As institutional capital continues to enter the crypto ecosystem, the backbone of on-chain activity remains the same: liquidity depth and the concentration of stablecoins. The market has witnessed a recurring debate about whether newer networks can outpace the incumbent by sheer throughput, but veteran money tends to chase depth and resilience first. A former Morgan Stanley derivatives executive who has watched Asia’s markets highlights a core truth: institutions care about where liquidity already sits, not just how fast a chain can process transactions. That dynamic underpins a broader narrative about who really ships value in crypto—users, traders, and institutions alike—rather than just the pace of technology.

Key takeaways

• Ethereum (CRYPTO: ETH) remains the deepest liquidity hub for DeFi and stablecoins, attracting large-scale capital that anchors on-chain markets and stabilizes supply.
• Institutional participation—through assets like tokenized funds and RWAs—adds scale and stability to crypto ecosystems, extending beyond hype-driven retail activity.
• Layer-2 solutions helped relieve mainnet congestion, but liquidity fragmentation across L2s ultimately reinforced Ethereum’s central role by maintaining a single, deep liquidity pool for large trades.
• Upcoming scaling upgrades, notably the Glamsterdam fork planned for 2026, aim to push the mainnet toward higher throughput (potentially around 10,000 TPS over time) while preserving liquidity depth.
• While rivals such as Solana tout higher TPS, Ethereum’s liquidity depth continues to attract institutions that value tight spreads and the ability to absorb sizeable transactions without slippage.

Tickers mentioned: $ETH, $SOL, $BUIDL

Market context: The debate between throughput and liquidity sits against a backdrop of growing institutional interest in stablecoins and real-world assets (RWAs) on-chain, with major asset managers exploring scalable, liquid rails for large-scale tokenized products.

Why it matters

The essence of the current market structure is that deep liquidity creates stability. Ethereum (CRYPTO: ETH) has solidified its status as a distribution layer for stablecoins and DeFi capital, a position that matters for actors ranging from market makers to fund managers seeking large, predictable liquidity pools. In practice, this depth translates into tighter bid-ask spreads and lower slippage for sizable trades, attributes that matter for institutions seeking to deploy capital without disrupting market prices. The presence of stablecoins and institutional liquidity solidifies a chain’s ecosystem, enabling more robust on-chain activity beyond speculative retail cycles.

Institutional players are not simply chasing a single metric like throughput; they want a ecosystem with proven settlement reliability, regulatory compatibility, and the ability to deploy RWAs and other real-world assets. BlackRock’s USD Liquidity Fund (BUIDL), a tokenized Treasury fund that started on Ethereum and later expanded to multiple blockchains, exemplifies how large investors are bridging traditional finance with digital liquidity. Ethereum’s share of the BUIDL market underscores how much of the industry’s capital defaults to the largest, most battle-tested chain. The on-chain footprint of such products reinforces Ethereum’s role as a backbone for stability, rather than just a playground for speculative tokens.

On the technical side, the evolution of Layer-2 rollups has been a double-edged sword. They alleviated cost pressures on the mainnet and expanded execution capacity—but liquidity was splintered across several environments, complicating large trades that require cross-rollup coordination. Still, the net effect, according to practitioners, was a retention of liquidity within the Ethereum ecosystem rather than a shift to competing L1s. The liquidity concentration on Ethereum has meant that even as projects tout higher theoretical TPS, the marketplace converges on the venue with the deepest pools and the most robust market depth.

In conversations around who leads the charge, the supply of liquidity is often described using a downtown-versus-suburb analogy. Ethereum, in this framing, functions as the “downtown”—the place where the most active liquidity and the broadest set of financial instruments converge. “If you want the deepest liquidity, you go downtown, and that’s Ethereum,” one advocate summarized. The comparison captures why institutions—and the traders who serve them—prefer to locate capital where the largest pools exist, even if there are more nimble, cheaper chains elsewhere. The goal is to minimize price impact and preserve execution quality even for large, complex orders.

