Author: Token Terminal

Compiled by: Saoirse, Foresight News

Ethereum is the core underlying settlement network for on-chain assets, relying on ETH for transaction fees and staking to secure the network. Traditional finance suffers from pain points such as slow settlement, numerous intermediaries, and high counterparty risk, while tokenized assets and stablecoins offer on-chain solutions. With relevant regulations gradually maturing from 2025 to 2026, the conditions for institutions to deploy on-chain businesses are officially in place.

Various stablecoins, tokenized funds, commodities, and on-chain equities are issued and settled on Ethereum. Layer 2 networks divert transactions before ultimately returning to Layer 1 for finality, allowing ETH to continuously accumulate value through this process. By market capitalization, Ethereum remains the world's largest platform for tokenized assets. It is jointly operated by the Ethereum Foundation and the developer community, with teams like Etherealize specifically interfacing with traditional financial institutions to drive institutional capital inflow. In Q1 2026, the Ethereum ecosystem showed a polarized trend. The following analysis, combined with complete data from Token Terminal, provides a detailed breakdown.

The market in Q1 2026 presented a stark two-sided picture: on-chain usage scale hit an all-time high — monthly active users, total transaction volume, and throughput all set new records; however, asset scale and fee metrics denominated in USD contracted simultaneously, with fully diluted market cap, total value locked, trading volume, and both types of fee data all declining quarter-over-quarter. Key events this quarter profoundly shaped this unique market behavior:

In January, the second Blob-only parameter fork (BPO#2) of the Fusaka upgrade cycle was implemented, significantly enhancing data storage carrying capacity;

In February, the ERC-8004 standard went live on mainnet, becoming a universal specification for AI agent identity and credit ratings;

The Ethereum Foundation confirmed three core goals for the 2026 protocol: scaling, optimizing user experience, and strengthening Layer 1 base security;

In March, the Institutional Ethereum Forum was held, with a notable increase in participation enthusiasm from traditional financial institutions.

Q1 2026 Core Metrics Overview

Ecosystem Total Value Locked: $316.2 billion (QoQ -11.0%, YoY +22.8%)

Ecosystem Outstanding Active Loans: $21.8 billion (QoQ -16.6%, YoY +39.0%)

Ecosystem Total DEX Trading Volume: $134.5 billion (QoQ -24.0%, YoY -31.2%)

Total Ecosystem Application Fee Revenue: $2.0 billion (QoQ -16.9%, YoY -7.8%)

Total Market Cap of On-Chain Tokenized Assets: $203.4 billion (QoQ -0.7%, YoY +42.9%)

Stablecoins: $178.9 billion (QoQ -2.3%, YoY +37.6%)

Tokenized Funds: $19.4 billion (QoQ +4.9%, YoY +73.1%)

Tokenized Commodities: $4.7 billion (QoQ +60.0%, YoY +325.9%)

Tokenized Equities: $365.1 million (QoQ +16.5%)

Monthly Active User Addresses: 13.2 million (QoQ +53.5%, YoY +85.9%)

Total Layer 1 Transactions: 200.4 million (QoQ +38.0%, YoY +81.5%)

Average Transactions Per Second: 25.78 (QoQ +41.2%, YoY +81.7%)

Layer 1 Mainnet Transaction Fee Revenue: $39.9 million (QoQ -47.9%, YoY -81.9%)

ETH Fully Diluted Market Cap: $290.0 billion (QoQ -30.3%, YoY -9.9%)

ETH Staking Ratio: 0.31 (increased by 0.03 both QoQ and YoY)

Total ETH Holding Addresses: 292.8 million (QoQ +8.1%, YoY +24.9%)

Note: The statistical scope of this report only includes the Ethereum Layer 1 mainnet. Layer 2 networks are considered independent public chains, and their related data is not included in Ethereum's statistical scope.

Overall Ecosystem Development

Total Value Locked (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. This statistic measures the on-chain idle funds within the entire Ethereum ecosystem that users can withdraw at any time. In Q1 2026, the average TVL of the Ethereum ecosystem reached $316.2 billion, a QoQ decrease of 11.0% and a YoY increase of 22.8%. The QoQ contraction was due to an overall price correction in crypto assets, while the significant YoY growth proves substantial expansion of the ecosystem scale compared to the same period last year.

