Why TradFi continues to bet on the rise of ETH

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Despite Ethereum's disappointing price action, institutional adoption of the Ethereum network is accelerating. Ethereum and Layer-2s account for 65% of the TVL market share.

Vitalik Buterin will focus on expanding the base layer and deploying ZK-EVM to ensure long-term onchain efficiency and security.

Ether (ETH) is down 36% in 2026, causing frustration as its reach for the $3,000 level increases. Despite the pullback to $1,900, Ethereum's fundamentals look strong. Development continues at a rapid pace, particularly targeting base layer scalability, privacy and quantum resiliency.

Critics who say Ether is well-positioned may be surprised if market sentiment shifts to cryptocurrencies.

Ether underperformed the broader crypto market by 9% in the first two months of 2026, challenging the theory that external factors were the main driver of this correction. The volume of the decentralized exchange (DEX) on the Ethereum network has decreased by 55% in the last six months, while its competitor Solana has shown a more modest decrease of 21% in the same time frame.

Ethereum DEX volume fell to $56.5 billion in February 2026, down significantly from its peak of $128.5 billion in August 2025. During the same period, Solana's monthly volume reached $95.5 billion, up from $120.6 billion in August. This throttling of activity has effectively reduced the immediate incentives to hold Ether by weighing network fees and decentralized application (DApp) revenue.

Institutions prefer Ethereum over other blockchains

With a narrow focus on voice, Ethereum maintains a 57% market share in Total Value Locked (TVL), totaling $52.4 billion. When you include layer-2 solutions like Base, Arbitrum, Polygon, and Optimism, Ethereum's dominance grows to 65%. For comparison, Solana TVL is sitting at $6.4 billion, while BNB Chain holds a total of $5.5 billion locked in smart contracts.

Major institutions including JP Morgan Asset Management, Citi, Deutsche Bank and BlackRock have recently launched onchain projects using Ethereum. From tokenized currencies to dedicated layer-2 packages and bank-issued stablecoins, Ethereum has become the epicenter of decentralized finance (DeFi) innovation, commanding a 68% market share in real world assets (RWA).

Ethereum's strategic decision to prioritize Layer-2 scaling through bundles has been partially rejected, as competing chains such as Tron and Solana currently lead in network fees. No matter how much critics criticize the decision to subsidize the rollover costs, no “Ethereum killer” has been able to match its monetary value. Even the highly successful HyperLiquid holds a relatively modest $1.5 billion in TVL.

Vitalik Buterin, the founder and lead architect of Ethereum, recently expressed his desire to reduce dependency on packages by targeting expansion of the base layer. According to Buterin, the proposed changes include parallel block verification, balancing gas costs with actual execution time, and implementing a Zero-Knowledge Ethereum Virtual Machine (ZK-EVM).

These updates will be implemented gradually. Buterin recommends that a small number of network members participate before moving to mandatory block verification systems based on ZK-EVM. Additionally, Ethereum holds a clear roadmap for navigating the era of quantum computing, which includes consensus-layer signatures based on privacy-focused authentication systems.

Related: Why Institutions Still Choose Ethereum Despite Faster Blockchains

Buterin admits that quantum-resistant signatures are so large and difficult to verify that lattice-based solutions are currently ineffective. Therefore, the proposed solution consists of adjusting the protocol-layer iterative signature and checksum by setting vectorized arithmetic presets to reduce the gas cost. While the Ethereum network is not yet perfect, there is a viable way to develop it.

Before dismissing ETH as a failure, it's important to analyze what made the network successful relative to competing DApp-based blockchains. Decentralization and trust will take years, if not decades, to establish. ETH maintains significant first-mover advantage and appears well-positioned to capture future demand for institutional-level onchain activity.