Written by: Token Terminal
Compiled by Saoirse, Foresight News
Ethereum serves as the core on-chain settlement network for digital assets, relying on ETH to pay transaction fees and stake to secure the network. Traditional finance faces pain points such as slow settlement, excessive intermediaries, and high counterparty risk, while tokenized assets and stablecoins provide on-chain solutions. As regulatory frameworks mature from 2025 to 2026, institutional adoption of on-chain services will become fully viable.
Various stablecoins, tokenized funds, commodities, and on-chain stocks are issued and settled on Ethereum, with layer-2 networks handling transaction volume before final settlement and settlement confirmation on layer one, allowing ETH to continuously accumulate value. By market capitalization, Ethereum remains the world’s largest platform for tokenized assets, operated jointly by the Ethereum Foundation and the developer community, with teams like Etherealize specifically facilitating connections with traditional financial institutions to drive institutional capital inflows. In Q1 2026, the Ethereum ecosystem exhibited a polarized trend; below is a detailed breakdown using complete data from Token Terminal.
In the first quarter of 2026, the market exhibited a stark duality: on-chain usage reached record highs—with monthly active users, total transaction volume, and throughput all hitting new peaks—while asset values and fee metrics denominated in USD contracted simultaneously, resulting in sequential declines across total market capitalization, total value locked, trading volume, and both categories of transaction fees. Key events this quarter profoundly shaped this unique market condition:
In January, the second round of the Fusaka upgrade cycle, solely the Blob Parameter Fork (BPO#2), was implemented, significantly enhancing data storage capacity.
In February, the ERC-8004 standard went live on mainnet, becoming the universal standard for AI agent identity and credit rating.
The Ethereum Foundation has identified three core goals for the 2026 protocol: scaling, enhancing user experience, and strengthening base-layer security.
The Institutional Ethereum Forum held in March saw a significant increase in participation from traditional financial institutions.
Q1 2026 Key Metrics Overview
Total locked assets in the ecosystem: $316.2 billion (环比 -11.0%, 同比 +22.8%)
Unsettled active loans in the ecosystem: $21.8 billion (环比 -16.6%, 同比 +39.0%)
Total trading volume of the decentralized exchange ecosystem: $134.5 billion (环比 -24.0%, 同比 -31.2%)
Total fee revenue from ecosystem applications: $2 billion (down 16.9%环比, down 7.8%同比)
Total market capitalization of on-chain tokenized assets: $203.4 billion (环比 -0.7%, 同比 +42.9%)
Stablecoins: $178.9 billion (环比 -2.3%, 同比 +37.6%)
Tokenized funds: $19.4 billion (up 4.9% month-over-month, up 73.1% year-over-year)
Tokenized commodities: $4.7 billion (up 60.0% MoM, up 325.9% YoY)
Tokenized stocks: $365.1 million (+16.5%环比)
Monthly active user addresses: 13.2 million (up 53.5% month-over-month, up 85.9% year-over-year)
Total number of transactions on Layer 1: 2.004 billion (up 38.0%环比, up 81.5%同比)
Average transactions per second: 25.78 (up 41.2% month-over-month and 81.7% year-over-year)
Total primary network transaction fee revenue: $39.9 million (down 47.9% month-over-month, down 81.9% year-over-year)
ETH fully diluted market cap: $290 billion (环比 -30.3%, 同比 -9.9%)
ETH staking ratio: 0.31 (up 0.03 both month-over-month and year-over-year)
Total number of ETH holding addresses: 292.8 million (up 8.1% month-over-month, up 24.9% year-over-year)
Note: This report’s scope includes only the Ethereum mainnet (Layer 1); Layer 2 networks are considered independent blockchains and their data is not included in Ethereum’s statistics.
Overall development of the ecosystem
Total locked value (TVL) refers to the total USD value of assets deposited into various on-chain applications, serving as a leading indicator for revenue-generating activities such as lending, trading, and staking. Here, we measure the on-chain locked funds within the Ethereum ecosystem that users can withdraw at any time. In the first quarter of 2026, the average TVL of the Ethereum ecosystem reached $316.2 billion, representing an 11.0% quarter-over-quarter decline and a 22.8% year-over-year increase. The quarterly decrease was driven by a broad correction in crypto asset prices, while the significant year-over-year growth demonstrates substantial expansion of the ecosystem compared to the same period last year.