Among the top five public chains, Ethereum's TVL leads by a wide margin: $316.2 billion far exceeds the combined total of Tron ($84.5 billion), Solana ($28.8 billion), BNB Chain ($10.3 billion), and Plasma ($5.7 billion), accounting for 71% of the total TVL of these five chains. Capital is mainly concentrated in two major sectors: the liquid staking sector led by Lido, and the lending sector centered around Aave. Restaking protocols like EigenLayer and ether.fi, as well as synthetic dollar stablecoin platforms like Ethena and Sky, also hold significant amounts of capital. High capital concentration is Ethereum's most prominent structural advantage.

The active loans metric represents the scale of deposits borrowed by users and generating interest income, directly reflecting lending business revenue. This statistic measures the total outstanding loans across all Ethereum lending applications. In Q1, the ecosystem's average active loan scale was $21.8 billion, a QoQ change of -16.6% and a YoY change of +39.0%. The loan balance contracted in tandem with TVL, reflecting an overall cooling of market risk appetite, but the scale remains significantly higher than the same period last year.

Ethereum's lending market is concentrated in a few liquidity pools, with Aave dominating: its active loan scale at quarter-end was approximately $13.5 billion, occupying the vast majority of the ecosystem's share; followed by Morpho (approx. $1.9 billion), Sky's Spark (approx. $1.0 billion), and Maple (approx. $840 million). The contraction in lending scale this quarter was mainly driven by Aave, as declining crypto asset prices led to cooling borrowing demand, shrinking its total loan volume by about 24%. Comparing the top five public chains horizontally, Ethereum's $21.8 billion in active loans significantly leads Solana ($2.5 billion), Plasma ($2.1 billion), BNB Chain ($760.8 million), and Avalanche ($392.4 million), accounting for 79.2% of the total loans across these five chains, making this the sector where Ethereum holds the highest market share.

Decentralized exchange (DEX) trading volume refers to the total transaction amount completed on on-chain spot exchanges. Traders pay fees when trading, and trading volume is highly correlated with platform revenue. This data aggregates DEX trading across the entire Ethereum ecosystem. In Q1, the ecosystem's total trading volume was $134.5 billion, a QoQ decline of 24% and a YoY decline of 31.2%. The drop in trading volume exceeded the shrinkage in TVL, confirming a significant reduction in market risk appetite during this quarter's asset downturn cycle.

Ethereum's DEX trading flow is highly concentrated on top platforms: Uniswap's Q1 trading volume was approximately $85.5 billion, accounting for two-thirds of the ecosystem total; followed by Curve (approx. $22.1 billion) and CoW Swap (approx. $12.4 billion). Trading volume is the only metric where Ethereum does not top the five major public chains: BNB Chain's total trading volume of $162.5 billion is higher than Ethereum's $134.5 billion, with Solana close behind ($104.9 billion), and Avalanche ($14.5 billion) and Polygon ($10.7 billion) ranking lower. Ethereum's trading volume accounts for 31.5% of the total across the five major chains, second to BNB Chain's 38%.

Ecosystem fees refer to all fees generated by users using various applications, including borrower interest and trader transaction fees, intuitively reflecting the economic value created by the ecosystem. This statistic sums up all application fees on Ethereum. In Q1, total ecosystem fees amounted to $2.0 billion, a QoQ change of -16.9% and a YoY change of -7.8%, falling in tandem with the decline in trading and lending activity.

Ethereum's $2.0 billion in ecosystem fees far leads 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 five major public chains. Even with the decline in data this quarter, Ethereum remains the largest source of application fees in the industry. Summarizing all metrics in this section: Ethereum comprehensively leads the industry in TVL, loan scale, and ecosystem fees, only trailing BNB Chain in DEX trading volume.