Amid these dynamics, Solana (CRYPTO: SOL) has been positioned by some as an “Ethereum killer” due to its throughput gains. The narrative around its higher TPS has been a magnet for retail activity, even as long-term sustainability and liquidity depth remain points of scrutiny. Solana’s rise, followed by a wave of “Solana killers” that promise even higher theoretical throughput, illustrates a broader industry race to scale. Yet industry observers caution that higher throughput alone does not guarantee meaningful capital flows; institutions still seek the deepest, most reliable pools of liquidity that can absorb sizable transactions without destabilizing prices. The ongoing discussion about liquidity depth versus raw speed remains central to how capital allocates across networks.

“I think of Ethereum as like downtown,” Lepsoe observed. “You could build a marketplace uptown somewhere in the suburbs, and you might find price efficiency there, but if you want the deepest liquidity, you go downtown.”

As the crypto landscape matures, institutional interest is increasingly oriented toward practical use cases—stablecoins, tokenized assets, and RWAs—over speculative price plays. The deployment of RWAs on Ethereum, together with stablecoin dominance, continues to define the path for institutional adoption. The narrative is not simply about which chain is fastest; it is about which chain provides the most reliable, scalable, and well-supported liquidity rails for large, real-world financial transactions.

Nevertheless, the industry remains optimistic about scaling on the mainnet. The Ethereum ecosystem has acknowledged that a portion of the early L2 momentum resulted in liquidity fragmentation, but this has been recast as a blessing in disguise by many observers. If liquidity remains accessible on Ethereum while L2s handle execution, the ecosystem can preserve a unified, deep pool that supports institutional activity. In a broader sense, the community is recalibrating expectations around what “scaling” means in a mature market: not just faster blocks, but more efficient execution and deeper markets that survive cycles of hype and drawdown.

On the horizon, scaling upgrades are expected to reshape the liquidity landscape further. The Glamsterdam fork, penciled in for 2026, aims to raise Ethereum’s block gas limit significantly, potentially lifting throughput and enabling more expansive on-chain activity without sacrificing liquidity depth. As these upgrades unfold, infrastructure providers are also pursuing innovations to improve execution efficiency. Projects like ETHGas, which aims to optimize block construction through off-chain coordination, and zero-knowledge-based bundling techniques, are examples of the kinds of fine-tuning that could complement the larger scaling narrative. In parallel, leading researchers emphasize the enduring value of battle-tested networks, suggesting that institutions will continue to favor chains that have withstood multiple market cycles and robust security assumptions before expanding into new ecosystems.

Industry participants also note that institutions are increasingly evaluating cross-chain strategies that let them maintain exposure to Ethereum’s liquidity while leveraging other networks for specific use cases or privacy requirements. The interplay between depth and customization—privacy, throughput, and settlement speed—will shape the next phase of institutional crypto infrastructure. While Solana and Canton offer competitive features—privacy assurances and rapid execution—they are unlikely to displace Ethereum’s liquidity advantage in the near term. The dominant thesis remains: for large allocators, liquidity depth remains the primary differentiator when choosing where to deploy capital.

In sum, Ethereum’s leadership in DeFi liquidity and stablecoins—coupled with growing RWAs and tokenized assets—continues to anchor institutional adoption. While faster networks entice speculative activity and offer marginal improvements in execution, the deepest markets and the most mature on-chain ecosystems remain on Ethereum. As 2026 approaches, the industry will be watching how Glamsterdam and related scaling initiatives interact with continued capital inflows, whether through BUIDL-like products or broader tokenized real-world assets, to shape the next cycle of growth in institutional crypto markets.

What to watch next

• Glamsterdam fork: Expected in 2026, with a potential increase in block gas limit from 60 million to 200 million and a long-term path toward higher TPS.
• Layer-2 development: Ongoing maturation of rollups and cross-L2 liquidity strategies to reduce fragmentation while preserving deep liquidity on the mainnet.
• RWAs and stablecoins adoption by institutions: Monitoring the evolution of tokenized assets on Ethereum and the appetite of major asset managers for real-world assets.
• Private and privacy-focused chains: Evaluation of Canton-like offerings and how they influence institutions’ multi-chain strategies while maintaining liquidity depth.
• Institutional products: Deployment and performance of tokenized funds such as BUIDL and related vehicles, including on- and cross-chain liquidity metrics.

