diff --git a/crates/net/network/src/manager.rs b/crates/net/network/src/manager.rs
index f21121a224..76c85f95c6 100644
--- a/crates/net/network/src/manager.rs
+++ b/crates/net/network/src/manager.rs
@@ -505,9 +505,9 @@ where
                         "Session disconnected"
                     );
 
-                    if error.is_some() {
+                    if let Some(ref err) = error {
                         // If the connection was closed due to an error, we report the peer
-                        this.swarm.state_mut().peers_mut().on_connection_dropped(&peer_id);
+                        this.swarm.state_mut().peers_mut().on_connection_dropped(&peer_id, err);
                     } else {
                         // Gracefully disconnected
                         this.swarm.state_mut().peers_mut().on_disconnected(&peer_id);
diff --git a/crates/net/network/src/message.rs b/crates/net/network/src/message.rs
index 441ef6c526..d6cfddef55 100644
--- a/crates/net/network/src/message.rs
+++ b/crates/net/network/src/message.rs
@@ -13,6 +13,7 @@ use reth_eth_wire::{
 use reth_interfaces::p2p::error::{RequestError, RequestResult};
 use reth_primitives::{Header, PeerId, Receipt, TransactionSigned, H256};
 use std::{
+    fmt,
     sync::Arc,
     task::{ready, Context, Poll},
 };
@@ -253,7 +254,7 @@ impl PeerResponseResult {
 }
 
 /// A Cloneable connection for sending _requests_ directly to the session of a peer.
-#[derive(Debug, Clone)]
+#[derive(Clone)]
 pub struct PeerRequestSender {
     /// id of the remote node.
     pub(crate) peer_id: PeerId,
@@ -274,3 +275,9 @@ impl PeerRequestSender {
         &self.peer_id
     }
 }
+
+impl fmt::Debug for PeerRequestSender {
+    fn fmt(&self, f: &mut fmt::Formatter<'_>) -> fmt::Result {
+        f.debug_struct("PeerRequestSender").field("peer_id", &self.peer_id).finish_non_exhaustive()
+    }
+}
diff --git a/crates/net/network/src/peers/manager.rs b/crates/net/network/src/peers/manager.rs
index ad1517afb7..2699ed3b7b 100644
--- a/crates/net/network/src/peers/manager.rs
+++ b/crates/net/network/src/peers/manager.rs
@@ -1,6 +1,9 @@
 use crate::peers::{reputation::BANNED_REPUTATION, ReputationChangeKind, ReputationChangeWeights};
 use futures::StreamExt;
-use reth_eth_wire::DisconnectReason;
+use reth_eth_wire::{
+    error::{EthStreamError, HandshakeError, P2PHandshakeError, P2PStreamError},
+    DisconnectReason,
+};
 use reth_primitives::PeerId;
 use std::{
     collections::{hash_map::Entry, HashMap, HashSet, VecDeque},
@@ -121,6 +124,7 @@ impl PeersManager {
     pub(crate) fn on_closed_incoming_pending_session(&mut self) {
         self.connection_info.decr_in()
     }
+
     /// Invoked when a pending session was closed.
     pub(crate) fn on_closed_outgoing_pending_session(&mut self) {
         self.connection_info.decr_out()
@@ -184,16 +188,29 @@ impl PeersManager {
             self.connection_info.decr_state(peer.state);
             peer.state = PeerConnectionState::Idle;
         }
+
+        self.fill_outbound_slots();
     }
 
     /// Called when a session to a peer was forcefully disconnected.
-    pub(crate) fn on_connection_dropped(&mut self, peer_id: &PeerId) {
-        let reputation_change = self.reputation_weights.change(ReputationChangeKind::Dropped);
-        if let Some(mut peer) = self.peers.get_mut(peer_id) {
+    ///
+    /// Depending on whether the error is fatal, the peer will be removed from the peer set
+    /// otherwise its reputation is slashed.
+    pub(crate) fn on_connection_dropped(&mut self, peer_id: &PeerId, err: &EthStreamError) {
+        if is_fatal_protocol_error(err) {
+            // remove the peer to which we can't establish a connection due to protocol related
+            // issues.
+            if let Some(peer) = self.peers.remove(peer_id) {
+                self.connection_info.decr_state(peer.state);
+            }
+        } else if let Some(mut peer) = self.peers.get_mut(peer_id) {
             self.connection_info.decr_state(peer.state);
             peer.state = PeerConnectionState::Idle;
+            let reputation_change = self.reputation_weights.change(ReputationChangeKind::Dropped);
             peer.reputation = peer.reputation.saturating_sub(reputation_change.as_i32());
         }
+
+        self.fill_outbound_slots();
     }
 
     /// Called for a newly discovered peer.
@@ -209,12 +226,15 @@ impl PeersManager {
             Entry::Occupied(mut entry) => {
                 let node = entry.get_mut();
                 node.addr = addr;
+                return
             }
             Entry::Vacant(entry) => {
                 trace!(target : "net::peers", ?peer_id, ?addr, "discovered new node");
                 entry.insert(Peer::new(addr));
             }
         }
+
+        self.fill_outbound_slots();
     }
 
     /// Removes the tracked node from the set.
@@ -574,6 +594,26 @@ impl Display for InboundConnectionError {
     }
 }
 
+/// Returns true if the error indicates that we'll never be able to establish a connection to that
+/// peer. For example, not matching capabilities or a mismatch in protocols.
+fn is_fatal_protocol_error(err: &EthStreamError) -> bool {
+    match err {
+        EthStreamError::P2PStreamError(err) => {
+            matches!(
+                err,
+                P2PStreamError::HandshakeError(P2PHandshakeError::NoSharedCapabilities) |
+                    P2PStreamError::UnknownReservedMessageId(_) |
+                    P2PStreamError::EmptyProtocolMessage |
+                    P2PStreamError::ParseVersionError(_) |
+                    P2PStreamError::Disconnected(DisconnectReason::UselessPeer) |
+                    P2PStreamError::MismatchedProtocolVersion { .. }
+            )
+        }
+        EthStreamError::HandshakeError(err) => !matches!(err, HandshakeError::NoResponse),
+        _ => false,
+    }
+}
+
 #[cfg(test)]
 mod test {
     use std::{