Ethereum Q1 2026 Report: Costs Drop, Users and Transaction Volume Reach Record Highs

Original Title: Ethereum Q1 2026 Report
Original Author: Token Terminal
Compilation: Peggy, BlockBeats

Editor's Note: This Token Terminal Ethereum Q1 2026 report presents a set of seemingly contradictory yet crucial data: the number of Ethereum mainnet users, transaction count, and throughput all hit record highs, but transaction fees, TVL, trading volume, and fully diluted ETH market cap all declined quarter-over-quarter.

Ethereum is actively entering a "lower fees for greater scale" phase. As Fusaka upgrades increase data capacity, block space becomes cheaper, and user and transaction growth begin to accelerate, but short-term fee capture is suppressed. The report explains this phenomenon as Jevons' Paradox: when usage costs decrease, network demand may be further unleashed.

More notably, Ethereum's core narrative is shifting from a DeFi public chain to a global financial settlement layer. The report shows that Ethereum still dominates the tokenized asset space: stablecoins, tokenized funds, tokenized commodities, and tokenized stocks are all scaling on its platform, with especially strong growth in funds and gold assets. The continued entry of institutions like BlackRock, JPMorgan, and Fidelity also moves "institutional on-chain" from concept to product issuance and settlement practice.

The core value of this report is not to predict short-term ETH price movements, but to demonstrate Ethereum’s structural position as a financial infrastructure: it sacrifices short-term fee revenue through expansion, while trying to consolidate its network effects in stablecoins, tokenized funds, on-chain credit, and institutional settlement. For investors and industry observers, the key question is: as more financial assets move on-chain, who will become the default settlement layer, and how will this settlement demand ultimately translate into ETH’s value capture?

Below is the original text:

1. Executive Summary ======

Ethereum ($ETH) is an open, permissionless blockchain providing global settlement and computing capabilities for financial applications in an open economy. It runs a shared ledger that everyone can build on, with no single party able to shut it down, and uses its native asset ETH to pay transaction fees; simultaneously, ETH is staked to secure the network.

The activities on Ethereum have historically been limited by traditional financial infrastructure costs and throughput: settlement takes days, with multiple intermediaries, each adding counterparty risk. Tokenization and stablecoins are on-chain solutions addressing these frictions. As their regulatory frameworks mature gradually through 2025 into 2026, institutional-level on-chain activity is transitioning from theory to reality.

Ethereum’s role in this shift is as the base settlement layer. Stablecoins, tokenized funds, tokenized commodities, and increasingly tokenized stocks are issued and settled on Ethereum; layer-2 networks extend throughput and ultimately settle back to layer 1. ETH, as the asset backing and paying for this settlement, accrues value, while the staking market reflects how much ETH supply is committed to this role.

From a market positioning perspective, Ethereum remains the largest venue for tokenized assets. Across cross-chain metrics, Ethereum holds the majority share in stablecoins, tokenized funds, commodities, and stocks. Driven by the Ethereum Foundation and a broad, independent community of client developers and researchers, Ethereum is also supported by organizations like Etherealize that help traditional finance better understand this network.

The first quarter of 2026 can be clearly divided into two main themes. On one hand, usage hits all-time highs: monthly active users, transaction count, and throughput all set records. On the other hand, dollar-denominated value and fee metrics show compression: fully diluted market cap, total locked value, trading volume, and two fee metrics all declined quarter-over-quarter. Key events shaping this quarter impacted both themes: the second Blob Parameters Only (BPO #2) fork during Fusaka’s upgrade cycle in January increased data capacity; ERC-8004 launched on mainnet in February, establishing AI Agent identity and reputation standards; the Ethereum Foundation outlined its 2026 Protocol Cluster priorities—scaling, user experience, and layer-1 strengthening; plus, events like the March Institutional Ethereum Forum reflect increased institutional participation.

