding becomes more challenging.

Standards Are Not Enforced

Even popular standards like ERC‑20 or ERC‑721 are not always strictly followed. Developers can tweak contracts, changing event names or function signatures, or create completely new standards. As a result, you’ll encounter unusual patterns in blockchain data that don’t follow the textbook rules, yet you still need to handle them.

Limited and Closed-Source Solutions

Existing decoding tools come with serious limitations:

  • Most people rely on third‑party APIs, which are closed‑source, so you can’t host, modify, or extend them yourself.

  • API‑based services often support only a some set of chains they choose.

With all these challenges in mind, what if you don’t want to rely on a third‑party API and instead want to programmatically understand what happened in a transaction yourself? Here’s what that process looks like:

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The Process of Decoding and Understanding a Transaction

  1. Retrieve raw transaction data from Ethereum RPC nodes—logs, receipts, and execution traces.

  2. Handle differences between RPC nodes, which may return data in varying formats.

  3. Locate the ABIs or function signatures for every contract involved in the transaction. Handle such things like various types of proxies, multicalls, and unverified contracts.

  4. Using those ABIs, decode logs, calldata, and traces. Handle nested, tree‑like calldata and traces structures; you may need to fetch additional ABIs as you traverse the tree.

  5. Detect and correctly decode token or NFT transfers, even when non‑standard methods are used.

  6. Extract native ETH transfers, which appear only in execution traces.

  7. If the transaction was reverted, decode the error message.

  8. Add caching, retries, and other optimizations to stay within rate limits, lower RPC costs, and speed up ABI lookups.

  9. Continuously update your decoder to support new standards (e.g., Account Abstraction) and common protocol quirks.

  10. Finally, interpret all this decoded context and present it in a meaningful way.

Why We Built Loop Decoder

I ran into all of these problems myself and wanted something better than to use a closed‑source, limited third‑party API. So we built Loop Decoder—a TypeScript library that simplifies transaction decoding and turns any EVM transaction hash into a clear, human‑readable format.

In the next posts, I’ll dive into how Loop Decoder works under the hood and explain why we built it on top of Effect TS library.

Links:

NastyaFarcaster
Nastya
Commented 3 months ago

I’m stoked to share that Loop Decoder - the dev library I’m building - just made it onto the @optimism Retro Funding list! What does that mean? Loop Decoder is one of 72 open‑source tools recognized for boosting developer experience and protocol security - and it’s now eligible for a retroactive grant 🎉 I’m also kicking off a post series on why and how I’m building it - here’s Post #1 explaining the problem it solves. https://paragraph.com/@nastyacodes/why-decoding-ethereum-transactions-is-hard?referrer=0x6C994eEF6fdbeE8BCFF9016B7CE3A53b489Ad155 https://x.com/Optimism/status/1918378918442402289

ashFarcaster
ash
Commented 3 months ago

Congrats @nastya that’s amazing news!

NastyaFarcaster
Nastya
Commented 3 months ago

thank you!

keccersFarcaster
keccers
Commented 3 months ago

Let’s goooooo!! Congrats!!!!

NastyaFarcaster
Nastya
Commented 3 months ago

thank you!

Tempe TechieFarcaster
Tempe Techie
Commented 3 months ago

Awesome, congrats!!! 🎉🎉🎉

hellno the optimistFarcaster
hellno the optimist
Commented 3 months ago

yayay congrats!

🦒Farcaster
🦒
Commented 3 months ago

FIRE SHIT LOVE IT 🔥🔥🔥🔥

NastyaFarcaster
Nastya
Commented 3 months ago

thanks 😃

HarrisFarcaster
Harris
Commented 3 months ago

awesome news, well deserved!

JohnsonFarcaster
Johnson
Commented 3 months ago

gg congrats. Just remembered the onchain alerts bot repo you created helped me build a nft mint alert bot. Thanks for building cool stuff!

NastyaFarcaster
Nastya
Commented 3 months ago

OMG glad to hear!

Maceo🧙🏿‍♂️🎩Farcaster
Maceo🧙🏿‍♂️🎩
Commented 3 months ago

wow incredible!

nikolaii.eth 🚀Farcaster
nikolaii.eth 🚀
Commented 2 months ago

Congrats!

NastyaFarcaster
Nastya
Commented 2 months ago

thanks Nikolaii!

nikolaii.eth 🚀Farcaster
nikolaii.eth 🚀
Commented 2 months ago

1000 $degen

Why Decoding Ethereum Transactions Is Hard