Ethereum remains a focal point for institutional on-chain activity even as price momentum stalls. In 2026, Ether has retreated about 36% for the year, slipping back from the $3,000 milestone toward the $1,900 zone as traders weigh macro headwinds and network dynamics. Yet major financial institutions are pressing ahead with on-chain experiments—spanning tokenized funds, custody solutions, and Layer-2 rollups—underlining a shift in capital toward Ethereum and its expanding ecosystem. On-chain metrics reinforce the narrative: the Ethereum ecosystem, including its Layer-2 solutions, commands a substantial share of total value locked (TVL), while on-chain activity and revenues have cooled from late-2025 peaks. Against this backdrop, Vitalik Buterin has signaled a pivot toward strengthening base-layer scalability and privacy-preserving technologies that could recalibrate the network’s long-run efficiency and security.

Key takeaways

• Structural dominance of Ethereum and its Layer-2s: Ethereum and associated rollups hold about 65% of TVL, underscoring institutional preference for the chain and its scaling stack.
• Price action versus on-chain momentum: Ether is down roughly 36% in 2026, despite ongoing development focused on scalability, privacy, and quantum resistance.
• Activity compression on Ethereum: DEX volumes on the network fell 55% over six months, a sharper pullback than Solana’s 21% decline, signaling a broader slowdown in activity and fee generation.
• Market leadership in liquidity and asset classes: Even with near-term headwinds, Ethereum commands a dominant 57% TVL on-chain, rising to 65% when Layer-2s are included, and maintains a substantial share of Real World Assets (RWA) activity.
• Roadmap and security priorities: The ecosystem’s leadership reiterates a staged approach to base-layer improvements, including parallel block verification, gas-time alignment, and a zero-knowledge EVM, with quantum-resistance considerations on the horizon.

Tickers mentioned: $ETH, $SOL

Sentiment: Neutral

Price impact: Negative. Ether’s 2026 decline and softer on-chain activity have pressured asset pricing and network revenue incentives.

Trading idea (Not Financial Advice): Hold. The combination of a robust institutional footprint and a clear, if gradual, roadmap for scalability suggests potential upside if macro conditions improve and on-chain activity stabilizes.

Market context: The Ethereum ecosystem remains a central hub within a broader cycle of liquidity rebalancing, regulatory attention, and shifting risk appetites that influence DeFi flows and cross-chain competition. In this environment, Ethereum’s lead in TVL and DeFi activity—supported by Layer-2 rollups—helps anchor a risk framework that many institutions rely on for on-chain experimentation and asset tokenization.

Why it matters

The sustained institutional engagement with Ethereum signals a broader belief that the network’s core advantages—decentralization, compatibility with a wide array of DeFi protocols, and a proven track record—deliver durable value creation even as price volatility tests investor patience. The data underpinning this case is compelling: Ethereum plus its Layer-2 ecosystem account for a sizable portion of TVL, and even amid a retreat in on-chain volumes, the share remains disproportionately higher than rival chains when L2s are counted. This creates a margin of safety for long-horizon participants who prioritize on-chain liquidity, institutional-grade tooling, and the ability to navigate Real World Asset use cases on-chain.

From a development perspective, the village of researchers and builders around Ethereum has kept pace with a rapidly evolving set of priorities. Vitalik Buterin’s public statements point to a deliberate shift toward strengthening the base layer’s scalability and privacy properties, while preserving the composability that DeFi and tokenized asset markets rely on. The proposed approach includes parallel block verification and real-time gas-cost alignment with actual execution time, paired with the emergence of a zero-knowledge Ethereum Virtual Machine (ZK-EVM). These steps are not only technical milestones; they are foundational bets on how the network sustains security, throughput, and cost efficiency as demand scales. The gradual rollout—starting with a minority of nodes participating before introducing more systemic changes—reflects a measured approach to system-wide upgrades, a stance that has historically helped Ethereum weather upgrade friction and security concerns.

