Ethereum 2026 Q1 Review: On-Chain Activity Hits Record Highs, 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 transaction 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 gradually maturing between 2025 and 2026, institutional deployment of on-chain businesses now has the conditions for practical implementation.

Various stablecoins, tokenized funds, commodities, and on-chain stocks are issued and settled on Ethereum. Layer 2 networks divert transactions before ultimately returning to Layer 1 for final confirmation, allowing ETH to continuously accumulate value. By market capitalization, Ethereum remains the world's largest platform for tokenized assets, operated jointly by the Ethereum Foundation and the developer community. Teams like Etherealize specifically engage with traditional financial institutions to facilitate institutional capital inflow. In the first quarter of 2026, the Ethereum ecosystem showed a polarized trend, which is detailed below using complete data from Token Terminal.

The market in Q1 2026 presented a starkly contrasting picture: on-chain usage scale hit an all-time high – with monthly active users, total transactions, and throughput all breaking records. However, dollar-denominated asset scales and fee indicators 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 situation:

In January, the second round of the Fusaka upgrade cycle, involving only Blob parameter changes (BPO#2), was implemented, significantly enhancing data storage capacity.

In February, the ERC-8004 standard went live on the mainnet, becoming a common specification for AI agent identity and credit rating.

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

In March, the Institutional Ethereum Forum was held, seeing a significant increase in participation from traditional financial institutions.

Q1 2026 Key Metrics Overview

Ecosystem Total Value Locked: $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 Total Volume: $134.5 billion (QoQ -24.0%, YoY -31.2%)

Total Ecosystem Application Fee Revenue: $2 billion (QoQ -16.9%, YoY -7.8%)

Total 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 Stocks: $365.1 million (QoQ +16.5%)

Monthly Active User Addresses: 13.2 million (QoQ +53.5%, YoY +85.9%)

Total Layer 1 Transaction Count: 200.4 million (QoQ +38.0%, YoY +81.5%)

Average Transactions Per Second: 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 Holders: 292.8 million (QoQ +8.1%, YoY +24.9%)

Note: This report's statistics 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 dollar value of assets deposited into various on-chain applications. It is a leading indicator for revenue-generating activities like lending, trading, and staking. This metric tracks on-chain settlement funds that ecosystem users can withdraw at any time. In Q1 2026, the Ethereum ecosystem's average TVL was $316.2 billion, down 11.0% quarter-over-quarter but up 22.8% year-over-year. The QoQ decline was due to the overall price correction in crypto assets, while the substantial YoY increase demonstrates significant ecosystem expansion compared to last year.

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

The Active Loans indicator represents the scale of deposits that users have lent out and are generating interest income, directly reflecting lending business revenue. This metric tracks the total outstanding borrowings across all Ethereum lending applications. In Q1, the ecosystem's average active loan scale was $21.8 billion, down 16.6% QoQ but up 39.0% YoY. The contraction in loan balances alongside TVL reflects a cooling of overall market risk appetite, although the scale remains significantly higher than the same period last year.

Ethereum's lending market is concentrated among a few major pools, with Aave dominating. At the end of the quarter, its active loan scale was approximately $13.5 billion, capturing the vast majority of the ecosystem's share. It was followed by Morpho (~$1.9B), Spark under Sky (~$1B), and Maple (~$840M). The contraction in lending scale this quarter was primarily driven by Aave, as declining crypto asset prices led to reduced lending demand, with its total loan volume shrinking by about 24%. Comparing across the top five public chains, Ethereum's $21.8 billion in active loans significantly leads Solana ($2.5B), Plasma ($2.1B), BNB Chain ($760.8M), and Avalanche ($392.4M), accounting for 79.2% of the total lending across these chains – the highest percentage share for Ethereum in any sector.

Decentralized Exchange (DEX) trading volume refers to the total transaction value completed on on-chain spot exchanges. Traders pay fees when transacting, making volume highly correlated with platform revenue. This data aggregates DEX trading across the entire Ethereum ecosystem. In Q1, the total ecosystem volume was $134.5 billion, down 24% QoQ and 31.2% YoY. The greater decline in trading volume compared to the contraction in TVL confirms a significant reduction in market risk appetite during the asset downtrend this quarter.

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, followed by Curve (~$22.1B) and CoW Swap (~$12.4B). Trading volume is the only metric where Ethereum does not lead the top five chains: BNB Chain's total volume of $162.5 billion exceeded Ethereum's $134.5 billion, with Solana close behind ($104.9B), while Avalanche ($14.5B) and Polygon ($10.7B) ranked lower. Ethereum's volume accounts for 31.5% of the total across the five chains, second only to BNB Chain's 38%.

