Ethereum Q1 2026 Review: Onchain Activity Hits All-Time High, Tokenized Assets Lead the Industry
TechFlow Selected TechFlow Selected
Ethereum Q1 2026 Review: Onchain Activity Hits All-Time High, Tokenized Assets Lead the Industry
Expansion leads to divergence in volume and price, while institutional finance continues to accelerate its entry.
Navigating Web3 tides with focused insightsAuthor: Token Terminal
Translated by: Saoirse, Foresight News
Ethereum serves as the core on-chain settlement network for digital assets, relying on ETH to pay transaction fees and secure network safety through staking. Traditional finance suffers from slow settlement, excessive intermediaries, and high counterparty risk—while tokenized assets and stablecoins offer on-chain solutions. Regulatory frameworks governing these assets are maturing gradually between 2025 and 2026, enabling institutional deployment of on-chain business operations to become operationally viable.
Stablecoins, tokenized funds, commodities, and on-chain equities are all issued and settled on Ethereum. After Layer-2 networks process transactions off-chain, final settlement and verification occur on Layer 1—allowing ETH to steadily accrue value. By market capitalization, Ethereum remains the world’s largest platform for tokenized assets, jointly operated by the Ethereum Foundation and its developer community. Teams like Etherealize specialize in bridging traditional financial institutions with Ethereum, accelerating institutional capital inflows. In Q1 2026, the Ethereum ecosystem exhibited pronounced bifurcation—a trend detailed below using comprehensive data from Token Terminal.
Q1 2026 displayed a stark duality: on-chain usage reached an all-time high—monthly active users, total transaction volume, and throughput all set new records; yet dollar-denominated asset scale and fee metrics simultaneously contracted. Total market cap, total value locked (TVL), trading volume, and both types of fee revenue declined quarter-on-quarter. Key events this quarter fundamentally shaped this unique market dynamic:
In January, Fusaka Upgrade Cycle Phase Two—Blob Parameter Fork #2 (BPO#2)—went live, significantly enhancing data storage capacity;
In February, ERC-8004—the universal standard for AI agent identity and credit rating—launched on mainnet;
The Ethereum Foundation confirmed three core protocol goals for 2026: scaling, optimizing user experience, and strengthening Layer-1 security;
In March, the Institutional Ethereum Forum was held, drawing markedly increased participation from traditional financial institutions.
Q1 2026 Key Metrics Overview
Ecosystem Total Value Locked (TVL): $31.62 billion (QoQ -11.0%, YoY +22.8%)
Ecosystem Outstanding Active Lending: $2.18 billion (QoQ -16.6%, YoY +39.0%)
Ecosystem Decentralized Exchange (DEX) Total Trading Volume: $134.5 billion (QoQ -24.0%, YoY -31.2%)
Ecosystem Application Fee Revenue: $2.0 billion (QoQ -16.9%, YoY -7.8%)
On-Chain Tokenized Asset Market Cap: $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%)
Layer-1 Total Transactions: 200.4 million (QoQ +38.0%, YoY +81.5%)
Average Transactions Per Second (TPS): 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: $29.0 billion (QoQ -30.3%, YoY -9.9%)
ETH Staking Ratio: 0.31 (QoQ & YoY increase of 0.03)
Total ETH Holding Addresses: 292.8 million (QoQ +8.1%, YoY +24.9%)
Note: This report covers only Ethereum Layer-1 mainnet. Layer-2 networks are treated as independent public blockchains; their data is excluded from Ethereum’s reporting scope.
Overall Ecosystem Development
Total Value Locked (TVL) represents the aggregate USD value of assets deposited into on-chain applications—it serves as a leading indicator for revenue-generating activities such as lending, trading, and staking. Here, TVL reflects on-chain funds deposited by users across the entire Ethereum ecosystem that remain freely withdrawable. In Q1 2026, Ethereum’s average ecosystem TVL stood at $31.62 billion—down 11.0% QoQ but up 22.8% YoY. The QoQ decline stemmed from broad crypto asset price corrections, while the YoY growth confirms substantive ecosystem expansion versus last year.
Among the top five public blockchains, Ethereum’s TVL leads by a wide margin: $31.62 billion dwarfs the combined TVL of TRON ($84.5 billion), Solana ($28.8 billion), BNB Chain ($10.3 billion), and Plasma ($5.7 billion), representing 71% of the total TVL across these five chains. Capital is concentrated primarily in two sectors: liquid staking (led by Lido) and lending (anchored by Aave). Re-staking protocols such as EigenLayer and ether.fi, alongside synthetic dollar stablecoin platforms like Ethena and Sky, also command substantial capital. This high degree of concentration constitutes Ethereum’s most distinctive structural advantage.