Institutional activity on Ethereum is not merely cosmetic. Large financial players—including names commonly associated with mainstream finance—have launched on-chain initiatives that leverage the Ethereum ecosystem for tokenized funds, stablecoins, and Layer-2 rollups. While critics have highlighted the limits of rollups versus competing blockchains, the real-world economics remain anchored to Ethereum’s first-mover advantage, broad ecosystem support, and established on-chain settlement guarantees. The network’s role in DeFi is underscored by its continued dominance in TVL and the notable share of Real World Assets on-chain. Despite the allure of faster or cheaper blockchains, no clear “Ethereum killer” has emerged capable of matching its breadth of activity and capital efficiency, a gap that keeps Ethereum at the center of many institutional agendas.

On the user-facing side, on-chain fees and DApp revenue have cooled as activity contracted. February 2026 data show Ethereum’s DEX volumes at $56.5 billion, down from an August 2025 peak of $128.5 billion. Meanwhile, Solana’s on-chain activity has fared somewhat better in relative terms, with monthly volumes around $95.5 billion in February, down from $120.6 billion in August. This divergence helps explain why the market remains skeptical about near-term profitability for general-purpose networks, even as the long-run narrative for scalable, privacy-preserving on-chain infrastructure remains intact. For readers following the data, the contrast between Ethereum’s on-chain momentum and its price action is a reminder that fundamental progress does not always translate into immediate price appreciation.

From a strategic perspective, the push toward base-layer scalability—while still embracing rollups—reflects a nuanced consensus about trade-offs between decentralization, security, and efficiency. Buterin’s own remarks acknowledge that quantum-resistant signatures are larger and costlier to verify, a reality that has pushed the team toward fixing protocol-layer recursive signatures and proof aggregation, along with vectorized math precompiles to reduce gas costs. Even with these challenges, the roadmap signals a path toward sustained scalability and resilience in a post-quantum security era, a consideration that matters for institutional investors seeking durability beyond the current market cycle.

Taken together, the evidence suggests that Ethereum’s long-term narrative remains intact even as near-term price action tests the nerves of investors. The combination of a sizable TVL share, an active pipeline of base-layer and L2 innovations, and ongoing institutional experimentation points to a ecosystem that is not merely surviving a period of cooling activity but actively retooling for a more scalable future. The market’s reaction to this mix will likely hinge on the pace of rollup cost reductions, the successful deployment of ZK-EVM features, and the ability of on-chain markets to re-accelerate user and developer activity without compromising security or decentralization.

Related readings on this topic illuminate how institutions weigh Ethereum’s advantages against faster but less proven competitors. For reference, see analyses discussing why institutions still prefer Ethereum despite faster blockchains, and the ongoing work on quantum-resistant and privacy-preserving enhancements in the network’s roadmap. These sources provide context for how market participants view Ethereum’s role in a diversified on-chain ecosystem.

ETH/USD (orange) vs total crypto capitalization (blue). Source: TradingView

Real World Assets active market capitalization, USD. Source: DefiLlama

What to watch next

• Progress on base-layer scalability updates, including any staged rollouts of ZK-EVM features and the transition plan for block confirmation systems.
• Monitoring Vitalik Buterin’s updates on quantum-resistance and signatures—especially any published roadmaps or protocol proposals that affect verification and security costs.
• Institutional on-chain initiatives by major banks and asset managers—tokenized funds, bank-issued stablecoins, and Layer-2 rollup deployments—testing real-world use cases on Ethereum.
• On-chain activity and TVL trends across Ethereum and its Layer-2s, with particular attention to DEX volumes, DApp revenue, and Real World Assets metrics as benchmarks for adoption.
• Regulatory developments that could influence DeFi infrastructure, on-chain asset tokenization, and cross-border settlement within the Ethereum ecosystem.

