Ethereum Q1 2026 Review: On-Chain Activity Hits All-Time High, Tokenized Assets Lead the Industry

Original Author: Token Terminal

Original Translation: Saoirse, Foresight News

Ethereum serves as the core underlying settlement network for on-chain assets, relying on ETH for gas fees and staking to maintain network security. Traditional finance suffers from slow settlement, numerous intermediaries, and high counterparty risk, while tokenized assets and stablecoins offer on-chain solutions. With relevant regulations maturing between 2025 and 2026, the conditions are ripe for institutions to formally deploy on-chain businesses.

Various stablecoins, tokenized funds, commodities, and on-chain stocks are issued and settled on Ethereum. Layer 2 networks route transactions but ultimately return to Layer 1 for final settlement, allowing ETH to continuously accrue value. By market capitalization, Ethereum remains the world's largest platform for hosting tokenized assets, operated jointly by the Ethereum Foundation and developer community. Teams like Etherealize specifically bridge traditional financial institutions, driving institutional capital inflow. In Q1 2026, the Ethereum ecosystem showed a polarized trend. The following is a detailed breakdown based on Token Terminal's complete data.

The market in Q1 2026 presented a starkly contrasting picture: on-chain usage reached all-time highs – monthly active users, total transaction volume, and throughput all set new records. However, asset values denominated in USD and fee metrics simultaneously contracted, 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 condition:

In January, the second round of the Fusaka upgrade cycle, specifically the Blob Parameter Only fork #2 (BPO#2), was implemented, significantly enhancing data storage capacity.

In February, the ERC-8004 standard went live on the mainnet, becoming the universal standard for AI agent identity and credit scoring.

The Ethereum Foundation defined three core protocol goals for 2026: scaling, optimizing user experience, and strengthening Layer 1 underlying security.

In March, the Institutional Ethereum Forum was held, significantly boosting participation from traditional financial institutions.

Q1 2026 Key Metrics at a Glance

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

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

Ecosystem Decentralized Exchange (DEX) Total 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 Stocks: $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 (TPS): 25.78 (QoQ +41.2%, YoY +81.7%)

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

ETH Fully Diluted Market Cap: $290 billion (QoQ -30.3%, YoY -9.9%)

ETH Staking Ratio: 0.31 (QoQ and YoY increase of 0.03)

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

Note: The statistics in this report cover only the Ethereum Layer 1 mainnet. Layer 2 networks are treated as independent blockchains, 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 like lending, trading, and staking. This metric represents the on-chain idle capital across 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, down 11.0% QoQ but up 22.8% YoY. The QoQ decline stemmed from the overall correction in crypto asset prices, while the significant YoY growth demonstrates substantial ecosystem expansion compared to the same period last year.

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

The active loans metric represents the deposit size that users have lent out and generate interest income from, directly reflecting lending business revenue. This statistic tracks the total outstanding loan balance across all Ethereum lending applications. The average active loans scale in Q1 was $21.8 billion, down 16.6% QoQ but up 39.0% YoY. Lending balances contracted alongside TVL, reflecting a cooling market-wide risk appetite, but the scale remains significantly higher than the same period last year.

The Ethereum lending market is concentrated in a few major pools, with Aave dominating: its active loans stood at approximately $13.5 billion at the end of the quarter, capturing the vast majority of the ecosystem's share. It is followed by Morpho (~$1.9B), Spark under Sky (~$1.0B), and Maple (~$0.84B). This quarter's contraction in lending scale was primarily driven by Aave, where total loans shrank by about 24% due to declining crypto asset prices and subdued lending demand. Compared horizontally across the top five chains, Ethereum's $21.8 billion in active loans significantly outpaces Solana ($2.5B), Plasma ($2.1B), BNB Chain ($0.7608B), and Avalanche ($0.3924B), capturing 79.2% of the total lending volume across these five chains. This is the sector with the highest Ethereum dominance ratio in this segment.

Decentralized Exchange (DEX) trading volume refers to the total value of transactions completed on-chain spot exchanges. Traders pay fees when executing trades, making this metric highly correlated with platform revenue. This data aggregates all DEX trading activity within the Ethereum ecosystem. Total ecosystem trading volume in Q1 was $134.5 billion, down 24% QoQ and 31.2% YoY. The decline in trading volume exceeded the contraction in TVL, confirming a significant reduction in market risk appetite during this quarter's asset downturn cycle.

Ethereum DEX trading flow is highly concentrated on top platforms: Uniswap recorded approximately $85.5 billion in Q1 volume, accounting for two-thirds of the ecosystem total. It is followed by Curve (~$22.1B) and CoW Swap (~$12.4B). Trading volume is the only metric where Ethereum does not top the five major chains: BNB Chain's total volume of $162.5 billion exceeds Ethereum's $134.5 billion, with Solana closely behind ($104.9B), and Avalanche ($14.5B) and Polygon ($10.7B) trailing. Ethereum's trading volume constitutes 31.5% of the top five chains' total, placing second after BNB Chain's 38%.

Ecosystem fees encompass all costs incurred by users using various applications, including borrower interest and trader transaction fees. It intuitively reflects the economic value created by the ecosystem and represents the sum of fees across all applications on Ethereum. Total ecosystem fees in Q1 reached $2.0 billion, down 16.9% QoQ and 7.8% YoY, in line with the decline in trading and lending activity.

