Why Ethereum’s Record Activity Isn’t Driving ETH Price

The Ethereum network’s growth strategy appears to focus on first winning the adoption race and then generating fees later.

Ethereum’s layer 1 network set all-time highs across all usage metrics in the first quarter of 2026, with monthly active users increasing 53.5% quarter over quarter to 13.2 million and transaction count reaching 200.4 million, even as ETH’s market cap fell 30% and fees on the base layer fell nearly 50%.

But according to Token Terminal’s Q1 2026 Ethereum Report, the central point is the divergence between rising activity and falling revenue.

Ethereum Usage Hits Record Despite Falling Fees and Valuation

The report, published on June 17, presented the numbers divide cleanly along two lines. On the usage side, everything was up, including monthly active users, which were up 85.9% year over year; transactions, which increased 81.5% year-on-year to just over 200 million; and throughput, which reached 25.78 transactions per second, a year-on-year increase of 81.7%.

However, on the dollar side, things were not so bright. Total ecosystem value locked averaged $316.2 billion, down 11% from Q4 2025 but still up nearly 23% year over year. Meanwhile, base layer transaction fees totaled $39.9 million, a drop of nearly 48% from the previous quarter and 81.9% below where they were a year ago.

According to Token Terminal, the fee compression had a direct cause, namely the second Blob Parameters Only (BPO #2) fork of the Fusaka upgrade cycle in January, which increased Ethereum’s data capacity and made block space cheaper. As a result, transaction counts increased by 38%, while total fees fell by almost half in the same period.

Etherealize, the group working to push Ethereum’s capabilities into traditional finance and a contributor to the report, phrased it this way:

“Ethereum is deliberately scaling the network at the expense of short-term fee capture, betting that cheaper block space unlocks much more demand (and eventually network revenue) in the long term.”

They are looking ahead to the Glamsterdam upgrade, which is targeting a more than 3x increase in the gas limit in Q3 2026, with Ethereum’s roadmap ultimately guiding towards 10,000 TPS and near-instant finality by 2029.

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As for Ethereum’s structural position in tokenized assets, the report noted that it had remained largely intact during the quarter, with the total market capitalization of tokenized assets averaging $203.4 billion, down just 0.7% from the previous quarter. However, it was up 42.9% year-over-year, with stablecoins leading the way with $178.9 billion, of which Tether’s USDT ($94.1 billion) and Circle’s USDC ($54.5 billion) accounted for the largest share.

Tokenized assets turned out to be the fastest growing segment, increasing 60% quarter-on-quarter and 325.9% year-on-year to reach $4.7 billion, the majority of which was represented by tokenized gold, i.e. Tether Gold and PAX Gold. Tokenized funds also experienced similar growth rates, rising 5% to 19.4 billion during the analyzed period. Regulated institutional products from BUIDL, WisdomTree and BlackRock’s Superstate were among the largest holdings, along with yielding on-chain dollar products from Sky and Ethena.

And of the top five blockchain networks, Ethereum had a 71% share of the total TVL, worth $316.2 billion, compared to $129 billion for Tron, Solana, BNB Chain and Plasma combined. It also holds over 79% of active DeFi loans, nearly 62% of stablecoins and 73% of tokenized funds, as well as 84% ​​of tokenized commodities.

However, DEX trading volume was the only area where Ethereum did not lead, with BNB Chain processing $162.5 billion against its $134.5 billion, while Solana came in third after raising $104.9 billion.

ETH price under pressure

Interestingly, none of the activities described above translated into price strength for the native Ethereum token. On the one hand, the coin’s fully diluted market capitalization averaged $290 billion in the first quarter of 2026, which represented a 30.3% quarter-on-quarter drop and almost 10% year-over-year.

At the time of writing, it was hovering around the $1,700 level after briefly hitting a 14-month low near $1,500 in early June, before recovering somewhat on news of a US-Iran peace deal.

Analyst sentiment on the matter is divided, with some like Daan Crypto Trades noting that ETH is on track for its second-worst first half since 2022 after a 29% drop in the first quarter and another 21% drop so far in the second quarter. That puts it on track for three consecutive double-digit quarterly losses.