Sources & verification

• Ether price and on-chain metrics referenced in coverage here: https://cointelegraph.com/ethereum-price
• Vitalik Buterin roadmap discussion for faster quantum-resistant Ethereum: https://cointelegraph.com/news/vitalik-details-roadmap-for-faster-quantum-resistant-ethereum
• Zero-knowledge privacy and AI API discussions for Ethereum devs: https://cointelegraph.com/news/ethereum-devs-propose-zero-knowledge-ai-api-privacy
• Institutional engagement with Ethereum and related technology choices: https://cointelegraph.com/news/institutions-prefer-eth-faster-blockchains
• Further notes on quantum-resistance roadmaps and fixes: https://cointelegraph.com/news/vitalik-proposes-4-fixes-quantum-resistance-roadmap-for-ethereum

Market reaction and key details

In a market where liquidity and risk sentiment oscillate with macro headlines, Ethereum remains a structural anchor for DeFi innovation. The 2026 price trajectory reflects a confluence of broader market cooling and the gnarly economics of scaling, but the on-chain narrative remains anchored in practical progress. The network’s ability to sustain a large share of TVL—65% when counting Layer-2 rollups such as Base, Arbitrum, Polygon, and Optimism—demonstrates that institutions are still monetizing the security, settlement, and composability that Ethereum provides. This is not just about price; it is about a long-run framework in which on-chain finance, tokenized assets, and cross-border settlement can operate with a level of trust and efficiency that is difficult to replicate elsewhere.

From the perspective of on-chain activity, the cooling observed in February 2026—DEX volumes at $56.5 billion and Solana volumes at $95.5 billion in the same period—speaks to a broader cycle where speculative frenzy subsides and real-world usage remains a critical metric. The gap between price and on-chain activity can be misleading; even with lower volumes, the structural advantage of a robust ecosystem—fueled by major financial institutions exploring on-chain product lines—suggests the capacity for renewed growth when conditions improve. The data indicate that Ethereum’s dominance is not merely a function of its native token but of a broader ecosystem that includes Real World Assets and a suite of DeFi primitives that continue to mature.

Buterin’s guidance toward base-layer scalability and ZK-EVMs represents more than a technical pivot. It is a strategic attempt to reduce the friction in moving from experimental rollups to a trusted settlement layer that can scale without compromising security or decentralization. The staged rollout approach—beginning with a minority of participants before expanding to broader deployment—reflects a cautious, methodical upgrade path that has historically helped Ethereum avoid dislocations associated with rapid, sweeping changes. In a market where investors crave clarity, the emphasis on a pragmatic balance between rollups and a strengthened base layer offers a credible framework for sustaining long-term value creation.

Ultimately, the story remains one of resilience and adaptation. While Ethereum’s price action in 2026 has been undeniably negative for momentum traders, the ecosystem’s structural assets—TVL concentration, institutional on-chain programs, and a roadmap oriented toward scalability and quantum-resilience—create a foundation upon which a renewed price cycle could emerge. The critical test will be in translating technical progress into practical improvements in user experience, developer tooling, and DApp economics that can sustain a broader, real-world demand for on-chain services.

TLDR:

• Ethereum open interest in ETH terms fell from 7.79M to 5.8M across all major derivatives exchanges.
  
• Binance notional open interest dropped from $12.6B to $4.1B, yet still holds nearly 35% of total market share.
  
• Core PPI rose 0.8% month-over-month, reducing Federal Reserve rate cut expectations and pressuring risk assets.
  
• Bybit and Gate.io both recorded steep open interest declines, confirming a broad market-wide deleveraging phase.
  

The Ethereum derivatives market is experiencing a sharp contraction as macroeconomic pressures weigh on crypto assets.

Core PPI data rose 0.8% month-over-month, confirming that inflation remains persistent. This reading has reduced expectations for a near-term Federal Reserve rate cut.

Meanwhile, rising U.S.-Iran tensions over the weekend added further uncertainty. Together, these factors pushed traders toward risk aversion, triggering a broad deleveraging across Ethereum’s futures and derivatives segment.

Open Interest Drops Sharply Across Major Exchanges

The Ethereum derivatives market saw open interest in ETH terms fall from 7.79 million to 5.8 million across all exchanges. That represents a reduction of nearly 2 million contracts across the board.

Binance alone concentrated roughly 2 million of the affected positions. The contraction reflects a clear pullback from leveraged exposure across the market.

Binance remains the dominant player despite the notable decline, holding close to 35% of total open interest. Its notional open interest, however, dropped sharply from $12.6 billion to $4.1 billion.