Sources & verification

• Vitalik Buterin’s discussion on L2 scaling and mainnet priorities: https://x.com/VitalikButerin/status/2018711006394843585
• BlackRock’s USD Liquidity Fund (BUIDL) tokenized Treasury product on Ethereum: https://www.blackrock.com/corporate/literature/whitepaper/bii-global-outlook-2026.pdf
• RWA.xyz assets page for BUIDL: https://app.rwa.xyz/assets/BUIDL
• DefiLlama stablecoins data, illustrating Ethereum’s leadership by market capitalization: https://defillama.com/stablecoins
• Article on Ethereum scaling and the Tok/Market perspective, including discussions around Glamsterdam and L2 decentralization: https://cointelegraph.com/news/ethereum-foundation-quantum-gas-limit-priorities-protocol

What Ethereum’s liquidity leadership means for users and builders

Ethereum’s enduring liquidity edge matters for users who rely on predictable execution and for builders who develop on-chain financial primitives. The combination of a deep stablecoin market, broad DeFi activity, and tokenized real-world assets provides a persistent foundation on which new applications can scale without chasing liquidity across multiple disconnected chains. For developers, it signals that building with robust liquidity incentives, tight slippage controls, and cross-chain interoperability will likely yield the strongest, most resilient user experiences. For investors, liquidity depth translates into relatively safer entry points for large exposures and more stable pricing dynamics during volatile episodes.

TLDR:

• Stablecoin payments total $390B annualized, led by B2B enterprise and supplier settlements.
• Card-linked spending is fastest growing by transaction count, rising +673% year-on-year.
• P2P transfers reach $77B with 0.37% market penetration, reshaping remittance corridors.
• B2C payouts total $11B, growing +86%, led by payroll and creator economy adoption.

Stablecoin payments are tracking $390 billion on an annualized basis, data shows. B2B activity dominates with $226 billion, fueled by enterprise settlements and supplier payments. 

Card-linked spending is rising rapidly, with transaction volumes up 673 percent. Peer-to-peer transfers and early B2C payouts remain smaller but show significant growth momentum.

Enterprise and B2B Adoption Drives Market Growth

Enterprise and B2B transactions are the main contributors to stablecoin volume, accounting for over half of total payments. Corporate settlements and supplier payments have increased 733 percent compared with prior periods, indicating growing institutional reliance. 

According to blockchain transaction data shared by expert Leon Waidmann, businesses are integrating stablecoins for faster, borderless liquidity and automated payments. Card-linked spending also continues to rise, positioning debit cards funded with stablecoins as the fastest-growing consumer-facing segment.

P2P transfers remain smaller at $77 billion but already reach a 0.37 percent market penetration rate. This suggests remittance corridors are being restructured as stablecoins replace traditional intermediaries. 

The growth in enterprise adoption precedes broader consumer adoption, highlighting the strategic prioritization of infrastructure over retail. Payments data from public blockchain networks confirms that B2B and enterprise transactions remain the primary driver of total stablecoin activity.

Despite rapid growth, total market penetration across all segments is only 0.02 percent. The low overall adoption underscores how early the market remains for stablecoin payments. 

Stablecoins are securing a foundation in enterprise liquidity before reaching mass consumer use. Analysts tracking network activity highlight the potential for future retail adoption once infrastructure is established.

Consumer Spending and Emerging B2C Applications

Consumer adoption of stablecoin payments is emerging primarily through cards and payroll applications. Card-linked transactions have surged, offering a practical entry point into retail spending. 

Debut B2C use cases, including creator economy payouts and payroll, are still in early phases, totaling roughly $11 billion. Growth in these areas reached 86 percent, signaling accelerating adoption for emerging markets.

