The strategy for the growth of the Ethereum network appears to prioritize gaining user adoption first, with monetization coming afterward.
In the first quarter of 2026, Ethereum’s layer-1 network achieved record-breaking levels across all usage metrics. Monthly active users surged by 53.5% quarter-over-quarter, reaching 13.2 million, while the number of transactions hit 200.4 million. This occurred despite a 30% decline in ETH’s market capitalization and a nearly 50% drop in base layer fees.
According to the Q1 2026 Ethereum Report by Token Terminal, the noticeable gap between rising activity and falling revenues is intentional.
Record Ethereum Activity Despite Diminishing Fees and Market Valuation
Released on June 17, the report illustrates a clear bifurcation in the data. On the usage front, all metrics saw growth. Active monthly users rose by 85.9% year-over-year. Transactions increased by 81.5% year-over-year to slightly over 200 million, and overall throughput reached 25.78 transactions per second, up 81.7% year-on-year.
In contrast, the financial metrics painted a different picture. The total value locked in the ecosystem averaged $316.2 billion, representing an 11% decline from Q4 2025 but still up nearly 23% year-on-year. Base layer transaction fees amounted to $39.9 million, nearly 48% lower than the previous quarter and 81.9% down from a year ago.
As per Token Terminal, this fee compression directly resulted from January’s Fusaka upgrade cycle and its second Blob Parameters Only fork (BPO #2), which enhanced Ethereum’s data capacity, making blockspace more affordable. Consequently, the transaction count rose by 38% while total fees were nearly halved during the same period.
The group Etherealize, which is dedicated to enhancing Ethereum’s capabilities in traditional finance and contributed to the report, expressed:
“Ethereum is strategically scaling the network at the cost of short-term fee generation, aiming for cheaper blockspace to unlock greater demand (and, ultimately, network revenue) over time.”
They are looking forward to the Glamsterdam upgrade, which aims to triple the gas limit in Q3 2026, with Ethereum’s roadmap ultimately targeting 10,000 TPS and near-instant finality by 2029.
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The report also highlighted Ethereum’s position in the tokenized asset market, which remained largely stable through the quarter. The total market cap for tokenized assets averaged $203.4 billion, just a 0.7% decrease from the previous quarter but up 42.9% year-on-year. Stablecoins led this segment with a market cap of $178.9 billion, mainly consisting of Tether’s USDT ($94.1 billion) and Circle’s USDC ($54.5 billion).
Tokenized assets emerged as the fastest-growing sector, witnessing a quarter-over-quarter increase of 60% and a year-over-year rise of 325.9% to $4.7 billion, primarily driven by tokenized gold offerings like Tether Gold and PAX Gold. Tokenized funds also recorded growth, rising 5% to $19.4 billion during the period, featuring regulated institutional products from BlackRock’s BUIDL, WisdomTree, and Superstate. Yield-generating dollar products from Sky and Ethena were also notable holdings.
Among the top five blockchain networks, Ethereum commanded an impressive 71% of the total value locked, totaling $316.2 billion, compared to $129 billion across Tron, Solana, BNB Chain, and Plasma combined. Furthermore, Ethereum held over 79% of active DeFi loans, nearly 62% of stablecoins, 73% of tokenized funds, and 84% of tokenized commodities.
Conversely, in decentralized exchange trading volume, Ethereum did not hold the lead, with BNB Chain processing $162.5 billion compared to its $134.5 billion, while Solana came in third with $104.9 billion.
ETH Price Faces Challenges
Interestingly, the robust activity did not translate into positive price momentum for Ethereum’s native token. In Q1 2026, the fully diluted market cap averaged $290 billion, experiencing a 30.3% drop quarter-over-quarter and nearly a 10% decline over the year.
At the time of this report, Ethereum hovered around $1,700, having hit a 14-month low near $1,500 in early June before regaining some ground following news of a peace agreement between the United States and Iran.
Market analysts are divided in their perspectives; some, like Daan Crypto Trades, have pointed out that ETH is on track for its second-worst first half of the year since 2022, following a 29% decline in Q1 and an additional 21% drop thus far in Q2. This trajectory could lead to three consecutive quarterly losses in the double digits.