This decline factors in both reduced contract volumes and falling ETH prices. Even after the drop, Binance’s share remains well ahead of all competitors.

Bybit, which holds roughly 15% of total open interest, saw its figures fall to $1.9 billion. That marks approximately a threefold reduction from its prior recorded levels.

Gate.io also declined, dropping from $5.2 billion to $2.75 billion. Gate.io now accounts for approximately 23% of the overall Ethereum derivatives market.

Analyst Darkfost noted the wide scope of this deleveraging phase across platforms. The data reflects active leverage unwinding rather than a routine price correction.

Traders across exchanges are steadily reducing exposure amid unfavorable macro conditions. The speed of this contraction points to deliberate risk management decisions by market participants.

Macro Pressures Drive Risk Aversion Across Crypto Markets

The Federal Reserve’s rate cut prospects have dimmed following the latest inflation data. Core PPI rising 0.8% month-over-month confirmed that price pressures have not eased.

Markets are now pricing in a prolonged period of restrictive monetary policy. This environment tends to reduce appetite for risk assets, including cryptocurrencies.

Altcoins have been among the first to absorb the pressure as risk sentiment shifted. Ethereum led the decline among major digital assets during this period.

The derivatives market responded accordingly, with leveraged positions being quickly reduced. Reduced leverage typically reflects a move by traders toward greater caution.

Geopolitical developments added further pressure on already fragile market conditions. Growing tensions between the United States and Iran surfaced over the weekend.

These events increased uncertainty at a time when investors already lacked clear direction. Risk assets, including crypto, tend to react quickly to such external geopolitical shocks.

The Ethereum derivatives market is now in a clear contraction phase across all major platforms. Traders have broadly pulled back from leveraged positions as conditions tightened.

The combination of macro headwinds and geopolitical risks has created a structurally unfavorable environment. Until conditions stabilize, the derivatives market may continue facing continued downward pressure.

Crypto hacks and exploits resulted in approximately $37.7 million in losses during February 2026 and were the lowest monthly figure since March 2025 according to Certik data.

Phishing attacks accounted for $8.6 million of the total, while wallet compromise led incident categories with $16.6 million in losses.

YieldBlox topped individual exploits with $10.6 million stolen, followed by IoTeX at $8.9 million and Foom at $2.3 million.

DeFi protocols suffered the largest losses by type at $14.4 million, while AI-related projects recorded $8.9 million in thefts.

Funds returned or frozen reached $11.3 million, representing approximately 30% of total losses.

Wallet compromise and price manipulation drive February losses

Wallet compromise incidents totaled $16.6 million across February and were the largest crypto hacks loss category.

Price manipulation attacks followed with $11.4 million in stolen funds, while phishing schemes drained $8.6 million from victims.

Code vulnerability exploits accounted for $5.1 million, with exit scams adding $2.1 million.

Instadapp posted the largest single incident at $10.5 million, followed by EFX at $8.9 million. Kasm recorded $2.2 million in losses, while Initia saw $2.1 million stolen.

CryptoFarm experienced two separate incidents totaling $2.7 million combined.

Smaller incidents included UCC and Hedgehog at $400,000 each, with Lending and SEI Token both posting $200,000 in losses.

DeFi protocols continued to see the highest exploit activity with $14.4 million in losses across multiple incidents.

AI-related projects emerged as the second-largest target with $8.9 million stolen. Gambling platforms lost $2.3 million, while address poisoning and wallet drainer schemes combined for $2.7 million.

February shows 60% crypto hack drop from January

The $37.7 million February total is a sharp drop from typical monthly figures seen throughout 2025.

Certik data shows January and February 2026 both posted lower losses than most 2025 months.

Total incidents remained relatively stable month-over-month based on the chart. The reduction in total losses comes from fewer high-value exploits rather than decreased attack frequency.

Phishing incidents showed similar patterns across both months, with February’s $8.6 million matching January levels.

Exploit total loss also dropped from January’s elevated levels to February’s $37.7 million.

Cardano’s price has entered a tight consolidation phase over the past several days. ADA is trading within a narrowing range as momentum weakens. Repeated attempts to break higher have stalled, reflecting broader caution in the crypto market.