Key Metrics (Q1 2026)

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

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

Trading Volume: $134.5 billion (QoQ -24.0%, YoY -31.2%)

Fees: $2.0 billion (QoQ -16.9%, YoY -7.8%)

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 Users: 13.2 million (QoQ +53.5%, YoY +85.9%)

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

Transactions per Second: 25.78 (QoQ +41.2%, YoY +81.7%)

Fees Paid: $39.9 million (QoQ -47.9%, YoY -81.9%)

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

Staking Ratio: 0.31x (QoQ +0.03x, YoY +0.03x)

Token Holders: 292.8 million (QoQ +8.1%, YoY +24.9%)

This report covers Ethereum Layer 1, i.e., the mainnet. Layer-2 networks are considered separate chains and are not included in Ethereum’s data.

2. Ecosystem ======

Total Locked Value (TVL) measures the on-chain deposit value across various applications within a project, serving as a leading indicator for income-generating activities like lending, trading, and staking. It reflects the capital deposited within the Ethereum ecosystem, which depositors can typically withdraw at any time.

In this context, in Q1 2026, the average TVL was $316.2 billion, down 11.0% QoQ but up 22.8% YoY. The quarterly decline aligns with the overall asset price pullback, while the annual increase indicates significant ecosystem expansion compared to a year earlier.

Among the top five chains, Ethereum leads with $316.2 billion, surpassing Tron ($84.5 billion), Solana ($28.8 billion), BNB Chain ($10.3 billion), and Plasma ($5.7 billion), accounting for 71.0% of the top five total. The largest capital pools within this are in liquid staking, represented by Lido, and lending, represented by Aave. Re-staking projects like EigenLayer and ether.fi, as well as synthetic dollar issuers Ethena and Sky, are also among the largest applications. Capital concentration remains Ethereum’s clearest structural advantage.

Active loans measure the portion of deposits that have been lent out to borrowers and are accruing interest, typically related to lending income. On Ethereum, it reflects the total outstanding loans across all lending applications.

In Q1 2026, active loans averaged $21.8 billion, down 16.6% QoQ but up 39.0% YoY. The lending balance shrank along with total locked value, consistent with risk appetite decline, but remains significantly higher than a year earlier.

Lending activity on Ethereum is concentrated in a few key money markets, dominated by Aave. At quarter’s end, active loans on Aave were about $13.5 billion, representing most of the ecosystem total; followed by Morpho (~$1.9 billion), Spark (a product of Sky, ~$1 billion), and Maple (~$840 million). The contraction this quarter was mainly driven by Aave, as prices fell and borrowing demand cooled, shrinking its loan book by about 24% during the quarter. Among the top five chains, Ethereum’s $21.8 billion far exceeds Solana ($2.5 billion), Plasma ($2.1 billion), BNB Chain ($760.8M), and Avalanche ($392.4M), accounting for 79.2% of the top five total. This is the highest share among all metrics in this section.

Trading volume measures the total value of trades executed on decentralized spot exchanges. Since traders pay fees, this metric is usually correlated with the fees generated by these venues. Here, it reports the total DEX trading volume within the Ethereum ecosystem.

In Q1 2026, total ecosystem trading volume was $134.5 billion, down 24.0% QoQ and 31.2% YoY. The decline in trading volume was more pronounced than the drop in locked capital, indicating reduced risk appetite during the quarter’s pullback.

DEX activity on Ethereum is concentrated in a few deep liquidity venues. Uniswap handled about $85.5 billion in Q1, roughly two-thirds of the ecosystem’s total; followed by Curve (~$22.1 billion) and CoW Swap (~$12.4 billion). Trading volume is the only metric in this section where Ethereum does not lead cross-chain: BNB Chain’s volume was $162.5 billion, higher than Ethereum’s $134.5 billion; Solana’s was $104.9 billion; then Avalanche ($14.5 billion) and Polygon ($10.7 billion). Ethereum accounts for 31.5% of the top five chains’ total trading volume, ranking second after BNB Chain’s 38.0%.

Fees represent the total value paid by users for utilizing a project’s application, such as interest paid by borrowers and transaction fees paid by traders, reflecting the economic value generated. This metric sums the fees produced by applications within the Ethereum ecosystem.

In Q1 2026, total ecosystem fees were $2.0 billion, down 16.9% QoQ and 7.8% YoY, consistent with the slowdown in trading and lending activities.