Tokenized Assets Sector

The total market cap of circulating assets refers to the total value of on-chain tokenized assets, calculated as circulating supply multiplied by the daily closing price. For stablecoins, it refers to the total circulating issuance; for tokenized funds, it refers to on-chain assets under management; for tokenized equities, it refers to the total value of on-chain issued shares. This section only counts assets issued on Ethereum.

In Q1, the average total market cap of Ethereum tokenized assets was $203.4 billion, essentially flat QoQ (down only 0.7%), with a significant YoY increase of 42.9%. Stablecoins accounted for 87.9% of the overall scale, with the remaining share divided among tokenized funds, commodities, and equities.

Stablecoins

In Q1, the average scale of Ethereum stablecoins was $178.9 billion, a slight QoQ decrease of 2.3% and a YoY increase of 37.6%, making it the only sub-category within tokenized assets to shrink QoQ. The market is monopolized by two major issuers: at quarter-end, Tether USDT ($94.1 billion) and Circle USDC ($54.5 billion) together accounted for the vast majority of Ethereum's stablecoin market cap. Other leading products include Sky USDS ($12.4 billion), Ethena USDe ($5.9 billion), and PayPal PYUSD ($2.9 billion). New compliant coins like Ripple's compliant stablecoin RLUSD ($1.1 billion) have also gone live. Comparing the top five public chains horizontally, Ethereum's $178.9 billion stablecoin scale leads Tron ($84.5 billion), Solana ($14.5 billion), Arbitrum One ($6.8 billion), and Base ($4.7 billion), accounting for 61.8% of the total stablecoin volume across these five chains.

Tokenized Funds

In Q1, the average size of tokenized funds on Ethereum was $19.4 billion, up 4.9% quarter-over-quarter and surging 73.1% year-over-year. The sector is divided into two main types:

Yield-bearing on-chain dollar products (largest in scale): Sky sUSDS (approx. $6.4 billion), Ethena sUSDe (approx. $3.5 billion);

Traditional finance compliant funds (core vehicle for institutional narratives): BlackRock BUIDL (issued via Securitize, approx. $1 billion), WisdomTree Government Money Market Fund (approx. $815 million), Superstate USTB (approx. $620 million), followed closely by Ondo OUSG (approx. $320 million). Comparing the five major public chains, Ethereum's $19.4 billion in tokenized funds significantly leads 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. This is the tokenized asset sector where Ethereum's advantage is the second most pronounced.

Tokenized Commodities

In Q1, the average size of tokenized commodities on Ethereum was $4.7 billion, up 60% quarter-over-quarter and skyrocketing 325.9% year-over-year, making it the fastest-growing tokenization category. The sector is almost entirely composed of on-chain gold: Tether Gold XAUT (approx. $2.6 billion) and Paxos Gold PAXG (approx. $2.4 billion) together account for virtually the entire sector's share. In a horizontal comparison of the five relevant public chains, Ethereum's $4.7 billion scale far exceeds 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. This is the sub-sector where Ethereum's dominance is strongest.

Tokenized Equities

Tokenized equities are the smallest sub-category. In Q1, the average size on Ethereum was $365.1 million, with the scale being nearly zero in the same period last year, representing a 16.5% quarter-over-quarter increase. The sector is almost exclusively dominated by Ondo Finance, whose issuance of on-chain assets for the S&P 500, Nasdaq 100 broad market indices, and dozens of individual stocks constitutes the vast majority of Ethereum's tokenized equity market cap. In a horizontal comparison of the five major public chains, Ethereum's $365.1 million slightly leads Solana ($249 million), BNB Chain ($150.5 million), Arbitrum One ($29 million), and Stellar ($4.2 million), accounting for only 45.8% of the total tokenized equities across the five chains. This is the only tokenized asset sector where Ethereum does not hold an absolute majority share.

Overall Tokenized Asset Sector: While stablecoin balances saw a slight decline in Q1, Ethereum's monopolistic position in the tokenized funds and commodities sectors continued to consolidate.