Among the top five public blockchains, Ethereum leads by a wide margin in total value locked: $316.2 billion far exceeds the combined TVL of Tron ($84.5B), Solana ($28.8B), BNB Chain ($10.3B), and Polygon ($5.7B), accounting for 71% of the total TVL across all five chains. The majority of funds are concentrated in two key sectors: liquid staking led by Lido and lending centered around Aave; EigenLayer, ether.fi, and other restaking protocols, as well as Ethena and Sky, synthetic USD stablecoin platforms, also hold substantial amounts of capital. This high concentration of funds represents Ethereum’s most prominent structural advantage.
Active lending metrics represent the total value of deposits lent out by users to generate interest income, directly reflecting lending business revenue. Here, we aggregate the total outstanding loans across all Ethereum lending applications. The average active lending volume in Q1 was $21.8 billion, down 16.6% quarter-over-quarter but up 39.0% year-over-year. Loan balances contracted in line with total locked value, reflecting a broader market decline in risk appetite; however, the scale remains significantly higher than the same period last year.
Ethereum’s lending market is concentrated in a few major pools, with Aave dominating: at the end of the quarter, active lending volume reached approximately $13.5 billion, accounting for the vast majority of the ecosystem’s share. Next are Morpho (~$1.9 billion), Spark by Sky (~$1 billion), and Maple (~$840 million). The quarter-over-quarter contraction in lending volume was primarily driven by Aave, as declining crypto asset prices dampened borrowing demand, reducing its total lending volume by approximately 24%. Compared across the five major blockchains, Ethereum’s $21.8 billion in active lending significantly leads Solana ($2.5 billion), Plasma ($2.1 billion), BNB Chain ($760.8 million), and Avalanche ($392.4 million), capturing 79.2% of the total lending volume across these chains—the highest Ethereum share of any sector in this category.
The trading volume of decentralized exchanges refers to the total value of trades executed on-chain on spot DEXs, where traders pay fees; trading volume is highly correlated with platform revenue. This data aggregates DEX trading across the entire Ethereum ecosystem. The ecosystem's total trading volume for the first quarter was $134.5 billion, a 24% quarter-over-quarter decline and a 31.2% year-over-year decline. The drop in trading volume exceeded the decline in total value locked, confirming a significant reduction in market risk appetite during this quarter's asset downturn.
Ethereum DEX trading volume is highly concentrated among top platforms: Uniswap accounted for approximately $85.5 billion in Q1, representing two-thirds of the ecosystem’s total volume; followed by Curve (~$22.1 billion) and CoW Swap (~$12.4 billion). Trading volume is the only metric where Ethereum has not ranked first among the top five blockchains: BNB Chain’s total trading volume reached $162.5 billion, surpassing Ethereum’s $134.5 billion, with Solana close behind ($104.9 billion), followed by Avalanche ($14.5 billion) and Polygon ($10.7 billion). Ethereum’s share of the total trading volume across the five chains is 31.5%, trailing BNB Chain’s 38%.
Ecosystem fees refer to all fees generated by users across various applications, including borrower interest and trader transaction fees, providing a direct measure of the economic value created by the ecosystem, calculated as the total sum of fees across all Ethereum applications. Total ecosystem fees for the first quarter amounted to $2 billion, down 16.9% quarter-over-quarter and 7.8% year-over-year, reflecting a decline aligned with reduced trading and lending activity.
Ethereum’s ecosystem fees of 2 billion far surpass those of Tron (599.3 million), Solana (532.5 million), BNB Chain (231.9 million), and Polygon (38.8 million), accounting for 58.4% of the total fees across the top five blockchains. Even with a decline in this quarter’s data, Ethereum remains the leading source of application fees in the industry. Across all metrics in this category: Ethereum leads the industry in total value locked, lending volume, and ecosystem fees, with only DEX trading volume trailing behind BNB Chain.
