Why record-breaking Ethereum activity does not lead to an increase in the price of ETH

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

Ethereum’s Layer 1 network hit all-time highs across every usage metric in Q1 2026, with the number of monthly active users rising 53.5% QoQ to 13.2 million and the number of transactions reaching 200.4 million, even as Ethereum’s market capitalization fell by 30% and fees on the underlying layer fell by nearly 50%.

But according to Token Terminal’s Q1 2026 Ethereum report, the difference between increased activity and decreased revenue is the bottom line.

Ethereum usage reaches record high despite low fees and valuation

The report was published on June 17 Show The numbers are divided 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 by 81.5% year-on-year to just over 200 million; Productivity reached 25.78 transactions per second, an increase of 81.7% year-on-year.

However, on the dollar side, things were not so bright. The average total value of the locked ecosystem was $316.2 billion, down 11% from Q4 2025 but still up approximately 23% year over year. Meanwhile, base tier transaction fees were $39.9 million, down nearly 48% from the previous quarter and 81.9% lower than a year ago.

For Token Terminal, the fee pressure had a direct cause, which was the second Blob Parameters Only fork of the Fusaka upgrade cycle (BPO #2) in January, which increased Ethereum’s data capacity and made block space cheaper. As a result, the number of transactions rose 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 contributing to the report, put it this way:

“Ethereum is deliberately scaling the network at the expense of fee collection in the near term, betting that cheaper block space unlocks more demand (and ultimately network revenue) in the long term.”

They are looking to upgrade Glamsterdam, which targets a more than 3x gas limit increase in Q3 2026, with Ethereum’s roadmap eventually pointing towards 10,000 TPS and a near-instantaneous finalization by 2029.

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Regarding Ethereum’s structural position in tokenized assets, the report noted that it remained largely intact during the quarter, with the total market capitalization of tokenized assets reaching $203.4 billion, only 0.7% lower than the previous quarter. However, they are up 42.9% year-on-year, with stablecoins worth $178.9 billion, of which Tether’s USDT ($94.1 billion) and Circle’s USDC ($54.5 billion) account for the bulk of it.

Tokenized assets turned out to be the fastest growing sector, increasing 60% QoQ and 325.9% YoY to $4.7 billion, most of which was represented by tokenized gold, i.e. Tether Gold and PAX Gold. Token funds also saw similar growth rates, rising by 5% to 19.4 billion during the period under discussion. BlackRock’s BUIDL, WisdomTree and Superstate structured institutional products were among the largest holdings, along with on-chain yielding dollar products from Sky and Ethena.

Among the top 5 blockchain networks, Ethereum had a 71% share of the total TVL, worth $316.2 billion, versus $129 billion on Tron, Solana, BNB Chain, and Plasma combined. It also holds over 79% of active DeFi loans, nearly 62% of stablecoins, 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 the BNB chain transacting $162.5 billion versus $134.5 billion, with Solana coming in third with $104.9 billion.

ETH price is under pressure

Interestingly, none of the activities described above have translated into Ethereum native token price strength. For example, the average fully diluted market capitalization of the coin was $290 billion in the first quarter of 2026, representing a decline of 30.3% on a quarterly basis and about 10% over one year.

At the time of writing, it was hovering around the $1,700 level shortly after to hit The price of gold fell to 14-month lows near $1,500 earlier in June before rebounding somewhat following news of a peace deal between the US and Iran.

Analysts’ sentiments are divided on it, with some like Daan Crypto Trades Pointing ETH is on track for the second-worst first half of the year since 2022 after a 29% decline in Q1 and another 21% decline so far in Q2. This puts it on track for three double-digit quarterly losses in a row.