Ethereum continues to hold the largest share of stablecoins and DeFi capital, even as newer, faster blockchains chase users. Institutional allocators are less swayed by headline throughput numbers and more focused on liquidity depth, counterparty confidence and proven infrastructure — which helps explain why large pools of capital remain on Ethereum.
Raw transactions-per-second figures interest engineers and retail traders, but institutions go where the liquidity is. As one former TradFi derivatives executive points out, capital follows depth: stablecoins, tokenized funds and big asset pools live on Ethereum, and traditional finance participants need venues that can absorb large trades with minimal slippage and tight spreads.
Chains like Solana grew quickly by attracting retail traders during NFT and memecoin cycles, but those inflows were often temporary. Newer L1s promising higher theoretical TPS — so-called “Solana killers” — have not displaced Ethereum’s liquidity advantage. Institutions executing sizable transactions favor markets that won’t move prices dramatically, and Ethereum’s deep pools provide that stability.
Institutional interest is shifting from speculative retail activity toward practical products: stablecoins and real-world assets (RWAs). Large players are already experimenting with tokenized offerings — for example, BlackRock’s USD Liquidity Fund (BUIDL) launched on Ethereum and still maintains a substantial on-chain presence. The concentration of stablecoins on Ethereum reinforces its role as the primary distribution layer for institutional flows.
Layer-2 rollups have cut fees and improved user experience, but they have also fragmented liquidity across multiple rollups. That fragmentation is a trade-off: rollups may have prevented capital from permanently migrating to rival L1s by keeping costs down, yet some L2 implementations have fallen short of decentralization goals, prompting renewed discussion about the best path to scale while preserving liquidity.
Ethereum’s roadmap aims to bridge throughput gains with its liquidity strengths. Upcoming upgrades, including the planned Glamsterdam fork to raise the block gas limit, are intended to move mainnet capacity higher over time. Complementary infrastructure work — off-chain coordination for block construction, zero-knowledge transaction bundling and stronger oracle and execution layers — is improving execution efficiency for institutional use cases.
In practice, institutions favor battle-tested networks. They will evaluate alternatives — Solana for raw performance, Canton for privacy-focused workflows — but many see no immediate threat to Ethereum’s dominant liquidity position. Performance enhancements can expand Ethereum’s ability to handle institutional flows, but liquidity and stability remain the primary magnets for large capital. In crypto markets, speed may draw users during booms, but sustained capital prefers venues with depth and predictability.