Active lending refers to the aggregate deposit size generating interest income for lenders—directly reflecting lending protocol revenues. This metric captures the total outstanding loan balances across all Ethereum lending applications. In Q1, average active lending stood at $2.18 billion—down 16.6% QoQ but up 39.0% YoY. Lending balances contracted in tandem with TVL, signaling reduced market risk appetite—but remained substantially higher than last year’s level.
Decentralized exchange (DEX) trading volume measures total spot trading value executed on-chain. Traders pay fees per trade, making volume highly correlated with platform revenue. This figure aggregates DEX trading volume across the full Ethereum ecosystem. In Q1, total DEX volume reached $134.5 billion—down 24% QoQ and 31.2% YoY. The volume decline exceeded the TVL contraction, confirming a marked drop in market risk appetite during this asset downturn.
Ethereum DEX trading volume is highly concentrated among top platforms: Uniswap accounted for ~$85.5 billion—or roughly two-thirds of total ecosystem volume—followed by Curve (~$22.1 billion) and CoW Swap (~$12.4 billion). Volume is the sole metric where Ethereum does not lead among the top five public blockchains: BNB Chain’s $162.5 billion surpassed Ethereum’s $134.5 billion, with Solana trailing closely at $104.9 billion; Avalanche ($14.5 billion) and Polygon ($10.7 billion) ranked lower. Ethereum’s share of total volume across the five chains stood at 31.5%, second only to BNB Chain’s 38%.
Ecosystem fees refer to all fees paid by users across applications—including borrower interest and trader transaction fees—and directly reflect economic value generated by the ecosystem. This metric aggregates total fees across all Ethereum applications. In Q1, total ecosystem fees amounted to $2.0 billion—down 16.9% QoQ and 7.8% YoY—mirroring declines in trading and lending activity.
Ethereum’s $2.0 billion in ecosystem fees far exceeds TRON ($599.3 million), Solana ($532.5 million), BNB Chain ($231.9 million), and Polygon ($38.8 million), capturing 58.4% of total fees across the top five public blockchains. Even amid Q1’s decline, Ethereum remains the industry’s largest source of application fee revenue. Across all metrics in this section—TVL, lending scale, and ecosystem fees—Ethereum leads the industry outright; only DEX volume trails behind BNB Chain.
Tokenized Assets Segment
Circulating asset market cap denotes the aggregate on-chain value of tokenized assets—calculated as circulating supply multiplied by daily closing price. Stablecoins use total circulating issuance; tokenized funds use on-chain assets under management (AUM); tokenized equities use total on-chain issued shares’ market value. This segment includes only assets issued on Ethereum.
In Q1, Ethereum’s average tokenized asset market cap stood at $203.4 billion—nearly flat QoQ (down just 0.7%) but up sharply 42.9% YoY. Stablecoins accounted for 87.9% of total size, with remaining shares split among tokenized funds, commodities, and equities.
Stablecoins
In Q1, Ethereum’s average stablecoin size stood at $178.9 billion—down modestly 2.3% QoQ but up 37.6% YoY—the only tokenized subcategory showing QoQ contraction. The market is dominated by two issuers: Tether USDT ($94.1 billion) and Circle USDC ($54.5 billion) together captured the vast majority of Ethereum stablecoin market cap at quarter-end. Other major products include Sky USDS ($12.4 billion), Ethena USDe ($5.9 billion), and PayPal PYUSD ($2.9 billion); newly launched compliant stablecoins like Ripple’s RLUSD ($1.1 billion) have also gone live. Among the top five public blockchains, Ethereum’s $178.9 billion stablecoin size leads TRON ($84.5 billion), Solana ($14.5 billion), Arbitrum One ($6.8 billion), and Base ($4.7 billion), commanding 61.8% of total stablecoin value across these five chains.
Tokenized Funds
In Q1, Ethereum’s average tokenized fund size stood at $19.4 billion—up 4.9% QoQ and surging 73.1% YoY. The sector splits into two categories:
Yield-bearing on-chain dollar products (largest segment): Sky sUSDS (~$6.4 billion) and Ethena sUSDe (~$3.5 billion);
Traditional finance-compliant funds (core institutional narrative vehicles): BlackRock BUIDL (issued via Securitize, ~$1.0 billion), WisdomTree Government Money Market Fund (~$815 million), Superstate USTB (~$620 million), and Ondo OUSG (~$320 million) followed closely. Among the top five relevant public blockchains, Ethereum’s $19.4 billion tokenized fund size vastly outpaces zkSync Era ($2.5 billion), BNB Chain ($2.3 billion), Solana ($1.3 billion), and Stellar ($1.1 billion), capturing 73% of total—making it Ethereum’s second-strongest tokenized asset segment.