Tokenized Assets Section
The total market capitalization of circulating assets refers to the total value of tokenized assets on-chain, calculated as the circulating supply multiplied by the closing price on the day; for stablecoins, the total circulating issuance is used; for tokenized funds, the on-chain assets under management are used; for tokenized stocks, the total value of issued shares on-chain is used. This section only includes assets issued on Ethereum.
In the first quarter, the average total market capitalization of Ethereum tokenized assets reached $203.4 billion, remaining virtually flat quarter-over-quarter (a mere 0.7% decline) and increasing significantly by 42.9% year-over-year. Stablecoins accounted for 87.9% of the total volume, with the remaining share divided among tokenized funds, commodities, and stocks.
Stablecoin
In Q1, the average size of Ethereum-based stablecoins was $178.9 billion, a slight 2.3% quarter-over-quarter decline but a 37.6% year-over-year increase, making it the only segment in the tokenization space to experience a quarterly contraction. The market is dominated by two major issuers: at quarter-end, Tether’s USDT ($94.1 billion) and Circle’s USDC ($54.5 billion) together accounted for the vast majority of Ethereum stablecoin market capitalization. Other leading products include Sky’s USDS ($12.4 billion), Ethena’s USDe ($5.9 billion), and PayPal’s PYUSD ($2.9 billion); newly launched compliant stablecoins such as Ripple’s RLUSD ($1.1 billion) have also entered the market. Compared across the five major blockchains, Ethereum’s $178.9 billion in stablecoin volume leads TRON ($84.5 billion), Solana ($14.5 billion), Arbitrum One ($6.8 billion), and Base ($4.7 billion), representing 61.8% of the total stablecoin supply across all five chains.
Tokenized funds
In Q1, the average size of Ethereum-based tokenized funds reached $19.4 billion, up 4.9% quarter-over-quarter and a remarkable 73.1% year-over-year. The sector is divided into two main categories:
Yield-bearing on-chain USD products (largest by size): Sky sUSDS (~$6.4 billion), Ethena sUSDe (~$3.5 billion);
Traditional finance compliance funds (core vehicles for institutional narratives): BlackRock’s BUIDL (issued via Securitize, ~$1 billion), WisdomTree’s Government Money Market Fund (~$815 million), Superstate’s USTB (~$620 million), and Ondo’s OUSG (~$320 million) follow closely. Among the top five blockchains, Ethereum leads significantly with $19.4 billion in tokenized funds, far surpassing ZKsync Era ($2.5 billion), BNB Chain ($2.3 billion), Solana ($1.3 billion), and Stellar ($1.1 billion), accounting for 73% of the total—making it the second most dominant tokenized asset category on Ethereum.
Tokenized Commodities
In Q1, the average trading volume of tokenized commodities on Ethereum reached $4.7 billion, representing a 60% sequential increase and a staggering 325.9% year-over-year growth, making it the fastest-growing category of tokenized assets. The sector is almost entirely dominated by on-chain gold: Tether Gold (XAUT) at approximately $2.6 billion and Paxos Gold (PAXG) at approximately $2.4 billion together account for nearly the entire market share. Compared across the five major related blockchains, Ethereum’s $4.7 billion volume far surpasses Ripple ($736.6 million), Arbitrum One ($95.9 million), BNB Chain ($38.4 million), and Solana ($29.8 million), accounting for 84% of the total—making it the most dominant细分赛道 on Ethereum.
Tokenized stocks
Tokenized stocks represent the smallest segment, with Ethereum’s average market size reaching $365.1 million in Q1, compared to nearly zero a year earlier, marking a 16.5% quarter-over-quarter increase. The sector is almost entirely dominated by Ondo Finance, which has issued on-chain assets tracking the S&P 500, Nasdaq 100 broad indices, and dozens of individual equities, accounting for the vast majority of Ethereum tokenized stock market capitalization. Across the five major blockchains, Ethereum leads slightly with $365.1 million, ahead of Solana ($249 million), BNB Chain ($150.5 million), Arbitrum One ($29 million), and Stellar ($4.2 million), yet still represents only 45.8% of the total tokenized stock market across all five chains—making it the only tokenized asset category where Ethereum does not hold an absolute majority share.