Payroll and creator-focused payments are just beginning to leverage stablecoins for recurring and cross-border payouts. Early integrations suggest that consumer adoption will expand as infrastructure matures. 

The expansion of cards as a consumer touchpoint complements enterprise dominance, bridging users into the broader ecosystem. Data from transaction networks suggests that these consumer-facing applications will grow alongside enterprise settlement systems.

The broader stablecoin ecosystem is positioning for a multi-trillion-dollar market, with infrastructure leading adoption. Companies building B2B stacks are establishing early dominance before retail markets mature. 

Card-linked and P2P transactions serve as entry points for consumer engagement. Continued adoption in enterprise, remittances, and emerging B2C applications underscores stablecoins’ expanding market footprint.

XRP reversed sharply after failing to sustain its rebound, with a high-volume breakdown through $1.36 accelerating downside momentum.

News Background

• XRP fell alongside renewed weakness across the broader crypto market, but the decisive move was technical rather than headline-driven.
• The token had staged a brief relief rally earlier in the week, only to stall below key resistance and roll over as sellers defended higher levels.
• The breakdown extends XRP’s corrective pattern since its July 2025 peak, reinforcing a sequence of lower highs and failed recovery attempts.

Price Action Summary

• XRP dropped 9.1% from $1.42 to $1.30
• Selling intensified once $1.36 support failed
• Volume surged more than 170% above average during the main capitulation phase
• A brief rebound toward $1.33 was quickly rejected

Technical Analysis

• The critical event was the clean break below $1.36, which had served as near-term structural support.
• Once lost, downside momentum accelerated, driving price toward $1.30 on outsized volume — a sign of forced selling rather than gradual distribution.
• A short-covering bounce pushed XRP to $1.325, but the rally stalled immediately, forming a clear lower high and confirming the broader downtrend remains intact. Former support at $1.36–$1.37 now acts as resistance, while $1.32–$1.33 caps near-term recovery attempts.
• On higher timeframes, XRP remains below key retracement levels, with $1.47 representing the next meaningful structural hurdle should buyers regain control.

What traders say is next?

• Traders are focused on whether $1.30 can hold as a near-term floor.
• If $1.30 stabilizes, XRP may consolidate before attempting another push toward $1.32–$1.36. A reclaim of $1.36 would be the first sign that the breakdown was overextended.
• If $1.30 fails decisively, downside risk shifts toward the $1.20–$1.22 region, where longer-term demand is expected to emerge.
• For now, momentum favors sellers, and any bounce is viewed as corrective until resistance levels are reclaimed.

Key Takeaways

• SolarEdge (SEDG) closed down 9.5% at $36.57 on February 27, trading on approximately half its typical daily volume.
• Solar stocks experienced significant declines, with Sunrun plummeting 35%, Array Technologies falling 34%, and Shoals Technologies dropping 31% following quarterly reports.
• Industry-wide challenges include tariff-related margin compression and reduced federal incentives dampening residential solar adoption.
• While SolarEdge exceeded Q4 earnings expectations, the company continues operating at a loss with a net margin of -34.2%.
• Wall Street maintains a “Reduce” rating on SEDG, with the consensus price target of $27.28 indicating potential downside from current levels.

Shares of SolarEdge Technologies (SEDG) declined 9.5% during trading on February 27, finishing the session at $36.57 compared to the previous close of $40.40.

SolarEdge Technologies, Inc., SEDG

Trading activity was notably subdued, with approximately 1.57 million shares changing hands — roughly half the company’s 3.16 million share average daily volume.

The decline in SEDG wasn’t an isolated event. The entire solar industry experienced significant downward pressure throughout the week.

Sunrun plummeted 35% following its earnings announcement. Array Technologies saw shares drop 34%. Shoals Technologies declined 31%. First Solar fell 14%. The Invesco Solar ETF registered an 8% loss for the week — marking its steepest five-day decline since June.

This widespread selloff signals fundamental challenges facing the industry rather than temporary market volatility.