Tokenized Commodities
In Q1, Ethereum’s average tokenized commodity size stood at $4.7 billion—up 60% QoQ and soaring 325.9% YoY—the fastest-growing tokenized category. The sector is almost entirely composed of on-chain gold: Tether Gold XAUT (~$2.6 billion) and Paxos Gold PAXG (~$2.4 billion) collectively account for the entire segment. Among the top five relevant public blockchains, Ethereum’s $4.7 billion far surpasses Ripple ($736.6 million), Arbitrum One ($95.9 million), BNB Chain ($38.4 million), and Solana ($29.8 million), capturing 84% of total—making it Ethereum’s most dominant tokenized subsegment.
Tokenized Equities
Tokenized equities represent the smallest subcategory, averaging $365.1 million on Ethereum in Q1—near zero last year—with a 16.5% QoQ gain. The sector is nearly monopolized by Ondo Finance, which issues on-chain assets tracking the S&P 500, Nasdaq-100, and dozens of individual stocks—comprising the overwhelming majority of Ethereum’s tokenized equity market cap. Among the top five public blockchains, Ethereum’s $365.1 million slightly edges out Solana ($249 million), BNB Chain ($150.5 million), Arbitrum One ($29 million), and Stellar ($4.2 million), capturing 45.8% of total tokenized equity value across these five chains—the only tokenized asset segment where Ethereum lacks absolute majority dominance.
Across the tokenized assets segment: stablecoin存量 dipped modestly in Q1, yet Ethereum’s dominance in tokenized funds and commodities continues consolidating.
On-Chain Usage Activity
Monthly active users (MAUs) are defined as unique addresses initiating revenue-generating on-chain transactions each month. This metric counts only Layer-1 mainnet interaction addresses. In Q1, average MAUs totaled 13.2 million—up 53.5% QoQ and 85.9% YoY—setting a new historical record and ending several prior quarters of sluggish growth, marking a sharp acceleration in user growth.
Transaction volume refers to the number of blockchain writes confirmed—reflecting user interaction intensity; transactions per second (TPS) measures average confirmation speed over the period, indicating real-time network capacity. Both metrics cover only Ethereum Layer-1 mainnet. In Q1, Layer-1 total transactions reached 200.4 million—up 38% QoQ and 81.5% YoY; average TPS rose to 25.78—up 41.2% QoQ. Both metrics hit all-time highs, confirming that user growth translated directly into tangible on-chain business volume.
Here, “fees” specifically denote base network costs paid by users initiating transactions on Ethereum Layer-1—distinct from the broader ecosystem application fees covered earlier. In Q1, Layer-1 total transaction fees stood at $39.9 million—plummeting 47.9% QoQ and 81.9% YoY. Rising activity alongside sharply falling fees represents the quarter’s most critical data paradox: transaction volume rose 38%, yet total fees fell nearly 50%. The core reason lies in Blob-based scaling dramatically increasing block storage capacity—creating ample block space and significantly lowering per-transaction costs.
The key conclusion for this segment is scaling dividends materializing: users and transaction counts hit new highs while overall network usage cost declined. When network throughput expands faster than market transaction demand grows, the “rising activity, falling fees” pattern emerges.
Native Token ETH Fundamentals
Fully diluted market cap calculation: ETH price × total supply under current tokenomics (including circulating, locked, unlocked, and yet-to-be-issued tokens). In Q1, ETH’s average fully diluted market cap stood at $29.0 billion—down 30.3% QoQ and 9.9% YoY—the largest QoQ decline among all valuation metrics reported, and the primary driver behind the ecosystem’s overall dollar-denominated asset scale contraction.
Staking ratio: the ratio of ETH value staked to secure Proof-of-Stake network security versus ETH’s total market cap; 0.31 means ~31% of ETH’s market value is staked. Average staking ratio in Q1 stood at 0.31—up from 0.28 in both prior quarter and same quarter last year. Even amid ETH’s broad market cap correction, the proportion of ETH staked for network security continued rising—indicating stable long-term staking intent during price downturns.
Token holder metric: total number of unique wallet addresses holding ETH. In Q1, average ETH holding addresses totaled 292.8 million—up 8.1% QoQ and 24.9% YoY—rising steadily for five consecutive quarters. Amid persistently declining fully diluted market cap, growing holder count signals further ETH ownership dispersion and sustained retail adoption—even as short-term market sentiment cools.
