Editor's Note: This Token Terminal Ethereum Q1 2026 Report presents a set of seemingly contradictory yet crucial data points: Ethereum mainnet's user count, transaction count, and throughput have hit all-time highs, but transaction fees, TVL, transaction volume, and ETH fully diluted market cap have seen a month-over-month decline.
Ethereum is actively moving into a "low fee for scale" phase. With the Fusaka upgrade increasing data capacity, block space has become cheaper, and user and transaction growth are starting to accelerate, but short-term fee capture is depressed. The report explains this phenomenon as the Jeavons Paradox: as the cost of usage decreases, network demand may be further unleashed.
Much more noteworthy is that Ethereum's core narrative is shifting from a DeFi public chain to a global financial settlement layer. The report indicates that Ethereum still dominates the tokenization of assets sector: stablecoins, tokenized funds, tokenized commodities, and tokenized stocks have all scaled on it, with funds and gold-like assets seeing particularly significant growth. The continued entry of institutions such as BlackRock, JPMorgan, Fidelity, etc., has also moved "institutional on-chain" from concept to product issuance and settlement practice.
The core value of this report lies not in proving how ETH price will change in the short term but in showcasing Ethereum's structural position as financial infrastructure: sacrificing short-term fees for scaling on one hand and attempting to consolidate its network effects in stablecoins, tokenized funds, on-chain credit, and institutional settlement on the other. For investors and industry observers, the real question to focus on is: as more and more financial assets are moved onto the chain, who will become the default settlement layer, and how will this settlement demand ultimately translate into ETH's value capture.
Below is the original text:
1) Executive Summary
Ethereum ($ETH) is a public, permissionless blockchain that provides global settlement and computation capabilities for financial applications in an open economy. It operates a shared ledger that anyone can build on and that no single party can shut down, using its native asset ETH to pay transaction fees; additionally, through a staking mechanism, ETH is also used to secure the network.
The activity on Ethereum has long been constrained by the cost and throughput of traditional financial infrastructure: settlements taking days to complete, layers of intermediaries adding up, and transaction counterparty risks at every hop. Tokenization and stablecoins have emerged as on-chain solutions to these frictions. As the regulatory frameworks for both gradually matured in 2025 and continued into 2026, the conditions for institutional-grade on-chain activities moved from theory to practice.
Ethereum's role in this transition is as the base settlement layer. Stablecoins, tokenized funds, tokenized commodities, and an increasing number of tokenized stocks are all issued and settled on Ethereum; meanwhile, layer-two networks handle throughput scaling and settle transactions back on layer one. As the asset securing and powering this settlement activity, ETH accrues value from it, with the staking market reflecting how much ETH supply is engaged in this role.
From a market positioning perspective, Ethereum remains the primary venue for tokenized asset market cap. In a cross-chain context, Ethereum holds a majority share in categories such as stablecoins, tokenized funds, commodities, and stocks. Ethereum is propelled by the Ethereum Foundation in conjunction with a broad, independent client team and research community; meanwhile, institutional-oriented organizations like Etherealize are helping traditional finance better understand the network.
The first quarter of 2026 can be clearly divided into two main threads. On one hand, there was a surge in usage metrics: record highs in monthly active users, transaction counts, and throughput. On the other hand, value and cost metrics denominated in USD experienced compression: fully diluted market cap, total value locked, trading volume, and two fee types all saw a decrease compared to the previous period. Key events shaping this quarter impacted both threads: the second Blob Parameters Only (BPO #2) fork during the Fusaka upgrade cycle in January increased data capacity; ERC-8004 went live on the mainnet in February, becoming the AI Agent Identity and Reputation Standard; the Ethereum Foundation outlined its 2026 Protocol Cluster priorities of scaling, enhancing user experience, and fortifying the base layer network; additionally, events like the Institutional Ethereum Forum in March showcased the increasing institutional involvement.