Tariff pressures are compressing profit margins at companies including First Solar, Array, and Shoals, with each citing these impacts during quarterly earnings discussions. Changes to federal energy policy have reduced financial incentives for consumers, while demand in the residential solar market shows signs of deterioration.

According to Wood Mackenzie forecasts, U.S. residential solar installations are projected to contract by 18% in 2026.

Sunrun’s quarterly results provided evidence of this declining trend. The company reported a 17% year-over-year decrease in new subscribers during Q4 2025 compared to Q4 2024, while the net value per new customer fell 30% in the period. The company’s 2026 outlook further dampened investor confidence — Jefferies analyst Julien Dumoulin-Smith downgraded the stock from Buy to Hold, pointing to expectations for “a more prolonged period of market contraction.”

First Solar’s Contract Backlog Signals Industry Headwinds

First Solar’s contract backlog declined to 50.1 gigawatts by year-end 2025, representing a significant drop from 68.5 gigawatts at the beginning of the year.

The company experienced more contract cancellations and terminations than new bookings during the quarter — marking the seventh straight quarter of declining backlog, according to Raymond James analyst Bobby Zolper.

Zolper observed that the company’s 2026 and 2027 projections fell approximately 15% short of earlier expectations across key metrics including shipment volumes, revenue, and EBITDA. He maintained a Market Perform rating, stating he would “wait out the near-term negatives.”

SolarEdge Posted Better-Than-Expected Results

Despite the share price decline, SolarEdge delivered fourth-quarter results that surpassed analyst forecasts. The company reported an adjusted EPS loss of $0.14, narrower than the anticipated loss of $0.19. Quarterly revenue reached $333.8 million, exceeding the $330.33 million consensus estimate and representing a 70.9% increase year over year.

However, profitability remains elusive. The company’s net margin stands at -34.2% with return on equity at -45.5%.

Wall Street’s view on SEDG leans bearish. The consensus recommendation is “Reduce,” comprising one Buy rating, 16 Hold ratings, and seven Sell ratings. The average analyst price target of $27.28 sits below the stock’s current trading range.

Recent analyst activity includes Deutsche Bank lowering its price target from $35 to $33 while maintaining a Hold rating on February 20, and Morgan Stanley increasing its target from $33 to $40 with an Equal Weight rating on February 19.

The stock’s 50-day moving average stands at $33.76, while the 200-day moving average is $34.19. SEDG maintains a market capitalization of approximately $2.06 billion with a beta coefficient of 1.66.

Institutional ownership accounts for 95.1% of outstanding shares.

Ethereum continues to host the largest concentration of stablecoins and decentralized finance (DeFi) capital, even as successive waves of faster networks emerge.

Newer blockchains have promised higher throughput and lower costs, raising questions about whether institutional capital could eventually migrate away from Ethereum.

Kevin Lepsoe, founder of ETHGas and a former Morgan Stanley derivatives executive in Asia, said he expects Ethereum’s lead to endure, as institutions tend to prioritize capital depth over flashy performance.

“[Transactions per second] is the metric that gets engineers excited, but is that what drives capital to the blockchain?” Lepsoe asked in an interview with Cointelegraph.

“The capital is on Ethereum; the stablecoins are there. TradFi is looking at where the liquidity is,” he said.

Institutional capital brings scale and stability to a blockchain’s ecosystem. Large asset managers and tokenized fund issuers move capital in volumes that deepen liquidity and anchor stablecoin supply. Their presence can establish a network’s position beyond hype-driven retail activity that surges in bull markets and fades in downturns.

Liquidity keeps Ethereum ahead of faster rivals

If institutions prefer to operate where most of the money already sits, then simply making a faster blockchain will not pull capital away from Ethereum.

Over the past several cycles, performance has become a weapon to attract users. Solana has emerged as Ethereum’s high-speed alternative, dubbed an “Ethereum killer,” though that label is debated. It onboarded retail traders through the non-fungible token (NFT) boom and the memecoin frenzy, but the heightened activities weren’t sustained in the long run.