Comprehensive Tokenized Assets Segment: Stablecoin outstanding balances slightly declined in Q1, while Ethereum continued to strengthen its dominance in tokenized funds and commodities sectors.
On-chain activity
Monthly active users are defined as unique addresses that initiated revenue-generating on-chain transactions within a month; this metric only includes interactions on the Ethereum mainnet. The average monthly active users for the first quarter reached 13.2 million, a significant increase of 53.5% quarter-over-quarter and 85.9% year-over-year, setting a new all-time high and ending a period of several quarters of slow growth with substantially accelerated user growth.
Total transaction volume refers to the number of transactions written to and confirmed on the blockchain, reflecting user engagement on-chain; transactions per second (TPS) represents the average confirmation rate during the period, measuring the network’s real-time capacity. Both metrics only include Ethereum Layer 1 mainnet transactions. In Q1, total Layer 1 transactions reached 200.4 million, up 38% quarter-over-quarter and 81.5% year-over-year; average TPS increased to 25.78, up 41.2% quarter-over-quarter. Both figures set new all-time highs, demonstrating that user growth has genuinely translated into increased on-chain activity.
Here, transaction fees refer specifically to the base network costs paid by users when initiating transactions on Ethereum Layer 1, distinct from the ecosystem-wide application fees covered in the second section. Total Layer 1 transaction fees for Q1 amounted to $39.9 million, a sharp 47.9% quarter-over-quarter decline and an 81.9% year-over-year drop. The most significant data contrast this quarter was rising activity alongside a steep drop in fees: total transaction volume increased by 38%, while total fees shrank by nearly half, primarily due to Blob扩容 significantly increasing block storage capacity, resulting in ample block space and substantially lower per-transaction costs.
The key takeaway from this section is that the benefits of scaling have materialized: both user numbers and transaction volumes have reached new highs, while overall network usage costs have declined. When the rate of network throughput expansion outpaces the growth of market transaction demand, it results in the characteristic pattern of rising activity alongside lower fees.
Native token ETH fundamentals
The fully diluted market cap calculation logic: ETH token price × total supply under the current tokenomics model (including circulating, locked, unvested, and future tokens). The average fully diluted market cap of ETH in Q1 was $290 billion, a quarter-over-quarter decline of 30.3% and a year-over-year decrease of 9.9%, representing the largest QoQ drop among all valuation metrics in this report and the primary driver behind the decline in the ecosystem’s total dollar-denominated asset value.
Staking ratio: The ratio of the total value of ETH staked to secure the proof-of-stake network to the overall market capitalization of ETH; a value of 0.31 indicates that approximately 31% of ETH’s market capitalization is staked. The average staking ratio for the first quarter was 0.31, higher than 0.28 in the previous quarter and the same period last year. Even as ETH’s overall market capitalization declined significantly, the proportion of tokens staked for network security continued to rise, indicating that users’ long-term willingness to stake remained stable during the price downturn.
Token Holder Metric: Total number of unique wallet addresses holding ETH. The average number of ETH-holding addresses in Q1 was 292.8 million, up 8.1% quarter-over-quarter and 24.9% year-over-year, marking five consecutive quarters of steady growth. Despite a continued decline in fully diluted market cap, the expansion of holding addresses indicates further dispersion of ETH holders, with ordinary users maintaining their willingness to invest despite short-term market cooling.
Etherealize team interpretation of comments
The most critical paradox this quarter: On-chain usage of Ethereum’s mainnet reached an all-time high, while network transaction fees simultaneously declined. Ethereum is proactively driving network scaling, willingly sacrificing short-term fee revenue—with the long-term logic that cheaper block space will unlock massive latent market demand, ultimately driving sustained growth in overall network revenue.
Data from Token Terminal’s “Ethereum Q1 2026 Report” demonstrates that this long-term logic is materializing: monthly active users increased by 85.9% year-over-year, total transaction volume rose by 81.5%, and network throughput improved by 81.7%. This is a classic manifestation of the Jevons Paradox. The team anticipates that the long-term increase in overall network transaction demand will fully offset the short-term revenue loss from declining per-transaction fees. Analogous to the semiconductor industry: when Gordon Moore introduced Moore’s Law in 1975, the industry’s revenue was limited; today, it has grown by several orders of magnitude. The scalability dividend has yet to be fully realized: the upcoming Glamsterdam upgrade in Q3 will increase the Gas limit by more than threefold; Ethereum’s long-term roadmap aims to achieve tens of thousands of TPS by 2029, building a high-speed Layer 1 blockchain with sub-second finality.