Key Metrics (Q1 2026)
Total Value Locked in the Ecosystem: $316.2 billion (MoM -11.0%, YoY +22.8%)
Total Active Loans in the Ecosystem: $21.8 billion (MoM -16.6%, YoY +39.0%)
Total Trading Volume in the Ecosystem: $134.5 billion (MoM -24.0%, YoY -31.2%)
Total Fees in the Ecosystem: $2.0 billion (MoM -16.9%, YoY -7.8%)
Tokenized Asset Market Cap: $203.4 billion (Weekly change: -0.7%, Yearly change: +42.9%)
Stablecoins: $178.9 billion (Weekly change: -2.3%, Yearly change: +37.6%)
Tokenized Funds: $19.4 billion (Weekly change: +4.9%, Yearly change: +73.1%)
Tokenized Commodities: $4.7 billion (Weekly change: +60.0%, Yearly change: +325.9%)
Tokenized Stocks: $3.651 billion (Weekly change: +16.5%)
Monthly Active Users: 13.2 million (Weekly change: +53.5%, Yearly change: +85.9%)
Number of Transactions: 200.4 million transactions (Weekly change: +38.0%, Yearly change: +81.5%)
Transactions Per Second: 25.78 (Weekly change: +41.2%, Yearly change: +81.7%)
Transaction Fees: $39.9 million (Weekly change: -47.9%, Yearly change: -81.9%)
Fully Diluted Market Cap: $290.0 billion (Weekly change: -30.3%, Yearly change: -9.9%)
Collateralization Ratio: 0.31x (Weekly change: +0.03x, Yearly change: +0.03x)
Number of Token Holders: 292.8 million (Weekly change: +8.1%, Yearly change: +24.9%)
This report covers Layer 1 of the Ethereum network, i.e., the mainnet. Layer 2 networks are considered separate chains and are not included in Ethereum's own data.
2) Ecosystem
The Total Value Locked (TVL) measures the on-chain deposit value across various applications within a project, serving as a leading indicator of revenue-generating activities such as lending, trading, and staking. This tracks the capital inflows into the Ethereum ecosystem, with depositors typically able to withdraw these funds at any time.
By this measure, in Q1 2026, the average TVL in the ecosystem was $316.2 billion, down by 11.0% weekly but showing a 22.8% yearly increase. The quarterly decline aligns with the overall decrease in asset prices, while the annual growth indicates a significant expansion of the Ethereum ecosystem compared to a year ago.
Among the top five chains, Ethereum leads significantly with $316.2 billion, surpassing the total of Tron ($84.5 billion), Solana ($28.8 billion), BNB Chain ($10.3 billion), and Plasma ($5.7 billion), comprising 71.0% of the top five chain total. The largest pools of capital are concentrated in the areas of liquidity staking, represented by the Lido project; and lending, represented by the Aave project. Staking projects EigenLayer and ether.fi, as well as synthetic dollar issuer Ethena and Sky, also feature among the largest applications. Capital concentration remains Ethereum's most distinct structural advantage.
The Active Loan Value measures the portion of deposits that have been lent to borrowers, accruing interest in the process. This metric is usually related to lending revenue and, on Ethereum, it reflects the outstanding borrowing across the entire DeFi lending ecosystem.
In the first quarter of 2026, the ecosystem's average Active Loan Value was $218 billion, down 16.6% quarter-over-quarter but up 39.0% year-over-year. The lending balances contracted in line with the decline in total value locked, indicating a decrease in risk appetite, yet remaining significantly higher than a year ago.
Lending activity on Ethereum is concentrated in a few key money markets, with Aave taking the lead. At the end of the quarter, Aave's Active Loan Value was around $135 billion, representing the majority of the ecosystem's total; followed by Morpho (around $19 billion), Spark by Sky ($10 billion), and Maple ($8.4 billion). The contraction this quarter was primarily driven by Aave, as its loan book shrank by about 24% during the quarter due to price declines and decreased borrowing demand. Among the top five chains, Ethereum's $218 billion is well above Solana ($25 billion), Plasma ($21 billion), BNB Chain ($7.608 billion), and Avalanche ($3.924 billion), accounting for 79.2% of the top five chains' total. This is the highest share of all metrics for Ethereum in this section.
The Trading Volume measures the total value of trades executed on decentralized spot exchanges. As traders incur fees, this metric is usually associated with the fees generated by these trading venues. Here, we are looking at the DEX trading volume within the Ethereum ecosystem.
In the first quarter of 2026, the ecosystem's total trading volume reached $1.345 trillion, down 24.0% quarter-over-quarter and 31.2% year-over-year. The drop in trading volume was more pronounced than the decline in locked capital, indicating a reduction in risk appetite during the quarter's pullback.
DEX activity on Ethereum is concentrated in a few deep liquidity trading venues. In the first quarter, Uniswap processed around $855 billion in trading volume, accounting for two-thirds of the ecosystem's trading volume; followed by Curve ($221 billion) and CoW Swap ($124 billion). Trading volume is the only metric in this section where Ethereum did not lead across chains: BNB Chain had a trading volume of $1.625 trillion, surpassing Ethereum's $1.345 trillion; Solana closely followed with $1.049 trillion; followed by Avalanche ($145 billion) and Polygon ($107 billion). Ethereum holds a 31.5% share of the trading volume across the top five chains, ranking second, below BNB Chain's 38.0%.
