TechFlow Selected published Token Terminal’s report on Ethereum for the first quarter of 2026, compiled in Chinese by Saoirse and Foresight News. The report describes Ethereum as the core base settlement network for on-chain assets, with ETH used to pay transaction fees and staked to secure the proof-of-stake network. Its main conclusion is that Ethereum entered Q1 with a clear divergence: mainnet usage reached record levels, while several dollar-denominated valuation and fee metrics declined during the same period.
According to the report, traditional finance still faces pain points such as slow settlement, multiple intermediaries and counterparty risk. Tokenized assets and stablecoins offer an on-chain settlement alternative. As the regulatory environment matured from 2025 into 2026, institutional on-chain business became more ready for implementation. Stablecoins, tokenized funds, commodities and on-chain stocks are issued and settled on Ethereum, while layer-2 networks route transactions that ultimately return to layer 1 for final confirmation. The Ethereum Foundation and the developer community continue to operate the ecosystem, while teams such as Etherealize focus on connecting traditional financial institutions with Ethereum-based infrastructure.
Record Usage Alongside Lower Dollar Metrics
In Q1 2026, Ethereum’s average ecosystem total value locked reached $316.2 billion, down 11.0% quarter over quarter but up 22.8% year over year. Active outstanding lending was $21.8 billion, down 16.6% quarter over quarter and up 39.0% year over year. Decentralized exchange volume across the Ethereum ecosystem totaled $134.5 billion, down 24.0% quarter over quarter and 31.2% year over year. Total application fees across the ecosystem were $2.0 billion, down 16.9% quarter over quarter and 7.8% year over year. Tokenized assets issued on Ethereum had an average market capitalization of $203.4 billion, down only 0.7% quarter over quarter and up 42.9% year over year.
The usage side moved in the opposite direction. Average monthly active addresses on Ethereum mainnet reached 13.2 million, up 53.5% quarter over quarter and 85.9% year over year. Total layer-1 transactions reached 200.4 million, up 38.0% quarter over quarter and 81.5% year over year. Average throughput rose to 25.78 transactions per second, up 41.2% quarter over quarter and 81.7% year over year. At the same time, total layer-1 transaction fees fell to $39.9 million, down 47.9% quarter over quarter and 81.9% year over year. ETH’s average fully diluted market capitalization was $290 billion, down 30.3% quarter over quarter and 9.9% year over year. The ETH staking ratio rose to 0.31, up 0.03 both quarter over quarter and year over year, while ETH holding addresses reached 292.8 million, up 8.1% quarter over quarter and 24.9% year over year.
The report highlights several events that shaped the quarter. In January, the second Blob-parameter-only fork in the Fusaka upgrade cycle, BPO#2, went live and significantly expanded data storage capacity. In February, ERC-8004 launched on mainnet as a common standard for AI agent identity and credit ratings. The Ethereum Foundation set three core protocol goals for 2026: scaling, improving user experience and strengthening layer-1 security. In March, an institutional Ethereum forum was held, with higher participation from traditional financial institutions. Token Terminal also notes that its data scope in the report covers only Ethereum layer 1; layer-2 networks are treated as independent public chains and are not included in Ethereum’s statistical perimeter.
TVL, Lending and DEX Activity Across Ethereum
Total value locked refers to the dollar value of assets deposited into on-chain applications and available for users to withdraw, and it serves as a leading indicator for revenue-generating businesses such as lending, trading and staking. Ethereum’s Q1 average TVL of $316.2 billion was far ahead of the combined figures for Tron at $84.5 billion, Solana at $28.8 billion, BNB Chain at $10.3 billion and Plasma at $5.7 billion. Ethereum represented 71% of TVL across those five public chains. The report says capital is concentrated mainly in two sectors: liquid staking led by Lido and lending led by Aave. Restaking protocols such as EigenLayer and ether.fi, as well as synthetic-dollar stablecoin platforms such as Ethena and Sky, also hold large amounts of capital.