Related: Can Solana shed its memecoin image in 2026?

Solana now has its own generation of “Solana killers” that advertise higher theoretical transactions per second (TPS). But Ethereum’s liquidity grants tighter spreads, lower slippage for large trades and the capacity to absorb institutional-sized transactions without heavily distorting prices.

“I think of Ethereum as like downtown,” Lepsoe said.

“You could build a marketplace uptown somewhere in the suburbs and you could get far off market prices there, maybe it’s more convenient or maybe you like the vibe. But if you want the deepest liquidity, you go downtown, and that’s Ethereum.”

Though past crypto booms featured high-stakes retail speculation, the next phase is shaping up to include more institutional capital. As it stands, institutional players have expressed interest in practical use cases such as stablecoins and real-world assets (RWAs).

Even the world’s largest asset manager is leaning into RWA products. BlackRock’s USD Liquidity Fund (BUIDL) is its tokenized Treasury fund that started on Ethereum and branched out to several blockchains. Ethereum holds over a 30% BUIDL market capitalization.

Ethereum is the largest network for stablecoins as well, which BlackRock’s global head of market development, Samara Cohen, said are “becoming the bridge between traditional finance and digital liquidity.”

Ethereum leads the industry in stablecoin market cap, with $160.4 billion, according to DefiLlama.

Ethereum’s L2 liquidity is returning to L1

Though Lepsoe said liquidity depth shapes institutional preference, a network’s efficiency cannot be completely disregarded.

Ethereum has been adjusting its own technical profile. Transaction fees that once routinely spiked to virtually unusable prices have fallen significantly, as layer-2 rollups eased pressure on the main chain. These solutions brought in new problems of their own. Rollups fragmented liquidity across multiple environments.

Related: 2026 is the year Ethereum starts scaling exponentially with ZK tech

Lepsoe described the liquidity fragmentation as a blessing in disguise for Ethereum. He argued that if L2s didn’t take away liquidity from the main chain, capital would have flown out to competitors.

“I think it actually saved the liquidity from going to other L1s, where they eventually probably couldn’t have brought it back,” he said.

Recently, Ethereum has shifted its focus back to scaling the main chain. Co-founder Vitalik Buterin said that many layer 2s have failed to decentralize, while the main chain is now sufficiently scaling.

“Both of these facts, for their own separate reasons, mean that the original vision of L2s and their role in Ethereum no longer makes sense, and we need a new path,” Buterin said in a recent X post.

Scaling upgrades strengthen Ethereum’s liquidity advantage

With transaction fees tamed, Ethereum is expected to execute the Glamsterdam fork in 2026, raising the block gas limit to 200 million from 60 million and putting its layer 1 on the road to 10,000 TPS over time.

For Ethereum, the timing coincides with institutions evaluating blockchain infrastructure for the next generation of financial services.

Alongside protocol upgrades, infrastructure providers are experimenting with ways to improve execution efficiency. Projects like Lepsoe’s ETHGas aim to optimize Ethereum’s block construction process through offchain execution and coordination, while Psy Protocol uses zero-knowledge technology to bundle multiple transactions into one.

Marcin Kaźmierczak, co-founder of blockchain oracle RedStone — which supplies data feeds for tokenized assets and institutional blockchain applications — said that Ethereum has the edge, as institutions prefer blockchains that have been battle-tested and around “for a very long time.” However, while institutions are “aggressively” expanding into Ethereum, they’re also shopping around.

“They look at Solana, which is getting good traction. Canton is extremely important for them because it gives them privacy, which they value very, very much,” Kaźmierczak told Cointelegraph.

Lepsoe said he sees “zero threat” from Solana or Canton, arguing that Ethereum still has the deepest liquidity pool, which is the primary draw for large allocators.

For institutional capital, performance improvements may expand Ethereum’s capacity, but liquidity remains its defining advantage. In blockchain markets, speed can attract users during booms, but capital tends to stay where the deepest markets already exist.

Magazine: 6 massive challenges Bitcoin faces on the road to quantum security