Today, Ethereum effectively serves as the operating system for the majority of decentralized finance (DeFi), providing the native asset for a broad ecosystem of lending, borrowing, and asset exchange without intermediaries in the traditional financial sector. Given its current DeFi positioning, many observers expect Ethereum’s dominance to persist, sustaining demand for Ether. Ethereum hosts a substantial share of the DeFi market’s $96 billion in total value locked (TVL), with about $55 billion held on the network. Solana, Ethereum’s closest DeFi competitor, has less than $7 billion in TVL.
That leading position is reinforced by robust developer activity: in Q4 2025, Ethereum saw a record 8.7 million smart contracts deployed, and daily active wallets nearly doubled in 2025 to more than 651,000. This dynamic creates a network effect, where liquidity attracts developers, developers attract users, and users further bolster liquidity. As a result, Ether’s long-term demand profile remains compelling despite macro headwinds.
Two major protocol upgrades are slated for 2026 to make the network faster, cheaper, and more resilient. Glamsterdam, expected in the first half of the year, will provide the software prerequisites for parallel transaction processing, potentially lowering gas fees. The late-2026 target upgrade, Hegota, aims to reduce hardware costs for securing the network, which could attract more independent validators and improve resilience. While these upgrades won’t erase all macro risks, they are designed to strengthen Ethereum’s fundamentals for DeFi and other on-chain applications.
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