Active lending measures the scale of borrowed assets that generate interest income and directly reflects lending business revenue. Ethereum’s average active outstanding lending was $21.8 billion in Q1, down 16.6% quarter over quarter but up 39.0% year over year. Aave remained dominant, with about $13.5 billion in active lending at quarter-end. Morpho followed with about $1.9 billion, Spark under Sky had about $1.0 billion and Maple had about $840 million. Token Terminal attributes the quarter’s lending contraction mainly to Aave, where weaker crypto asset prices reduced borrowing demand and lending volume declined by about 24%. Across five major chains, Ethereum’s $21.8 billion in active lending exceeded Solana at $2.5 billion, Plasma at $2.1 billion, BNB Chain at $760.8 million and Avalanche at $392.4 million. Ethereum represented 79.2% of active lending across those five chains, making it the category where its share was highest.
DEX volume measures the total dollar amount of spot trading completed on on-chain exchanges, and it is closely linked with fee revenue. Ethereum’s ecosystem DEX volume was $134.5 billion in Q1, down 24.0% quarter over quarter and 31.2% year over year. Uniswap accounted for about $85.5 billion, roughly two-thirds of the Ethereum ecosystem total. Curve followed with about $22.1 billion and CoW Swap with about $12.4 billion. DEX volume was the only major metric in which Ethereum did not rank first among the five chains covered in the report. BNB Chain had $162.5 billion in total volume, ahead of Ethereum’s $134.5 billion. Solana followed with $104.9 billion, while Avalanche had $14.5 billion and Polygon had $10.7 billion. Ethereum represented 31.5% of total DEX volume across the five chains, below BNB Chain’s 38%.
Ecosystem fees include all fees generated when users interact with applications, such as borrower interest and trading fees. Ethereum generated $2.0 billion in application fees during the quarter, down 16.9% quarter over quarter and 7.8% year over year. Even after the decline, it led Tron at $599.3 million, Solana at $532.5 million, BNB Chain at $231.9 million and Polygon at $38.8 million. Ethereum accounted for 58.4% of total fees across the five chains. Across this section of the report, Ethereum led in TVL, lending scale and ecosystem fees, while BNB Chain led in DEX trading volume.
Tokenized Assets: Stablecoins Dominate, Funds and Commodities Grow
Token Terminal defines circulating asset market capitalization for tokenized assets as circulating supply multiplied by the day’s closing price. For stablecoins, it uses circulating issuance; for tokenized funds, it uses on-chain assets under management; and for tokenized stocks, it uses the total value of shares issued on-chain. This section covers only assets issued on Ethereum. In Q1, Ethereum’s average tokenized asset market capitalization was $203.4 billion, nearly flat quarter over quarter with a 0.7% decline and up 42.9% year over year. Stablecoins made up 87.9% of the total, with tokenized funds, commodities and stocks sharing the remainder.
Ethereum stablecoins averaged $178.9 billion in Q1, down 2.3% quarter over quarter and up 37.6% year over year. Stablecoins were the only tokenized subcategory to shrink quarter over quarter. The market was dominated by two issuers: Tether USDT at $94.1 billion and Circle USDC at $54.5 billion at quarter-end. Other major products included Sky USDS at $12.4 billion, Ethena USDe at $5.9 billion and PayPal PYUSD at $2.9 billion. Ripple’s compliant stablecoin RLUSD, at $1.1 billion, was also listed among new compliant stablecoins already live. Across five chains, Ethereum’s $178.9 billion in stablecoins led Tron at $84.5 billion, Solana at $14.5 billion, Arbitrum One at $6.8 billion and Base at $4.7 billion. Ethereum represented 61.8% of the combined stablecoin supply across those chains.
