Key takeaways:

• Institutional adoption of the Ethereum network is accelerating despite disappointing Ether price action. Ethereum and its Layers 2 hold 65% of the TVL market share.

• Vitalik Buterin focuses on the scalability of the base layer and ZK-EVM to ensure long-term onchain performance and security.

Ether (ETH) is down 36% in 2026, sparking frustration as the $3,000 level looks increasingly out of reach. Despite the retreat towards $1,900, Ethereum’s fundamentals appear resilient. Development is progressing at a rapid pace, with a particular focus on base layer scalability, privacy, and quantum resiliency.

Critics who say Ether is underperforming may be surprised if market sentiment returns towards cryptocurrencies.

Ether underperformed the broader cryptocurrency market by 9% in the first two months of 2026, challenging the theory that external factors are the only factors driving this correction. Decentralized exchange (DEX) volume on the Ethereum network has declined by 55% over the past six months, while competitor Solana has seen a more modest decline of 21% over the same period.

Ethereum DEX volume dropped to $56.5 billion in February 2026, a significant decline from its peak of $128.5 billion in August 2025. During the same period, Solana’s monthly volume reached $95.5 billion, down from $120.6 billion in August. This reduction in activity has impacted network fees and decentralized application (DApp) revenues, effectively limiting direct incentives to hold Ether.

Institutions choose Ethereum over other blockchains

The narrow focus on volume ignores the fact that Ethereum holds 57% of the market share in total value locked (TVL), totaling $52.4 billion. When layer 2 solutions such as Base, Arbitrum, Polygon, and Optimism are included, Ethereum’s dominance increases to 65%. For comparison, Solana’s TVL is worth $6.4 billion, while the BNB network has a total of $5.5 billion locked in shrewd contracts.

Gigantic institutions including JP Morgan Asset Management, Citi, Deutsche Bank and BlackRock have recently launched onchain projects using Ethereum. From tokenized funds to dedicated Layer 2 roll-ups and bank-issued stablecoins, Ethereum remains a major hub for decentralized finance (DeFi) innovation, commanding a 68% share of the real-world asset (RWA) market.

Ethereum’s strategic decision to prioritize Layer 2 scalability through rollups has been deemed a failure in part because competing networks like Tron and Solana currently lead in network fees. Regardless of how critics evaluate the decision to subsidize the costs of the rollup, no “Ethereum killer” has managed to match its monetary value. Even the hugely successful Hyperliquid maintains a relatively modest $1.5 billion in TVL.

Vitalik Buterin, co-founder and chief architect of Ethereum, recently expressed his intention to reduce the reliance on rollups by focusing on the scalability of the core layer. According to Buterin, the proposed changes include verification of parallel blocks, adjusting gas costs to real execution time, and implementing a zero-knowledge Ethereum virtual machine (ZK-EVM).

These updates will be rolled out gradually. Buterin recommends that a minority of networks participate initially before moving toward mandatory block confirmation systems that rely on ZK-EVM. Additionally, Ethereum maintains a clear roadmap in the era of quantum computing, which includes consensus layer signatures based on privacy-oriented proof systems.

Related: Why institutions still prefer Ethereum despite faster blockchains

Buterin acknowledged that quantum-resistant signatures are much larger and more hard to verify, noting that network-based solutions are currently unproductive. Therefore, the proposed solution involves fixing the recursive signature at the protocol layer and aggregating evidence while developing vector mathematical precompilations to reduce gas costs. While the Ethereum network isn’t perfect yet, there is a viable path to scalability.

Before we dismiss ETH as a failure, it is significant to analyze what made the network successful compared to competing DApp-centric blockchains. Decentralization and trust take years, if not decades, to establish. ETH maintains a significant first-mover advantage and appears well-positioned to capture future growth in demand for onchain activity at an institutional level.