A system and associated method for dynamic error dampening in a node in a network system. The node collects statistics of data traffic transferred through the node. The node has a link error MIB storing Error ratio and Reliability of interface of the node. When the Error ratio is too high, the node starts running a Layer 2 protocol for monitoring data traffic and calculates Penalty of the node. When Penalty is higher than predefined Suppress Threshold, the node deactivates Layer 3 link while the Layer 2 protocol still monitors the interface. Once the Penalty becomes lower than Reuse Threshold, the node reactivates the Layer 3 link that had been previously deactivated. When Penalty becomes zero (0), the node clears the Error ratio and stops the Layer 2 protocol for monitoring the data traffic.