On-Chain Activity

Monthly active users are defined as unique addresses generating revenue-producing on-chain transactions per month; this metric only counts interaction addresses on the Ethereum Layer 1 mainnet. The average monthly active users in Q1 were 13.2 million, a massive 53.5% quarter-over-quarter surge and an 85.9% year-over-year increase, setting a new all-time high and ending the slow growth trend of previous quarters, with user growth accelerating significantly.

Total transaction volume refers to the number of transactions written to the blockchain and confirmed, reflecting the intensity of user on-chain interaction; Transactions Per Second (TPS) is the average confirmation rate over the period, measuring the network's real-time carrying capacity. Both metrics only count the Ethereum Layer 1 mainnet. In Q1, total Layer 1 transactions were 200.4 million, up 38% QoQ and 81.5% YoY; average TPS rose to 25.78, a 41.2% QoQ increase. Both figures hit new all-time highs, proving that user base growth has tangibly translated into increased real on-chain business volume.

Transaction fees here specifically refer to the base network costs paid by users to initiate transactions on Ethereum Layer 1, distinct from the ecosystem-wide application fees counted in Part Two. In Q1, total Layer 1 transaction fees were $39.9 million, plummeting 47.9% QoQ and 81.9% YoY. The combination of rising activity and sharply falling fees is the most critical data paradox of this quarter: total transaction volume increased by 38%, yet total fees shrank by nearly half. The core reason is that Blob scaling significantly increased block storage capacity, leading to ample block space supply and a notable decrease in per-transaction costs.

The core conclusion of this section is that the dividends of scaling have materialized: users and transaction counts hit simultaneous new highs, while overall network usage costs declined. When the rate of network throughput expansion exceeds the growth rate of market transaction demand, the characteristic of "rising activity, falling fees" emerges.

Native Token ETH Fundamentals

Fully Diluted Market Cap calculation logic: ETH token price × the total supply under the current token economic model (including circulating, locked, unlocked, and yet-to-be-issued tokens). In Q1, the average fully diluted market cap of ETH was $290 billion, a sharp 30.3% QoQ drop and a 9.9% YoY decline. This is the valuation metric with the largest QoQ decline in the entire report and the core factor driving the contraction in the ecosystem's overall USD-denominated asset scale.

Staking Ratio: The ratio of the total value of staked ETH securing the Proof-of-Stake network to the overall market cap of ETH; 0.31 means approximately 31% of ETH's market cap is participating in staking. The average staking ratio in Q1 was 0.31, up from 0.28 in the previous quarter and the same period last year. Even with a significant correction in ETH's overall market cap, the proportion of tokens staked for network security continued to rise, indicating that users' willingness to stake long-term remains stable during price down cycles.

Token Holder Metric: The total number of unique wallet addresses holding ETH. In Q1, the average number of ETH holding addresses was 292.8 million, up 8.1% QoQ and 24.9% YoY, marking five consecutive quarters of steady growth. Against the backdrop of a continuously declining fully diluted market cap, the persistent expansion of holding addresses indicates that the ETH holder base is further dispersing, and ordinary users' willingness to allocate has not cooled with short-term market sentiment.

Etherealize Team Commentary

The most central paradox of this quarter: On-chain usage scale on the Ethereum Layer 1 mainnet hit an all-time high, while network transaction fees concurrently declined. Ethereum is proactively advancing network scaling, deliberately sacrificing short-term fee revenue. The long-term logic is: cheaper block space will unlock massive latent market demand, ultimately driving long-term growth in total network revenue.

Data from Token Terminal's "Q1 2026 Ethereum Report" proves this long-term logic is being realized: on a year-over-year basis, monthly active users grew by 85.9%, total transaction volume rose by 81.5%, and network throughput increased by 81.7%. This is a classic manifestation of the Jevons paradox. The team predicts that the long-term incremental demand for total network transactions will fully offset the short-term revenue loss from declining per-transaction fees. An analogy to the semiconductor industry: when Gordon Moore proposed Moore's Law in 1975, the industry's revenue scale was limited; today, the industry's revenue scale has grown by several orders of magnitude. The dividends of scaling are not yet fully unleashed: the Q3 Glamsterdam upgrade plans to increase the Gas limit by more than threefold; Ethereum's long-term roadmap envisions achieving ten-thousand-level TPS by 2029, creating a high-speed Layer 1 public chain with sub-second transaction finality.

