Important points:
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Despite Ether’s disappointing price trend, institutional adoption of the Ethereum network is accelerating. Ethereum and its Layer 2 hold 65% of the TVL market share.
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Vitalik Buterin is shifting focus to base layer scalability and ZK-EVM to ensure long-term on-chain efficiency and security.
Ether (ETH) has fallen 36% in 2026, fueling frustration as the $3,000 level feels increasingly out of reach. Despite pulling back towards $1,900, Ethereum’s fundamentals appear resilient. Development continues at a rapid pace, particularly targeting base layer scalability, privacy, and quantum resistance.
Critics who argue that Ether is in a bad position may be surprised if market sentiment turns towards cryptocurrencies again.
Ether has underperformed the broader crypto market by 9% in the first two months of 2026, challenging the theory that external factors are the sole driver of this correction. Decentralized exchange (DEX) trading volume on the Ethereum network has fallen by 55% over the past six months, while competitor Solana has recorded an even more modest 21% decline over the same period.
Ethereum DEX trading volume decreased to $56.5 billion in February 2026, a significant decline from its peak of $128.5 billion in August 2025. Monthly Solana trading volume during the same period reached $95.5 billion, down from $120.6 billion in August. This reduction in activity squeezed network fees and decentralized application (DApp) revenues, effectively reducing the immediate incentive to hold Ether.
Institutions choose Ethereum over other blockchains
Focusing on volume ignores the fact that Ethereum holds a market share of 57% of Total Value Locked (TVL), totaling $52.4 billion. If we include layer 2 solutions such as Base, Arbitrum, Polygon, and Optimism, Ethereum’s dominance rises to 65%. For comparison, Solana’s TVL is $6.4 billion, while the BNB chain has a total of $5.5 billion locked in smart contracts.
Major institutions such as JPMorgan Asset Management, Citi, Deutsche Bank, and BlackRock have recently launched on-chain projects using Ethereum. From tokenized funds to proprietary Layer 2 rollups to bank-issued stablecoins, Ethereum remains the leading venue for decentralized finance (DeFi) innovation, with a 68% market share in real world assets (RWA).
Ethereum’s strategic decision to prioritize layer 2 scalability via rollups is partially seen as a failure, as competing chains such as Tron and Solana currently lead in network fees. Regardless of how critics judge the decision to subsidize rollup costs, there is no “Ethereum killer” that can match its monetary value. Even the highly successful Hyperliquid has a relatively modest TVL of $1.5 billion.
Ethereum co-founder and chief architect Vitalik Buterin recently announced his intention to reduce dependence on rollups by targeting base layer scalability. According to Buterin, the proposed changes include parallel block verification, adjusting gas costs and actual execution times, and implementing a zero-knowledge Ethereum virtual machine (ZK-EVM).
These updates will be implemented gradually. Buterin recommends that a small number of networks participate initially before moving to a mandatory block confirmation system that relies on ZK-EVM. Additionally, Ethereum maintains a clear roadmap for navigating the quantum computing era. This includes a consensus layer signature based on a privacy-focused proof system.
Related: Why institutions still prefer Ethereum even though blockchain is getting faster
Buterin acknowledged that quantum-resistant signatures are significantly larger and more difficult to verify, noting that lattice-based solutions are currently inefficient. Therefore, the proposed solution involves modifying recursive signatures and proof aggregation in the protocol layer while developing vectorized math precompilation to reduce gas costs. The Ethereum network is not yet perfect, but there are viable paths to scalability.
Before dismissing ETH as a failure, we need to analyze what made the network successful compared to competing DApp-focused blockchains. Decentralization and trust will take years, if not decades, to establish. ETH maintains a significant first-mover advantage and appears well-positioned to capture future surges in demand for institutional-level on-chain activity.
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