Ethereum generated $2.0 billion in fees, significantly higher than Tron ($599.3 million), Solana ($532.5 million), BNB Chain ($231.9 million), and Polygon ($38.8 million), accounting for 58.4% of the top five chains’ total fees. Despite the decline, Ethereum remains the largest single source of application fees. Overall, in this section, Ethereum leads in locked capital, lending, and fees, only trailing in trading volume.

3. Tokenized Assets =======

Market cap of circulating assets measures the total value of tokenized assets on-chain, calculated as circulating supply multiplied by the end-of-day price. For stablecoins, it refers to the outstanding supply; for tokenized funds, the on-chain asset management scale; for tokenized stocks, the value of on-chain issued shares. This data covers assets issued on Ethereum.

In Q1 2026, the average market cap of tokenized assets on Ethereum was $203.4 billion, roughly flat QoQ (-0.7%) but up 42.9% YoY. Stablecoins account for the largest share, at 87.9% of the total, with the rest composed of funds, commodities, and stocks.

In Q1 2026, the average stablecoin market cap on Ethereum was $178.9 billion, down 2.3% QoQ but up 37.6% YoY, the only subcategory to decline within this quarter. The dominant issuers are two: Tether’s USDT at $94.1 billion and Circle’s USDC at $54.5 billion, together comprising most of the stablecoin market cap on this network. Followed by Sky’s USDS ($12.4 billion), Ethena’s USDe ($5.9 billion), and PayPal’s PYUSD ($2.9 billion). New entrants like Ripple’s RLUSD ($1.1 billion) are also live. Among the top five chains, Ethereum’s $178.9 billion surpasses Tron ($84.5 billion), Solana ($14.5 billion), Arbitrum One ($6.8 billion), and Base ($4.7 billion), making up 61.8% of the top five total.

In Q1 2026, the average tokenized fund size was $19.4 billion, up 4.9% QoQ and 73.1% YoY. This sector divides into two parts: one with leading yield-bearing on-chain USD, including Sky’s sUSDS (~$6.4 billion) and Ethena’s sUSDe (~$3.5 billion); the other with regulated funds supporting institutional narratives, which have expanded in scale, including BlackRock’s BUIDL (issued via Securitize, about $1 billion), WisdomTree’s government money market fund (~$815M), and Superstate’s USTB (~$620 million). Among the top five chains, Ethereum’s $19.4 billion leads, ahead of zkSync Era ($2.5 billion), BNB Chain ($2.3 billion), Solana ($1.3 billion), and Stellar ($1.1 billion), accounting for 73.0% of the total, the second-highest concentration among all asset categories in this report.

In Q1 2026, the average tokenized commodity size was $4.7 billion, up 60.0% QoQ and 325.9% YoY, making it the fastest-growing tokenized asset class. This category is almost entirely gold: Tether Gold (XAUT, about $2.6 billion) and Paxos’ PAX Gold (PAXG, about $2.4 billion) together constitute nearly the entire segment. Among the top five chains, Ethereum’s $4.7 billion far exceeds XRP Ledger ($736.6 million), Arbitrum One ($95.9 million), BNB Chain ($38.4 million), and Solana ($29.8 million), representing 84.0% of the top five total, the strongest lead in this report.

Tokenized stocks remain the smallest category. In Q1 2026, the average size was $365.1 million, a significant increase from a nearly negligible base a year earlier, with a 16.5% QoQ rise. This category is almost entirely dominated by Ondo Finance, whose on-chain stocks and ETFs cover broad indices like S&P 500 and Nasdaq 100, as well as dozens of individual stocks, forming most of Ethereum’s tokenized stock market cap. Among the top five chains, Ethereum leads with $365.1 million, followed by Solana ($249 million), BNB Chain ($150.5 million), Arbitrum One ($29 million), and Stellar ($4.2 million). However, Ethereum’s share of the top five total is only 45.8%, the narrowest lead among categories and the only one where Ethereum does not hold a clear majority.

Overall, this quarter demonstrates Ethereum’s leading position in tokenized funds and commodities, even as stablecoin balances temporarily plateau.