Etherealize Team Commentary
This quarter’s central paradox: Ethereum Layer-1 on-chain usage hit an all-time high, yet network transaction fees concurrently declined. Ethereum proactively advanced network scaling—intentionally sacrificing short-term fee revenue. Its long-term logic is clear: cheaper block space unlocks vast latent demand, ultimately driving long-term network revenue growth.
Token Terminal’s “Q1 2026 Ethereum Report” data validates this long-term thesis: YoY, monthly active users grew 85.9%, transaction volume rose 81.5%, and network throughput increased 81.7%—a textbook illustration of Jevons’ Paradox. The team forecasts that long-term incremental transaction demand will fully offset short-term revenue loss from lower per-transaction fees. Analogous to the semiconductor industry: when Gordon Moore proposed Moore’s Law in 1975, industry revenue was modest; today, it has grown by multiple orders of magnitude. Scaling dividends remain incompletely realized: the upcoming Q3 Glamsterdam upgrade will more than triple gas limits; Ethereum’s long-term roadmap targets 10,000+ TPS by 2029—building a Layer-1 public chain capable of sub-second finality.
The team aligns with BlackRock CEO Larry Fink’s December view: the tokenization industry today stands where the internet did in 1996—when Amazon’s online book sales totaled just $16 million. Markets then widely dismissed Amazon as a loss-making dot-com bookstore riding the bubble; yet Bezos foresaw the internet’s wholesale retail transformation, prioritizing network effects and scale over short-term profit. Ethereum now makes the same strategic trade-off—to cement its position as the world’s foundational financial settlement layer.
Internet evolution offers another vital insight: open, permissionless networks inevitably defeat closed, proprietary ones. In 1995, Bill Gates predicted digital commerce would run on corporate-owned private networks—the “Information Highway”—not the open internet. Microsoft built MSN; AOL, CompuServe, and Prodigy all operated walled gardens with millions of paying users; France’s Minitel terminal system even surpassed global internet user count until late 1996. Yet all closed systems ultimately failed. No major enterprise willingly builds core operations atop a competitor-controlled network; more critically, no single firm can permanently match the innovation velocity of an open, permissionless ecosystem. History repeatedly affirms this: Linux surpassed proprietary Unix; open web eclipsed corporate intranets; Wikipedia replaced Encyclopaedia Britannica. At every inflection point, proprietary products initially dominate via precise features, aggressive marketing, and commercial resources—but once open ecosystems accumulate sufficient tooling, developers, and neutral trustworthiness, first-mover advantages rapidly erode.
This industry dynamic is now replaying in financial infrastructure. All data in this report confirms Ethereum has crossed its ecosystem tipping point—commanding absolute market share across all core segments. Institutions choose Ethereum for tokenized finance not out of ideological preference, but because liquidity, composability, and proven institutional deployment cases are all concentrated here. Report data shows: Ethereum holds 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. Every new tokenized asset further thickens ecosystem liquidity—continuously attracting more institutions. A neutral, unbiased base layer is the industry’s sole stable equilibrium solution—no large financial institution would uniformly adopt rival private chains for asset settlement. Moreover, institutions increasingly recognize privacy-preserving interactions, access controls, KYC compliance, and asset transfer governance can be implemented atop Ethereum via privacy computation environments and permissioned token standards—while fully integrating with public network liquidity. Conversely, closed private chains cannot tap into the open ecosystem’s massive liquidity and diverse applications.
Post-quarter, institutional deployment accelerated further—May alone saw several major milestones: Asset Management: BlackRock filed applications for two new tokenized funds; JPMorgan launched its second Ethereum-based money market fund, JLTXX; Fidelity International launched FILQ—a Moody’s AAA-rated dollar liquidity fund—issued as an ERC-20 token. Stablecoins: Japan Blockchain Foundation’s yen-pegged stablecoin EJPY is set to deploy on Ethereum; a consortium of 12 major European banks—including BNP Paribas, ING, UniCredit, and BBVA—is preparing a compliant euro stablecoin.
The internet seemed distant in 1990—but became societal infrastructure by 2005. If Fink’s assessment of tokenization’s developmental stage proves accurate, the coming years may represent Ethereum’s most opportune era in history. The team’s prior “Efficient Money” report articulated a core thesis: network fees establish ETH’s intrinsic value floor; the long-term bullish case posits that ETH—leveraging superior monetary properties—could absorb over $30 trillion in monetary store-of-value premium currently held by gold and Bitcoin combined. Ethereum need not rely on high fees to cement its industry leadership.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Token Terminal
