Ethereum's Dominance in Tokenized Finance and Institutional Adoption: A Case for Long-Term Exposure in 2026

Ethereum's trajectory in 2025 has solidified its position as the foundational infrastructure for tokenized finance, driven by a confluence of network effect strengthening, protocol upgrades, and institutional adoption. As the crypto ecosystem transitions into 2026, Ethereum's dominance in tokenized euros, record-breaking smart contract deployments, and surging DeFi Total Value Locked (TVL) present a compelling case for long-term exposure. This analysis unpacks the data, infrastructure-led growth, and institutional tailwinds reinforcing Ethereum's role as the bedrock of the next phase of crypto adoption.

Tokenized Euros: Ethereum's 50% Market Share and Regulatory Tailwinds

Ethereum's dominance in the tokenized euro market has reached a critical inflection point. According to a report by StockTwits, Ethereum accounts for approximately 50% of all tokenized euros in circulation as of late 2025, a figure corroborated by the State of Euro Stablecoins 2025 report from Range and Utila, which notes that 90.1% of euro stablecoin issuance occurs on Ethereum according to the report. This dominance is underpinned by the EU's Markets in Crypto-Assets (MiCA) regulation, enforced in early 2025, which excluded non-compliant stablecoins and created a regulatory vacuum Ethereum filled with its robust infrastructure as research shows. Circle's EURC, the leading euro stablecoin, now holds 41% of the market capitalization in this space according to the report, further entrenching Ethereum's role as the primary settlement layer for tokenized euros.

The regulatory clarity provided by MiCA has not only legitimized tokenized euros but also accelerated institutional participation. As the International Organization of Securities Commissions (IOSCO) highlighted in its November 2025 Final Report on Financial Asset Tokenization, Ethereum's interoperability and liquidity advantages position it as the default chain for cross-border settlements and secondary market activity according to the report. This regulatory tailwind, combined with Ethereum's existing stablecoin dominance (52% of global stablecoin supply), creates a flywheel effect where tokenized euros and dollars coexist on the same network, amplifying Ethereum's utility as research indicates.

Infrastructure-Led Growth: Pectra, Fusaka, and Smart Contract Deployments

Ethereum's 2025 upgrades-Pectra (May 2025) and Fusaka (December 2025)-have been pivotal in scaling its infrastructure to meet the demands of tokenized finance. The Pectra upgrade introduced blob transactions and EIP-4844, which significantly increased data availability for Layer 2 (L2) solutions while reducing fees according to the report. This optimization spurred a surge in smart contract deployments, with daily deployments reaching levels last seen during the 2021 bull run as data shows. Fidelity Digital Assets noted that Pectra's blob throughput improvements directly supported the scalability of rollups, enabling Ethereum to maintain low fees even as TVL and transaction volumes surged according to research.

The Fusaka upgrade, meanwhile, introduced PeerDAS (EIP-7594), which reduced bandwidth requirements for nodes and increased the gas limit by 33%, boosting Layer 1 throughput according to the report. These upgrades have positioned Ethereum as a modular, high-performance blockchain capable of handling both tokenized asset settlements and complex DeFi protocols. As Bankless observed in its 2025 stress test analysis, Ethereum's post-Fusaka throughput now rivals that of Solana and other high-speed chains, while retaining its composability and security guarantees according to the analysis.

DeFi TVL and the Institutionalization of Ethereum

Ethereum's DeFi ecosystem reached a record $170 billion in TVL by September 2025, driven by protocols like Aave, Lido, and Uniswap according to the report. This growth reflects a broader trend of institutional adoption, with major financial institutions such as BlackRock and JPMorgan launching tokenized products on Ethereum's infrastructure according to the analysis. BlackRock's Ethereum spot ETF (ETHB) further cemented the chain's role in traditional finance, bridging the gap between crypto-native and institutional markets according to the report.

While Ethereum's L2 TVL declined by 17% year-over-year, this shift does not signal a loss of momentum. Instead, it reflects a maturation of the ecosystem, where L2s like Base and World focus on throughput and user experience rather than speculative TVL growth according to the report. The Fusaka upgrade's throughput improvements are expected to further integrate L2s into Ethereum's infrastructure, creating a seamless, multi-layered network for tokenized finance.

A Network Effect Strengthened by Competition

Ethereum's dominance is not static; it is actively defended against emerging competitors like Solana. However, as Yahoo Finance noted, Solana's focus on speed and cost efficiency does not replicate Ethereum's ecosystem breadth or regulatory alignment . The tokenization of euros and dollars on Ethereum creates a network effect where liquidity, developers, and institutions are incentivized to stay on the chain. This is further reinforced by Ethereum's role as the settlement layer for tokenized assets, a position that becomes increasingly valuable as asset tokenization scales.

Conclusion: Ethereum as the Foundation for 2026 and Beyond

Ethereum's 50% share in tokenized euros, record smart contract deployments, and institutional adoption underscore its role as the foundational infrastructure for the next phase of crypto. The Pectra and Fusaka upgrades have not only enhanced scalability but also positioned Ethereum to handle the demands of a tokenized global economy. As regulatory frameworks mature and institutional participation deepens, Ethereum's network effect will continue to strengthen, making it an essential long-term exposure for investors seeking to capitalize on the future of finance.