Tokenized funds on Ethereum averaged $19.4 billion in Q1, up 4.9% quarter over quarter and 73.1% year over year. The report divides the sector into two main types. The largest group is yield-bearing on-chain dollar products, led by Sky sUSDS at about $6.4 billion and Ethena sUSDe at about $3.5 billion. The second group is compliant traditional finance funds, described as the core carrier for the institutional narrative. BlackRock’s BUIDL, issued through Securitize, had about $1.0 billion. WisdomTree’s government money market fund had about $815 million, Superstate USTB had about $620 million and Ondo OUSG followed with about $320 million. Compared with ZKsync Era at $2.5 billion, BNB Chain at $2.3 billion, Solana at $1.3 billion and Stellar at $1.1 billion, Ethereum’s $19.4 billion represented 73% of tokenized funds across the five chains.
Tokenized commodities were the fastest-growing tokenized asset category in the report. Ethereum’s average tokenized commodity value reached $4.7 billion in Q1, up 60.0% quarter over quarter and 325.9% year over year. The category consisted almost entirely of on-chain gold. Tether Gold XAUT was about $2.6 billion and Paxos Gold PAXG was about $2.4 billion, together accounting for essentially the entire sector. Ethereum’s $4.7 billion was far above Ripple at $736.6 million, Arbitrum One at $95.9 million, BNB Chain at $38.4 million and Solana at $29.8 million. Ethereum represented 84% of the total across these related chains, making tokenized commodities the subcategory where its dominance was strongest.
Tokenized stocks were the smallest subcategory. Ethereum’s average tokenized stock value was $365.1 million in Q1, compared with almost zero in the same period last year, and up 16.5% quarter over quarter. The report says the sector was almost entirely held by Ondo Finance, which issued on-chain assets tracking the S&P 500, Nasdaq 100 broad indices and dozens of individual stocks. Ethereum’s $365.1 million was slightly ahead of Solana at $249 million, BNB Chain at $150.5 million, Arbitrum One at $29 million and Stellar at $4.2 million. Ethereum represented 45.8% of tokenized stocks across the five chains, making it the only tokenized asset sector where Ethereum did not hold an absolute majority share. Overall, the report says stablecoin balances dipped slightly, while Ethereum’s dominant position in tokenized funds and tokenized commodities continued to strengthen.
Mainnet Expansion and ETH Fundamentals
The report defines monthly active users as unique addresses that generate revenue-producing on-chain transactions each month, counted only on Ethereum layer 1. Ethereum averaged 13.2 million monthly active users in Q1, the highest level in its history and a sharp acceleration after several quarters of slower growth. Total transactions, defined as confirmed transactions written to the blockchain, reached 200.4 million on layer 1. Average throughput rose to 25.78 TPS. Both metrics set new records, showing that user growth translated into actual on-chain activity.
The fee figure in this section refers specifically to the base network cost users pay to send transactions on Ethereum layer 1, separate from the broader application fee figure in the ecosystem section. Q1 layer-1 transaction fees totaled $39.9 million, down 47.9% quarter over quarter and 81.9% year over year. Token Terminal presents this as the quarter’s key data contrast: transaction volume rose 38%, while total fees fell by nearly half. The report attributes the decline to Blob expansion, which significantly increased block data capacity, made block space more abundant and reduced the cost per transaction. When network throughput expands faster than transaction demand, the result is higher activity and lower fees.
For ETH fundamentals, the report calculates fully diluted market capitalization as the ETH price multiplied by total supply under the current token model, including circulating, locked, unlocked and future issuance. ETH’s average fully diluted market capitalization was $290 billion in Q1, down 30.3% quarter over quarter and 9.9% year over year. This was the largest quarter-over-quarter decline among all valuation indicators in the report and an important driver of the decline in dollar-denominated ecosystem asset values. The staking ratio was 0.31, above 0.28 in both the previous quarter and the same period last year. A ratio of 0.31 means about 31% of ETH’s market value was participating in staking to secure the network. Average ETH holding addresses reached 292.8 million, up 8.1% quarter over quarter and 24.9% year over year, marking five consecutive quarters of steady growth.