Fee Volume measures the total value users pay to use a particular project or application, such as the interest paid by borrowers and the transaction fees paid by traders, to reflect how much economic value has been generated. This metric aggregates the fees generated by applications in the Ethereum ecosystem.
In the first quarter of 2026, the ecosystem's fee volume totaled $2 billion, a 16.9% decrease from the previous quarter and a 7.8% decrease year-on-year, consistent with the weakening in trading and lending activities.
Ethereum generated $2 billion in fees, significantly higher than 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 of the top five chains. Despite the decline, Ethereum remains the largest single source of application fees. Overall, Ethereum leads in locked capital, credit, and fees, lagging only in transaction volume.
3) Tokenized Assets
Circulating Asset Market Cap measures the total value of an asset after it has been tokenized on a blockchain, calculated as the circulating supply multiplied by the end-of-day price. For stablecoins, it refers to the outstanding supply; for tokenized funds, it refers to the on-chain asset under management; for tokenized stocks, it refers to the value of on-chain issued stocks. This data pertains to assets issued on Ethereum.
In the first quarter of 2026, the average market cap of tokenized assets on Ethereum was $203.4 billion, nearly unchanged from the previous quarter (-0.7%) and a 42.9% year-on-year growth. Stablecoins accounted for the highest proportion, reaching 87.9% of the total, with the remaining split between funds, commodities, and stocks.
In the first quarter of 2026, the average scale of stablecoins on Ethereum was $178.9 billion, a 2.3% decrease from the previous quarter but a 37.6% year-on-year increase, being the only subcategory to decline during the quarter. Two major issuers dominated: by the end of the quarter, Tether's USDT was $94.1 billion, and Circle's USDC was $54.5 billion, together accounting for most of the stablecoin market cap on the network. Following them are Sky's USDS ($12.4 billion), Ethena's USDe ($5.9 billion), and PayPal's PYUSD ($2.9 billion). Newer regulated entrants like Ripple's RLUSD ($1.1 billion) have also come online. Among the top five chains, Ethereum leads at $178.9 billion, surpassing Tron ($84.5 billion), Solana ($14.5 billion), Arbitrum One ($6.8 billion), and Base ($4.7 billion), capturing 61.8% of the total stablecoin supply of the top five chains.
In Q1 2026, the average size of tokenized funds on Ethereum was $194 billion, representing a 4.9% increase from the previous quarter and a 73.1% increase year-over-year. This sector can be divided into two parts: one consists of the leading on-chain dollar assets, represented by Sky's sUSDS (approximately $64 billion) and Ethena's sUSDe (approximately $35 billion); the other part consists of regulated funds supporting institutional narratives that have seen scale expansion, including BlackRock's BUIDL (issued through Securitize, approximately $10 billion), WisdomTree Government Money Market Fund (approximately $8.15 billion), Superstate's USTB (approximately $6.2 billion), and Ondo's OUSG (approximately $3.2 billion). Among the top five chains, Ethereum leads with $194 billion, ahead of zkSync Era ($25 billion), BNB Chain ($23 billion), Solana ($13 billion), and Stellar ($11 billion), representing 73.0% of the total of the top five chains and ranking as the second most concentrated asset class in this section.
In Q1 2026, the average size of tokenized commodities on Ethereum was $47 billion, showing a 60.0% increase from the previous quarter and a 325.9% increase year-over-year, making it the fastest-growing tokenized asset class. This category is almost entirely composed of gold: Tether Gold (XAUT, approximately $26 billion) and Paxos' PAX Gold (PAXG, approximately $24 billion) together almost entirely constitute the entire sector. Among the top five chains, Ethereum's $47 billion far surpasses XRP Ledger ($7.366 billion), Arbitrum One ($95.9 million), BNB Chain ($38.4 million), and Solana ($29.8 million), representing 84.0% of the total of the top five chains and highlighting Ethereum's strongest leading position in this section.
Tokenized stocks remain the smallest category in terms of size. In Q1 2026, the average size of tokenized stocks on Ethereum was $3.651 billion, a significant increase from almost negligible levels a year ago and a 16.5% increase from the previous quarter. This category is largely dominated by Ondo Finance. Ondo's on-chain stocks and ETFs cover broad-based index funds such as the S&P 500 and Nasdaq 100, as well as dozens of individual stocks, accounting for most of the market capitalization of tokenized stocks on Ethereum. Among the top five chains, Ethereum leads with $3.651 billion, followed by Solana ($2.49 billion), BNB Chain ($1.505 billion), Arbitrum One ($29 million), and Stellar ($4.2 million). However, Ethereum only represents 45.8% of the total of the top five chains in this category, marking its narrowest leading advantage and the only tokenized category where Ethereum does not clearly dominate.