The team agrees with the view expressed by BlackRock CEO Larry Fink last December: the current stage of the tokenization industry is equivalent to the internet in 1996 — when Amazon's online book sales were only $16 million. Back then, the market widely believed Amazon was just an online bookstore surviving on the dot-com bubble and sustaining continuous losses; but Bezos foresaw that the internet would completely reshape the retail industry, forgoing short-term profits to fully build network effects and scale advantages. Ethereum is making the same trade-off today to solidify its position as the global financial underlying settlement layer.

The development of the internet offers another crucial lesson: open, permissionless networks will ultimately defeat closed, private networks. In 1995, Bill Gates predicted in "The Road Ahead" that digital commerce would rely on enterprise-specific private networks, the "information superhighway," rather than the open internet. At that time, Microsoft built MSN, while AOL, CompuServe, and Prodigy all operated closed walled gardens, boasting millions of paying users; France's Minitel terminal system had a user base surpassing the global internet until the end of 1996. Yet all these closed systems ultimately failed. No major established enterprise is willing to build its business on a network controlled by a competitor; more critically, no single enterprise can permanently keep pace with the innovation speed of a permissionless open ecosystem. History repeatedly validates this rule: Linux surpassed proprietary Unix systems, the open web replaced corporate intranets, and Wikipedia replaced the Encyclopedia Britannica. At the beginning of each transformation, private products gain a first-mover advantage through more precise features, ample marketing, and business resources; but once the open ecosystem accumulates sufficient development tools, developers, and attributes of neutrality and trustworthiness, the first-mover advantage rapidly dissolves.

Now this industry pattern is replaying in the financial infrastructure space. All data in this report corroborates that Ethereum has crossed the ecosystem critical point: it holds absolute market share across all core tracks. Institutions choosing Ethereum for tokenized finance is not driven by ideological preference, but because ecosystem liquidity, composability, and mature institutional implementation cases are all concentrated here. Report data shows: Ethereum accounts for 79.2% of active DeFi lending, 61.8% of stablecoins, 73% of tokenized funds, and 84% of tokenized commodity market share among the five major public chains. Each new category of tokenized assets further thickens ecosystem liquidity, continuously attracting more institutions to enter; the neutral, unbiased base layer is the industry's only stable equilibrium solution — large financial institutions will never uniformly choose a competitor's proprietary chain to complete asset settlement. Beyond that, institutions are gradually realizing that private interactions, access restrictions, KYC compliance, and asset transfer controls can all be implemented on the Ethereum upper layer through private computing environments and permissioned token standards, while fully connecting to the entire network's public liquidity; conversely, closed proprietary chains cannot graft onto the massive liquidity and diverse applications of an open ecosystem.

After the quarter ended, the pace of institutional deployment further accelerated, with multiple major implementations appearing in May alone: In asset management: BlackRock filed applications for two new tokenized funds; JPMorgan issued its second on-chain money market fund on Ethereum, JLTXX; Fidelity International launched the Moody's AAA-rated USD liquidity fund FILQ, listed in ERC-20 token form. In the stablecoin track: the Blockchain Japan Foundation's yen stablecoin EJPY is about to deploy on Ethereum; a consortium of 12 major European banks (including BNP Paribas, ING, UniCredit, BBVA, etc.) is preparing a compliant euro stablecoin.

In 1990, the internet seemed out of reach; by 2005, it had become a social necessity. If Fink's assessment of the tokenization industry's development stage is accurate, the coming years may represent the most opportunity-rich phase in Ethereum's development history. The team's previous "Efficient Money" report put forward a core thesis: network fees establish an intrinsic value floor for ETH; the long-term optimistic logic is that, relying on more refined monetary properties, ETH is poised to absorb the monetary store-of-value premium of gold and Bitcoin combined, exceeding $30 trillion. Ethereum does not need to rely on high fees to establish its industry-leading position.

律师：加密协议基金会收到“自愿提供信息”请求是非常常见的现象

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