Ethereum posted its highest on-chain activity ever in the first quarter of 2026 while network fees plunged. According to Token Terminal's Ethereum Q1 2026 report, monthly active users averaged 13.2 million, up 85.9% year-over-year. Total transactions reached 200.4 million, and throughput hit 25.78 transactions per second. Meanwhile, Layer-1 fees dropped to $39.9 million, a 47.9% decline from Q4 2025. The report attributed the fee reduction to increased data capacity that lowered transaction costs.
Active Users and Transaction Volume Surge
The average monthly active users rose for three consecutive quarters, hitting 13.2 million in Q1, compared to 7.1 million a year earlier. Transaction count jumped from 120 million to 200.4 million, while throughput set a new record. The report noted that scaling solutions and the maturing L2 ecosystem fueled the surge in on-chain demand.
Revenue and Market Cap Under Pressure
Despite soaring usage, Ethereum's financial metrics diverged. The ecosystem's average total value locked (TVL) stood at $316.2 billion in Q1, down 11% quarter-over-quarter but still up 22.8% year-over-year. Active loans reached $21.8 billion, a 16.6% sequential decline. DEX trading volume totaled $134.5 billion, with Uniswap handling roughly $85.5 billion, followed by Curve and CoW Swap. Notably, Ethereum generated $2 billion in ecosystem fees, leading the top five chains.
ETH's fully diluted market cap averaged $290 billion, down 30.3% QoQ. The number of ETH holders grew to 292.8 million addresses, and the staking ratio rose to 0.31x.
Tokenized Assets Expand Despite Headwinds
The tokenized asset market averaged $203.4 billion in Q1, with stablecoins representing 87.9% of the value (though their market cap dipped 2.3% QoQ). USDT and USDC remained the top two stablecoins. Tokenized funds hit $19.4 billion, up 4.9% quarterly and 73.1% annually. Commodity tokens, led by Tether Gold and PAX Gold, surged to $4.7 billion, a 60% quarterly gain. Tokenized stocks also grew to $365.1 million.
Protocol Upgrades and Priorities
During Q1, Ethereum kicked off the Fusaka upgrade cycle and introduced the ERC-8004 standard. The Ethereum Foundation outlined its 2026 protocol priorities, focusing on scaling, user experience, and Layer-1 improvements.