Overall, this quarter has shown Ethereum's leading position in the realm of fund and commodity tokenization, even as stablecoin balances saw a temporary plateau.
4) Usage
Monthly Active Users measure the unique addresses that have engaged in revenue-generating transactions on the network within a one-month window. On Ethereum, it counts unique addresses transacting on the base layer network.
In Q1 2026, the average monthly active users were 13.2 million, marking a 53.5% increase from the previous quarter and an 85.9% increase year-over-year, reaching a record high. After experiencing several quarters of moderate growth, user growth has significantly accelerated.
Transaction count measures the number of transactions confirmed and added to the blockchain, reflecting user activity on the network; transactions per second is the average rate of these confirmed transactions, used to measure throughput and real-time usage. Both are calculated here on the Ethereum base layer network.
In Q1 2026, the total transaction count reached 200.4 million, increasing by 38.0% from the previous quarter and 81.5% year-over-year; throughput rose to 25.78 transactions per second, a 41.2% increase. Both metrics hit record highs, confirming that user growth has translated into substantial on-chain activity.
Here, fees refer to the transaction fees users pay when transacting on the Ethereum base layer network, i.e., the cost of using the base-layer network. This is different from ecosystem-level application fees mentioned in the second section.
By this measure, in Q1 2026, fees totaled $39.9 million, decreasing by 47.9% from the previous quarter and 81.9% year-over-year. This starkly contrasts with the usage volume and is a key data point for the quarter: with a 38.0% increase in transaction count but a 47.9% decrease in total fees, it indicates a significant reduction in average transaction costs as data capacity increases and block space prices decline.
This section presents a scalability narrative: more users, more transactions, all completed at a lower total cost. With throughput growing faster than demand, the rise in activity and the drop in fees can coexist.
5) ETH
Fully Diluted Market Cap measures ETH's valuation under the fully diluted assumption, calculated by multiplying the token price by the total supply under the current tokenomics, including circulating, locked, unlocked, and future token issuance.
In the first quarter of 2026, the fully diluted market cap averaged $2900 billion, representing a 30.3% decrease compared to the previous quarter and a 9.9% decrease year-over-year. The quarterly decline was the largest in the valuation metrics in this report, driving down other USD-denominated metrics.
The staking ratio measures the value of ETH staked to help secure a proof-of-stake network relative to the total ETH market cap. A reading of 0.31x means approximately 31% of the value is staked.
In the first quarter of 2026, the staking ratio averaged 0.31x, higher than the previous quarter and the same quarter a year ago at 0.28x. Despite the ETH market cap decrease, the share of ETH committed to network security increased, indicating a stable participation in staking during price retracement.
The token holder count measures the number of unique addresses holding the network's native token. On Ethereum, it accounts for addresses holding ETH.
In the first quarter of 2026, the average token holder count was 2.928 billion, an 8.1% increase compared to the previous quarter and a 24.9% increase year-over-year, continuing the steady upward trend of the past five quarters. Despite the fully diluted market cap decrease, the holder base is expanding, indicating that ETH ownership is becoming more widespread even during a price pullback.
6) Etherealize Team Commentary
"The most notable tension this quarter is that Ethereum's mainnet usage reached an all-time high, yet transaction fees are decreasing. Ethereum is intentionally sacrificing short-term fee capture to expand the network, betting that cheaper block space can unleash more demand and ultimately bring in more network revenue.
Token Terminal's 'Ethereum Q1 2026 Report' shows that this bet is paying off. Year-over-year, monthly active users grew by 85.9%, transaction count grew by 81.5%, and throughput grew by 81.7%. This is precisely where the Jevons Paradox comes into play. We anticipate that the overall increase in network demand will be sufficient to offset the impact of lower fees, similar to how the semiconductor industry today generates revenues orders of magnitude higher than in 1975 when Intel co-founder Gordon Moore observed that the number of transistors on a microchip roughly doubled every two years. Furthermore, the returns from scaling are still ahead: the Glamsterdam upgrade in the third quarter will increase the gas limit by over 3x, and the Ethereum roadmap aims to achieve 10,000 TPS by 2029, along with a 'fast layer one' network featuring sub-second finality."
We agree with BlackRock CEO Larry Fink's assessment from last December. He wrote, "Today's tokenization is roughly equivalent to the internet in 1996—when Amazon only sold $16 million worth of books." At that time, the consensus was that Amazon was just a loss-making online bookstore propped up by the internet bubble. However, Jeff Bezos saw the internet's potential to reshape the retail industry, so he prioritized optimizing network effects and economies of scale over short-term profits. Ethereum is making a similar trade-off to solidify its position as a global financial settlement layer.