Ecosystem fees refer to all costs incurred by users when using various applications, including borrower interest and trader transaction fees. They directly reflect the economic value generated by the ecosystem. This metric aggregates fee totals across all Ethereum applications. In Q1, total ecosystem fees reached $2 billion, down 16.9% QoQ and 7.8% YoY, corresponding with the decline in trading and lending activity.

Ethereum's $2 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 among the top five chains. Even with the QoQ decline, Ethereum remains the largest source of application fees in the industry. Reviewing all metrics in this section: Ethereum leads the industry in TVL, lending scale, and ecosystem fees, with only DEX trading volume falling short of BNB Chain.

Tokenized Assets Sector

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

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

Stablecoins

In Q1, the average scale of stablecoins on Ethereum was $178.9 billion, down slightly by 2.3% QoQ but up 37.6% YoY. This was the only tokenized sub-sector with a QoQ contraction. The market is dominated by two major issuers: at the end of the quarter, Tether (USDT, $94.1B) and Circle (USDC, $54.5B) held the vast majority of Ethereum stablecoin market cap. Other notable products include Sky USDS ($12.4B), Ethena USDe ($5.9B), and PayPal PYUSD ($2.9B). Newer compliant stablecoins like Ripple's RLUSD ($1.1B) have also launched. Comparing across the top five chains, Ethereum's $178.9 billion stablecoin scale leads TRON ($84.5B), Solana ($14.5B), Arbitrum One ($6.8B), and Base ($4.7B), accounting for 61.8% of the total stablecoin market cap across these chains.

Tokenized Funds

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

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

Traditional finance compliant funds (core narrative vehicle for institutions): BlackRock BUIDL (issued via Securitize, ~$1B), WisdomTree Government Money Market Fund (~$815M), Superstate USTB (~$620M), followed by Ondo OUSG (~$320M). Comparing across the top five chains, Ethereum's $19.4 billion in tokenized funds significantly leads ZKsync Era ($2.5B), BNB Chain ($2.3B), Solana ($1.3B), and Stellar ($1.1B), accounting for 73% of the total. This is Ethereum's second most dominant tokenized asset sector.

Tokenized Commodities

In Q1, the average scale of tokenized commodities on Ethereum was $4.7 billion, up 60% QoQ and skyrocketing 325.9% YoY, making it the fastest-growing tokenized category. This sector consists almost entirely of on-chain gold: Tether Gold (XAUT, ~$2.6B) and Paxos Gold (PAXG, ~$2.4B) together account for the entire sector's share. Comparing across five relevant public chains, Ethereum's $4.7 billion scale far exceeds Ripple ($736.6M), Arbitrum One ($95.9M), BNB Chain ($38.4M), and Solana ($29.8M), accounting for 84% of the total. This is the sub-sector where Ethereum has the strongest dominance.

Tokenized Stocks

Tokenized stocks are the smallest sub-sector. In Q1, their average scale on Ethereum was $365.1 million, having been nearly zero in the same period last year, up 16.5% QoQ. The sector is almost exclusively dominated by Ondo Finance, which issues on-chain assets tracking the S&P 500, Nasdaq 100 broad-based indices, and dozens of individual stocks, constituting the vast majority of Ethereum's tokenized stock market cap. Comparing across the top five chains, Ethereum's $365.1 million slightly leads Solana ($249M), BNB Chain ($150.5M), Arbitrum One ($29M), and Stellar ($4.2M). However, it only accounts for 45.8% of the total tokenized stock market cap across these chains, making it the only tokenized asset sector where Ethereum does not hold an absolute majority share.

Summary of the Tokenized Assets Sector: Stablecoin inventory slightly declined in Q1, but Ethereum's monopolistic position in the tokenized funds and commodities sectors continues to strengthen.

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 counts addresses interacting with the Ethereum Layer 1 mainnet. The average MAU in Q1 was 13.2 million, surging 53.5% QoQ and soaring 85.9% YoY, reaching an all-time high. This breaks the trend of slow growth seen over previous quarters, with a significant increase in user growth rate.

Total Transaction Count refers to the number of transactions written and confirmed on the blockchain, reflecting the intensity of user on-chain interaction. Transactions Per Second (TPS) is the average confirmation rate over the period, measuring the network's real-time processing capacity. Both metrics only count Ethereum Layer 1 mainnet activity. In Q1, Layer 1 total transactions were 200.4 million, up 38% QoQ and 81.5% YoY. The average TPS increased to 25.78, up 41.2% QoQ. Both metrics set new all-time highs, proving that user growth translates into actual on-chain business increment.