The team agrees with BlackRock CEO Larry Fink’s view from last December: the current stage of the tokenization industry is equivalent to the internet in 1996—when Amazon’s online book sales amounted to just $16 million. At the time, the market generally viewed Amazon as an online bookstore surviving solely on the internet bubble and operating at a continuous loss; however, Bezos anticipated that the internet would fundamentally transform retail, sacrificing short-term profitability to aggressively build network effects and scale advantages. Ethereum is now making the same trade-off to solidify its position as the global financial base settlement layer.
The development of the internet offers another crucial insight: open, permissionless networks will ultimately triumph over closed, proprietary networks. In 1995, Bill Gates predicted in "The Road Ahead" that digital commerce would rely on corporate-owned proprietary networks—the "information superhighway"—rather than the open internet. At the time, Microsoft’s MSN, AOL, CompuServe, and Prodigy all operated closed walled gardens, each with millions of paying users; France’s Minitel terminal system still had more users than the global internet as late as the end of 1996. Yet all these closed systems eventually failed. No major corporation was willing to build its business on a network controlled by a competitor; more importantly, no company could permanently match the innovation speed of an open, permissionless ecosystem. History has repeatedly confirmed this pattern: Linux surpassed proprietary Unix systems, open web platforms replaced corporate intranets, and Wikipedia displaced the Encyclopædia Britannica. In every such transformation, proprietary products initially gained an advantage through more refined features, ample marketing, and business resources—but once the open ecosystem accumulated sufficient development tools, developers, and neutral, trustworthy attributes, that early advantage rapidly dissipated.
This industry dynamic is now being replayed in the realm of financial infrastructure, and all data in this report confirms that Ethereum has crossed its ecosystem tipping point: it holds absolute market share across all core sectors. Institutions are choosing Ethereum for tokenized finance not out of ideological preference, but because liquidity, composability, and mature institutional deployment cases are all concentrated here. Report data shows Ethereum commands 79.2% of DeFi active lending, 61.8% of stablecoins, 73% of tokenized funds, and 84% of tokenized commodities across the top five public blockchains. Each new category of tokenized asset further strengthens ecosystem liquidity, continuously attracting more institutions. A neutral, unbiased底层 is the only stable and balanced solution for the industry—large financial institutions will not uniformly adopt competing private chains for asset settlement. Moreover, institutions are increasingly recognizing that privacy-preserving interactions, access controls, KYC compliance, and asset transfer restrictions can all be implemented atop Ethereum through privacy-preserving computation and permissioned token standards, while fully integrating with the network’s public liquidity. In contrast, closed private chains cannot connect to the vast liquidity and diverse applications of the open ecosystem.
After the end of the quarter, institutional adoption accelerated further, with several major developments occurring in May alone: In asset management, BlackRock filed applications for two new tokenized funds; JPMorgan launched its second Ethereum-based money market fund, JLTXX; and Fidelity International introduced FILQ, a Moody’s AAA-rated U.S. dollar liquidity fund, listed as an ERC-20 token. In the stablecoin space, the Japanese Blockchain Foundation’s yen-backed stablecoin, EJPY, is set to deploy on Ethereum; and a consortium of 12 major European banks—including BNP Paribas, ING, UniCredit, and BBVA—is preparing to launch a compliant euro-backed stablecoin.
In 1990, the internet seemed distant and unreachable; by 2005, it had become a societal necessity. If Funk’s assessment of the tokenization industry’s development stage is accurate, the coming years may prove to be the most opportune period in Ethereum’s history. The team’s earlier report, “Efficient Money,” put forth a core thesis: network fees establish a fundamental value floor for ETH; the long-term bullish case rests on ETH’s increasingly refined monetary properties, which could attract over $30 trillion in monetary storage value premiums currently held by gold and Bitcoin combined. Ethereum can establish itself as the industry leader without relying on high transaction fees.