Another lesson from the internet is that open, permissionless networks often outcompete closed networks. In 1995, Bill Gates published "The Road Ahead," predicting that digital commerce would run on a proprietary corporate network he called the "information superhighway," rather than the open internet. Microsoft was building MSN at the time. AOL, CompuServe, and Prodigy operated walled gardens with millions of paying users. In France, Minitel had more users than the entire World Wide Web until late 1996. They all eventually lost. No serious company would want to build on a competitor-controlled network; perhaps more importantly, no company can keep up indefinitely with the pace of permissionless innovation. We have seen this play out repeatedly: Linux surpassing proprietary Unix, open networks replacing corporate walled gardens, Wikipedia overtaking Britannica. Each time, the proprietary solutions initially had an advantage—more focused products, stronger marketing, more extensive business development teams—but each time, once open systems crossed the thresholds of contribution accumulation, tool maturity, and trusted neutrality, that advantage eroded.
Today, we are seeing the same theme in financial infrastructure, and the data in this report demonstrates that Ethereum has crossed that threshold and dominates the market share in all key metrics. Institutions building tokenized finance are choosing Ethereum not out of ideology, but because liquidity, composability, and institutional precedent are already there. As highlighted in this report, among the top five chains, Ethereum holds 79.2% of active DeFi loans, 61.8% of stablecoins, 73.0% of tokenized funds, and 84.0% of tokenized commodities. Each new tokenized asset deepens liquidity, attracting the next asset in; and a neutral base layer is the only equilibrium that can be sustained, as large participants will never agree to settle on a competitor's infrastructure. Furthermore, institutions are realizing that privacy, permissioning, KYC, and transfer restrictions can all be achieved on Ethereum through privacy-preserving environments and permissioned token standards while still retaining the ability to tap into public liquidity; conversely, grafting public liquidity and an open-app ecosystem onto a closed chain is impossible.
If there's been one change, it's that institutional momentum has only picked up post-quarter end. In May alone, BlackRock filed for two more tokenized funds; JPMorgan launched its second tokenized money market fund JLTXX on Ethereum; Fidelity International introduced FILQ, a Moody's AAA-rated USD liquidity fund issued in ERC-20 form. In the stablecoin space, the Japan Blockchain Foundation's JPY stablecoin, EJPY, is set to launch on Ethereum; a consortium of twelve European banks including BNP Paribas, ING, UniCredit, and BBVA are also preparing to launch a regulated EUR stablecoin.
The internet seemed implausible in 1990, yet inevitable by 2005. If Fink's assessment of tokenization's stage is correct, the next few years may be one of Ethereum's most exciting periods. As argued in the "Productive Money" report, network fees provide an intrinsic value floor for ETH, with the bull case scenario absorbing the $30 trillion currency premium held by gold and Bitcoin, as ETH possesses superior monetary attributes. ETH does not need high fees to win."
7) Definitions
Metrics:
Ecosystem Total Value Locked: The USD value of assets deposited across applications within a chain's ecosystem, reported as the average value over a period.
Ecosystem Active Loans: The outstanding loan value in USD within ecosystem lending applications, reported as the average value over a period.
Ecosystem Trading Volume: The USD value of trades executed on decentralized exchanges within the ecosystem, reported as the total volume over a period.
Ecosystem Fees: The total fees paid by users to applications within the ecosystem, reported as the total amount over a period.
Circulating Supply Market Cap: The circulating USD value of a tokenized asset class, calculated as the circulating supply multiplied by the end-of-day price, reported as the average value over a period.
Monthly Active Users: The number of unique addresses engaging in revenue-generating transactions with Ethereum, reported as the average over a monthly period.
Transaction Count: The number of transactions settled on the Ethereum layer one network, reported as the total over a period.
Transactions Per Second: The average rate at which Ethereum Layer 1 network confirms transactions during the period.
Fee Usage: The total transaction fees paid on the Ethereum Layer 1 network, reported as a total during the period.
Fully Diluted Market Cap: The ETH price multiplied by the total supply under the current tokenomics, reported as an average during the period.
Staking Participation: The value of staked ETH securing the network, as a percentage of the total ETH market cap, reported as an average during the period.
Token Holder Count: The number of unique addresses holding ETH, reported as an average during the period.
8) About This Report
This report is published quarterly and is based on Token Terminal's end-to-end on-chain data infrastructure. All metrics are directly sourced from blockchain data. The charts and datasets referenced in the report can be viewed on the Token Terminal Ethereum Q1 2026 Dashboard.
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