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Etherealize Team Commentary on Token Terminal's Ethereum Q1 2026 Report

The headline tension this quarter was Ethereum mainnet hitting record usage levels while transaction fees fell. Ethereum is deliberately scaling the network at the expense of near-term fee capture, betting that cheaper blockspace unlocks far more demand (and eventually network revenue) in the long run.

Token Terminal's Ethereum Q1 2026 Report shows that bet is working. On a year-over-year basis, monthly active users rose 85.9%, transaction count is up 81.5%, and throughput climbed 81.7%.

This is Jevon's paradox at work, and we expect the increase in total network demand to more than make up for lower fees, similar to how the semiconductor industry generates several orders of magnitude more revenue today than it did in 1975, when Intel co-founder Gordon Moore observed that the number of transistors on a microchip doubled roughly every two years.

Furthermore, the scaling payoff is still ahead of us with the Glamsterdam upgrade targeting a more than 3x increase in the gas limit in Q3 and Ethereum's roadmap guiding to 10,000 TPS and a "fast L1" with finality in seconds by 2029.

We agree with BlackRock CEO Larry Fink who wrote in December that "tokenisation today is roughly where the internet was in 1996—when Amazon had sold just $16m worth of books."

The consensus at the time was that Amazon was a money-losing online bookseller propped up by an internet bubble. However, Jeff Bezos saw that the internet was going to transform retail and optimized for network effects and economies of scale, rather than near term profits. Ethereum is making a similar tradeoff to cement its position as the settlement layer for global finance.

The other lesson worth drawing from the Internet is that open, permissionless networks tend to beat closed ones. In 1995, Bill Gates published The Road Ahead predicting digital commerce would run on proprietary corporate networks he called the "Information Superhighway" rather than the open internet. Microsoft was building MSN. AOL, CompuServe, and Prodigy ran walled gardens with millions of paying subscribers. France's Minitel had more users than the entire web until late 1996. They all lost. No serious company would build on top of a network controlled by a competitor, and perhaps more importantly, no corporation could keep pace with permissionless innovation indefinitely.

We have seen this play out again and again: Linux out-built proprietary Unix, the open web displaced corporate walled gardens; Wikipedia displaced Britannica. Each time, the proprietary alternative had the early lead — a more focused product, larger marketing budgets, business development teams — and each time that lead eroded after the open system crossed a threshold of accumulated contribution, tooling, and credible neutrality.

We are now seeing this theme play out in financial infrastructure, and this report's data is evidence that Ethereum has crossed the threshold with dominant market share in every metric that matters.

The institutions building tokenized finance are choosing Ethereum not out of ideology but because the liquidity, composability, and institutional precedent are already there. As this report highlights, Ethereum holds 79.2% of active DeFi loans across the top five chains, 61.8% of stablecoins, 73.0% of tokenized funds, and 84.0% of tokenized commodities.

Every new tokenized asset deepens the liquidity that pulls in the next one, and a neutral substrate is the only equilibrium that holds because large players will never agree to settle on a competitor's infrastructure. Furthermore, institutions are realizing that privacy, permissioning, KYC, and transfer restrictions can all be implemented on Ethereum through privacy-preserving environments and permissioned token standards without surrendering access to public liquidity; the reverse (bolting public liquidity and an open application ecosystem onto a closed chain) is not possible.

The institutional momentum, if anything, has accelerated since quarter-end. In May alone, BlackRock filed for two more tokenized funds, JPMorgan launched JLTXX as its second tokenized money-market fund on Ethereum, and Fidelity International launched FILQ, a Moody's AAA-rated dollar liquidity fund, as an ERC-20. In the world of stablecoins, the Japan Blockchain Foundation's yen stablecoin EJPY will launch on Ethereum, and a twelve-bank European consortium (including BNP Paribas, ING, UniCredit, and BBVA) is preparing a regulated euro stablecoin.

The internet looked impossible in 1990 and inevitable by 2005. If Fink is right about where tokenization sits on that curve, the next few years could be some of the most exciting in Ethereum's history. And as we argued in our Productive Money report, network fees give ETH an intrinsic value floor, while the bull case is ETH absorbing the ~$30+ trillion monetary premium held by gold and Bitcoin given its superior monetary attributes. ETH doesn't need exorbitant fees to win.