4. Usage ======

Monthly active users (MAU) measure the number of unique addresses engaging in revenue-generating transactions within a month. On Ethereum, it counts distinct addresses conducting transactions on Layer 1.

In Q1 2026, MAU averaged 13.2 million, up 53.5% QoQ and 85.9% YoY, reaching a new high. After several quarters of moderate growth, user growth has accelerated significantly.

Transaction count measures the number of confirmed transactions added to the blockchain, reflecting user activity; transactions per second (TPS) is the average rate of these confirmed transactions, measuring throughput and real-time usage. Both metrics here refer to Ethereum Layer 1.

In Q1 2026, total transaction count was 200.4 million, up 38.0% QoQ and 81.5% YoY; throughput increased to 25.78 transactions per second, up 41.2%. Both metrics hit all-time highs, confirming that user growth translated into substantial on-chain activity.

Fees here refer to the total transaction fees paid by users on Ethereum Layer 1, representing the cost of using the base network. This differs from the ecosystem application fees discussed in the second section.

In Q1 2026, total fees amounted to $39.9 million, down 47.9% QoQ and 81.9% YoY. This stark contrast with usage growth is a key data point: transaction count increased 38.0%, while total fees declined 47.9%, indicating that as data capacity increased and block space prices fell, the average cost per transaction dropped sharply.

This section tells an expansion story: more users, more transactions, at lower total costs. As throughput growth outpaces demand, activity can rise even as fees fall.

5. ETH =====

Fully Diluted Market Cap measures ETH valuation under the assumption of full dilution, calculated as token price times total supply under the current economic model, including circulating, locked, unlocked, and future issuance tokens.

In Q1 2026, the average fully diluted market cap was $290 billion, down 30.3% QoQ and 9.9% YoY. The quarterly decline is the largest among valuation metrics in this report and also drives down other dollar-denominated indicators.

Staking ratio measures the value of staked ETH used to secure the proof-of-stake network relative to ETH’s total market cap. A ratio of 0.31x indicates about 31% of ETH’s value is staked.

In Q1 2026, the average staking ratio was 0.31x, higher than the previous quarter and a year earlier at 0.28x. Even as ETH’s market cap declined, the proportion of ETH committed to securing the network increased, indicating stable staking participation during price retracements.

Token holders count the number of distinct addresses holding ETH. On Ethereum, it measures the number of addresses holding ETH.

In Q1 2026, the average number of token holders was 292.8 million, up 8.1% QoQ and 24.9% YoY, continuing a stable upward trend over the past five quarters. Even as fully diluted market cap declines, the holder base continues to expand, indicating broader ownership during price retracements.

6. Etherealize Team Commentary ==================

"The most notable tension this quarter is that Ethereum’s mainnet usage hit record highs, yet transaction fees declined. Ethereum is intentionally sacrificing short-term fee capture to expand the network, betting that cheaper block space will unlock more demand and ultimately generate more long-term network revenue.

Token Terminal’s 'Ethereum Q1 2026 Report' shows this bet is paying off. Year-over-year, monthly active users grew 85.9%, transaction count increased 81.5%, and throughput rose 81.7%. This is the Jevons’ Paradox at work. We expect the overall network demand increase will offset the impact of lower fees, similar to how the semiconductor industry today generates revenue several orders of magnitude higher than in 1975, when Intel co-founder Gordon Moore observed that transistor counts on chips roughly doubled every two years. Moreover, the benefits of expansion are still ahead: Glamsterdam’s upgrade in Q3 will increase gas limits by over 3x, and Ethereum’s roadmap aims for 10,000 TPS by 2029, along with a 'fast layer' network with second-level finality.

We agree with BlackRock CEO Larry Fink’s assessment from December last year. He wrote, 'Today’s tokenization is roughly equivalent to the internet in 1996 — when Amazon only sold $16 million worth of books.' Back then, the consensus was that Amazon was just a loss-making online bookstore supported by the internet bubble. But Jeff Bezos saw the internet’s potential to reshape retail, prioritizing network effects and economies of scale over short-term profits. Ethereum is making similar trade-offs to solidify its role as the global financial settlement layer.