Etherealize on Open Networks and Institutional Adoption
Etherealize’s commentary focuses on the contradiction between record layer-1 usage and falling transaction fees. The team says Ethereum has been actively pursuing scaling and accepting lower short-term fee revenue, with the longer-term logic that cheaper block space can release large amounts of demand and eventually support network-wide revenue growth. The report’s year-over-year data—monthly active users up 85.9%, transaction count up 81.5% and network throughput up 81.7%—is described by the team as a typical expression of Jevons paradox. It also compares the situation with the semiconductor industry: when Gordon Moore proposed Moore’s Law in 1975, industry revenue was limited, while today the industry’s revenue scale has increased by several orders of magnitude.
The commentary says the scaling dividend has not been fully released. The Glamsterdam upgrade planned for the third quarter is set to raise the gas limit by more than three times. Ethereum’s long-term roadmap targets tens of thousands of TPS by 2029 and aims to build a high-speed layer-1 public chain with second-level transaction finality. The team also agrees with BlackRock CEO Larry Fink’s view from last December that today’s tokenization industry is comparable to the internet in 1996, when Amazon’s online book sales were only $16 million. At the time, Amazon was often viewed as an online bookstore surviving on the internet bubble while continuing to lose money. Jeff Bezos instead expected the internet to reshape retail, gave up short-term profitability and focused on network effects and scale.
Etherealize also uses internet history to discuss open networks versus closed private networks. In The Road Ahead in 1995, Bill Gates predicted that digital commerce would rely on corporate proprietary private networks, or an information highway, rather than the open internet. Microsoft built MSN, while America Online, CompuServe and Prodigy all ran closed walled gardens with millions of paying users. France’s Minitel terminal system still had more users than the global internet by the end of 1996. Those closed systems ultimately lost. The commentary says large formal enterprises do not want to build their business on networks controlled by competitors, and that no company can permanently match the pace of innovation in a permissionless open ecosystem. It cites Linux surpassing proprietary Unix systems, open web pages replacing corporate closed intranets and Wikipedia replacing Encyclopaedia Britannica as historical examples.
The team argues that the same industry pattern is now being repeated in financial infrastructure. The data in the report is used to support the view that Ethereum has crossed an ecosystem threshold and holds an absolute market share in major categories. Institutions choosing Ethereum for tokenized finance are not doing so because of an ideological preference, according to the commentary, but because liquidity, composability and mature institutional implementation cases are already concentrated there. The report’s figures show Ethereum holding 79.2% of DeFi active lending, 61.8% of stablecoins, 73% of tokenized funds and 84% of tokenized commodities across the five major public chains. Each new tokenized asset adds to ecosystem liquidity and attracts more institutional participation. The team says a neutral base layer is the only stable equilibrium for the industry, because large financial institutions will not all settle assets on a competitor-owned private chain.
The commentary adds that institutions are gradually recognizing that privacy interactions, access restrictions, KYC compliance and asset transfer controls can be implemented on top of Ethereum through privacy computing environments and permissioned token standards, while still accessing the public network’s liquidity. In contrast, closed private chains cannot connect to the open ecosystem’s liquidity and application diversity. After the quarter ended, institutional deployment accelerated further in May. In asset management, BlackRock filed applications for two additional tokenized funds; JPMorgan issued its second Ethereum-based on-chain money market fund, JLTXX; and Fidelity International launched FILQ, a Moody’s AAA-rated U.S. dollar liquidity fund, as an ERC-20 token. In stablecoins, the Japan Blockchain Foundation’s yen stablecoin EJPY is set to be deployed on Ethereum. A consortium of 12 major European banks, including BNP Paribas, ING, UniCredit and BBVA, is preparing a compliant euro stablecoin.
The report closes by returning to the comparison with the internet’s development path. In 1990, the internet looked distant from daily life, while by 2005 it had become a social necessity. Etherealize also refers to its earlier Efficient Money report, which argued that network fees build an intrinsic value floor for ETH. Its long-term bullish logic is that, supported by improved monetary properties, ETH could absorb part of the combined monetary store-of-value premium of gold and Bitcoin, which the report describes as exceeding $30 trillion. The commentary’s final point is that Ethereum does not need to rely on high fees to establish its position as the industry leader.