Bearish signals dominate the short-term outlook. However, one key cohort of holders is providing support.

Cardano Is Under Pressure

The Money Flow Index shows persistent selling pressure on ADA. The indicator remains below the neutral 50 level, signaling sustained capital outflows. Weak inflows suggest that buyers are hesitant to step in at current prices.

A shift in momentum requires reclaiming the 50 mark or entering oversold territory. At present, ADA is far from both conditions. Without a strong reversal signal, selling pressure may continue to weigh on Cardano price action.

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Derivatives data reinforces the bearish narrative. The liquidation map indicates that Cardano futures contracts are skewed toward short positions. Exposure on short contracts stands near $23 million compared with $14 million in potential long liquidations.

This imbalance highlights trader expectations for further downside. Elevated short interest can increase volatility if the price moves sharply. However, current positioning suggests that many traders anticipate continued weakness rather than a breakout.

Sustained bearish positioning may amplify price swings. If ADA attempts a recovery, short liquidations could accelerate upside. Conversely, additional selling could reinforce negative momentum. For now, macro sentiment in futures markets remains defensive.

ADA LTHs Provide Relief

Long-term holders are currently offsetting part of the sell pressure. The Mean Coin Age metric is rising, indicating that older coins are remaining inactive. This trend suggests that LTHs are choosing to hold rather than distribute.

Resilience among long-term investors is crucial. Persistent holding behavior reduces circulating supply pressure. While it does not guarantee recovery, it helps ADA defend critical support levels during periods of uncertainty.

ADA Price Needs To Hold Above This Support

Cardano is trading at $0.264 at the time of writing, rangebound between $0.295 resistance and $0.256 support. The lower boundary aligns with the 13.6% Fibonacci retracement, often referred to as the bear market support floor. ADA has maintained this level for nearly three weeks.

Given current indicators, consolidation appears likely to continue. A successful defense of $0.256 could enable a rebound toward $0.278. Sustained buying may push ADA back to $0.295, testing upper range resistance once again.

However, increased selling pressure would shift the outlook. A decisive breakdown below $0.256 would weaken structural support. In that scenario, Cardano price could decline toward $0.239, invalidating the short-term bullish thesis and reinforcing bearish control.

The CEO of AI company Anthropic, Dario Amodei, has responded to the United States Department of Defense and the White House, ordering military defense contractors that do business with the Department of Defense to stop using Anthropic’s products.

Anthropic objected to the use of its AI models for mass domestic surveillance and fully autonomous weapons that can fire without any human input, Amodei told CBS on Saturday. 

He added that Anthropic was fine with all of the US government’s proposed use cases for its AI models, except for surveillance and fully autonomous weapons platforms. He said:

“These are things that are fundamental to Americans: the right, not to be spied on by the government, the right for our military officers to make decisions about war, themselves, and not turn it over completely to a machine.” 

The decision by the Defense Department to label Anthropic as a “supply chain risk,” meaning that military contractors cannot use Anthropic’s products on defense contracting work, is “unprecedented” and “punitive,” he added.

Amodei later clarified that he is not against the development of fully automated weapons if foreign militaries begin using them in the future, but that AI is not yet reliable enough to function autonomously in a military setting.

The law has not caught up to the rapidly developing AI sector, Amodei said, calling on the United States Congress to pass “guardrails” to prevent the use of AI in domestic mass surveillance programs.

Related: Anthropic says it’s been targeted in massive distillation attacks

OpenAI wins a defense contract after US officials label Anthropic a supply chain risk

On Friday, US “Secretary of War” Pete Hegseth announced that Anthropic is a “Supply-Chain Risk to National Security.”

“Effective immediately, no contractor, supplier, or partner that does business with the United States military may conduct any commercial activity with Anthropic,” he said. 

Hours later, rival AI company OpenAI accepted a contract with the US Defense Department to deploy its AI models across military networks. 

The announcement of the deal from OpenAI CEO Sam Altman drew online backlash from critics, who cited AI being used for mass domestic surveillance and undermining individual privacy as a red line.  

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