Another lesson from the internet is that open, permissionless networks tend to outperform closed ones. In 1995, Bill Gates published 'The Road Ahead,' predicting digital commerce would run on proprietary 'information superhighways' like MSN, AOL, CompuServe, and Prodigy, which had millions of paid users. France’s Minitel, with more users than the entire web until late 1996, ultimately lost out. No serious company would build on a competitor-controlled network; more importantly, no company can indefinitely keep pace with permissionless innovation. We’ve seen this repeatedly: Linux surpassing proprietary Unix, open networks replacing corporate walled gardens, Wikipedia replacing Britannica. Each time, proprietary solutions had initial advantages—more focused products, stronger marketing, better business development—but once open systems crossed the thresholds of contribution, tooling, and trustworthiness, their lead was eroded.

Today, we see the same theme in financial infrastructure, and the data in this report proves that Ethereum has crossed that threshold, dominating key metrics. Institutions building tokenized finance choose Ethereum not out of ideology, but because of liquidity, composability, and precedents. As this report highlights, Ethereum accounts for 79.2% of active DeFi loans, 61.8% of stablecoins, 73.0% of tokenized funds, and 84.0% of tokenized commodities among the top five chains. Each new tokenized asset deepens liquidity, attracting the next; a neutral underlying layer is the only sustainable balance, as large players will never settle on infrastructure controlled by competitors. Moreover, institutions are realizing that privacy, permissioning, KYC, and transfer restrictions can be implemented via privacy-preserving environments and permissioned token standards on Ethereum, without sacrificing access to public liquidity; conversely, grafting public liquidity and open applications onto closed chains is impossible.

If there is any change, it’s that institutional momentum has further accelerated after the quarter’s end. In May alone, BlackRock filed two more tokenized funds; JPMorgan launched its second tokenized money market fund, JLTXX; Fidelity International introduced FILQ, a USD liquidity fund rated AAA by Moody’s, issued as an ERC-20. In stablecoins, Japan Blockchain Foundation’s JPY stablecoin EJPY will launch on Ethereum; a consortium of twelve European banks—including BNP Paribas, ING, UniCredit, and BBVA—is preparing to launch a regulated euro stablecoin.

The internet in 1990 seemed impossible, but by 2005 it was inevitable. If Fink’s view on tokenization’s stage is correct, the next few years could be among Ethereum’s most exciting in history. As argued in our 'Productive Money' report, network fees provide ETH with an intrinsic value floor, while the bull case is that ETH absorbs the over $30 trillion in monetary premium held by gold and Bitcoin, thanks to superior monetary properties. ETH does not need high fees to succeed."

7. Definitions ====

Metrics:

Total Locked Value (TVL): The USD value of deposits across various applications within a chain’s ecosystem, reported as a period average.

Active Loans: The USD value of outstanding loans in lending applications within the ecosystem, reported as a period average.

Trading Volume: The USD value of trades executed on decentralized exchanges within the ecosystem, reported as total for the period.

Fees: The total fees paid by users to applications within the ecosystem, reported as total for the period.

Circulating Asset Market Cap: The USD value of a tokenized asset class in circulation, calculated as circulating supply times end-of-day price, reported as a period average.

Monthly Active Users: The number of distinct addresses engaging in revenue-generating transactions on Ethereum, reported as a period average.

Transaction Count: The total number of confirmed transactions on Ethereum Layer 1, reported as total for the period.

Transactions per Second: The average rate of confirmed transactions on Ethereum Layer 1 during the period.

Fees Paid: The total transaction fees paid on Ethereum Layer 1, reported as total for the period.

Fully Diluted Market Cap: ETH price times total supply under the current economic model, including circulating, locked, unlocked, and future tokens, reported as a period average.

Staking Ratio: The value of staked ETH used to secure the proof-of-stake network relative to ETH’s total market cap, reported as a period average.

Token Holders: The number of distinct addresses holding ETH, reported as a period average.

8. About This Report =======

This report is published quarterly, based on Token Terminal’s end-to-end on-chain data infrastructure. All metrics are directly sourced from blockchain data. Charts and datasets referenced in the report are available on the Token Terminal Ethereum 2026 Q1 dashboard.

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