Ethereum's $2.0 billion in ecosystem fees far surpasses Tron ($599.3M), Solana ($532.5M), BNB Chain ($231.9M), and Polygon ($38.8M), accounting for 58.4% of the total fees across the top five chains. Even with this quarter's decline, Ethereum remains the industry's largest source of application fees. Summarizing all metrics in this section: Ethereum leads the industry comprehensively in TVL, lending scale, and ecosystem fees, with only DEX trading volume lagging behind BNB Chain.

Tokenized Assets Sector

Total Market Cap of Circulating Assets refers to the total value of on-chain tokenized assets, calculated by multiplying circulating supply by the closing price of the day. For stablecoins, it represents the total circulating issuance; for tokenized funds, the assets under management on-chain; for tokenized stocks, the total value of shares issued on-chain. This section only covers assets issued on Ethereum.

In Q1, the average total market cap of tokenized assets on Ethereum was $203.4 billion, essentially flat QoQ (down only 0.7%) but up significantly by 42.9% YoY. Stablecoins accounted for 87.9% of the total scale, with the remainder shared by tokenized funds, commodities, and stocks.

Stablecoins

In Q1, the average stablecoin scale on Ethereum was $178.9 billion, a slight QoQ decline of 2.3% but a YoY increase of 37.6%. It was the only tokenized sub-sector to show a QoQ contraction. The market is dominated by two major issuers: at the end of the quarter, Tether's USDT ($94.1B) and Circle's USDC ($54.5B) together constituted the vast majority of Ethereum's stablecoin market cap. Other top products include Sky's USDS ($12.4B), Ethena's USDe ($5.9B), and PayPal's PYUSD ($2.9B). New compliant stablecoins like Ripple's RLUSD ($1.1B) have also launched. Compared horizontally across the five major chains, Ethereum's $178.9 billion in stablecoins leads Tron ($84.5B), Solana ($14.5B), Arbitrum One ($6.8B), and Base ($4.7B), capturing 61.8% of the total stablecoin supply across these five chains.

Tokenized Funds

In Q1, the average scale of tokenized funds on Ethereum was $19.4 billion, up 4.9% QoQ and surging 73.1% YoY. This sector is divided into two main types:

Yield-bearing on-chain USD products (largest scale): Sky's sUSDS (~$6.4B), Ethena's sUSDe (~$3.5B).

Traditional Finance Compliant Funds (core narrative for institutional adoption): BlackRock's BUIDL (issued via Securitize, ~$1.0B), WisdomTree Government Money Market Fund (~$0.815B), Superstate's USTB (~$0.62B), followed by Ondo's OUSG (~$0.32B). Comparing across the top five chains, Ethereum's $19.4B in tokenized funds vastly outpaces ZKsync Era ($2.5B), BNB Chain ($2.3B), Solana ($1.3B), and Stellar ($1.1B), accounting for 73% of the total. This is the tokenized asset sector where Ethereum has its second strongest advantage.

Tokenized Commodities

In Q1, the average scale of tokenized commodities on Ethereum was $4.7 billion, up 60% QoQ and surging 325.9% YoY, making it the fastest-growing tokenized category. This sector is almost entirely composed of on-chain gold: Tether Gold (XAUT, ~$2.6B) and Paxos Gold (PAXG, ~$2.4B) together account for the entire sector share. Cross-chain comparison shows Ethereum's $4.7 billion dominates Ripple ($736.6M), Arbitrum One ($95.9M), BNB Chain ($38.4M), and Solana ($29.8M), claiming 84% of the total. This is the sub-sector with Ethereum's strongest dominance.

Tokenized Stocks

Tokenized stocks represent the smallest sub-category. In Q1, the average scale on Ethereum was $365.1 million, up 16.5% QoQ, starting from a near-zero base last year. This sector is almost exclusively dominated by Ondo Finance, whose issuance of S&P 500, Nasdaq 100 broad-based index, and dozens of individual stock on-chain assets constitutes the vast majority of Ethereum's tokenized stock market cap. Cross-chain comparison shows Ethereum's $365.1M slightly leads Solana ($249M), BNB Chain ($150.5M), Arbitrum One ($29M), and Stellar ($4.2M), but holds only 45.8% of the total tokenized stocks across the five chains. This is the only tokenized asset sector where Ethereum does not hold an absolute majority share.

Summary of Tokenized Asset Sector: Stablecoin inventories slightly declined in Q1, but Ethereum's monopolistic position in tokenized funds and commodities continues to solidify.

On-Chain Usage Activity

Monthly Active Users (MAU) are defined as unique addresses that execute revenue-generating on-chain transactions each month. This metric only accounts for addresses interacting with the Ethereum Layer 1 mainnet. The average MAU in Q1 was 13.2 million, surging 53.5% QoQ and 85.9% YoY, reaching an all-time high. This breaks the trend of slow growth seen over previous quarters, with user growth accelerating significantly.

Total Transactions refer to the number of transactions written and confirmed on the blockchain, reflecting the heat of user on-chain interaction. Transactions Per Second (TPS) is the average confirmation rate over the period, measuring the network's real-time capacity. Both metrics are specific to the Ethereum Layer 1 mainnet. Q1 saw a total of 200.4 million Layer 1 transactions, up 38% QoQ and 81.5% YoY. The average TPS increased to 25.78