Ethereum’s Last Moat

Ethereum’s last moat is slowly fading away. You can argue that Ethereum has been losing the trading race to Solana, Hyperliquid, and more recently Robinhood Chain. But the response has always been fairly straightforward: Ethereum still has the liquidity.

And historically, that has been a good response. Trading activity can move quickly. Deep stablecoin liquidity and established lending markets have been much harder to displace. Ethereum has remained the place where a huge amount of crypto’s capital sits, and where its most established applications put that capital to work.

There are three reasons why I think that will change going forward.

First, the most exciting growth stories in DeFi are happening entirely outside of Ethereum.

Tokenized equities are the best example. Stablecoins grew from essentially nothing into a roughly $300B market. Equities are the next major wave of assets moving onchain, although the trajectory will obviously be different.

With equities, issuance is a necessary first step but not the main goal. People want to trade equities, finance positions, and borrow against them. Look at tokenized equity trading volume by chain in the chart below. The race is between Solana, BNB Chain, Robinhood Chain, and Base. Ethereum is not just losing here; it’s not even competing.

The funny thing is, Ethereum has a larger share of tokenized equity supply than Solana, Robinhood Chain, and Base. I’m sure some people will point to this metric to argue that I’m cherry-picking the data. I would then ask: how is Ethereum’s tokenized equity supply being used? As we saw, it’s barely being traded: DEX volume in the past 30 days was just $25M, equivalent to roughly 3% of outstanding supply, compared with 4.7x supply turnover on BNB Chain and 7x on Solana.

Alright, so if it’s barely being traded, maybe it’s deposited as collateral on lending protocols? Not really. 

Lending, like trading, is also happening outside of Ethereum, and this is more worrying. Look at Aave. Its Equities Hub launched on Base, with seven Coinbase tokenized equities accepted as collateral. Aave, which I would consider Ethereum’s most successful application, will see the growth of equity collateral happen on Base. 

And again, why would any of this activity take place on the Ethereum L1? Coinbase, Robinhood, and Binance, all of which are issuing tokenized stocks, have an incentive to push that DeFi activity to their respective chains.

This is how the liquidity moat starts to crumble. A category that’s going to grow 1000x from here, and none of that growth is happening on Ethereum.

Second, Ethereum’s flagship applications are prioritizing growth elsewhere.

Take Uniswap. In the past 30 days, Robinhood Chain accounted for 43% of its trading volume, compared with 32% for Ethereum.

Uniswap’s growth had been stagnant for years, and then it suddenly found massive success with Robinhood Chain, with speculative activity coming back and a lot of V4 hook experimentation. If I were in charge of Uniswap’s growth, would I be focused on Ethereum or Robinhood Chain? I think the answer is fairly obvious.

As a completely separate example, take Ethena. Ethereum’s share of USDe supply has fallen from 88% at the October 2025 supply peak to 56%. When USDe supply expanded last year to a peak of almost $15B, most of that was on Ethereum L1. Ethena has secured partnerships with Robinhood and Coinbase, which have led to growth on both RH Chain and Base. It has also launched markets on Kamino and Jupiter Lend on Solana, and expanded to Tron last month.

It’s not only about USDe. Look at Ethena’s new consumer product. Ethena Pay, a neobank intended to make USDe useful for everyday saving and spending, launched on Avalanche. Ethena’s boldest bet on reaching a much larger audience beyond crypto natives is being built outside Ethereum mainnet.

Now, to be clear, I’m not saying that DeFi is dead on Ethereum. That is obviously far from reality, and a few protocols like Sky are still primarily focused on Ethereum. I also mentioned Aave V4’s Base Hub, but its biggest market is still Ethereum. What I’m saying is that Ethereum’s most important applications are now realizing that growth will come from other chains. Most importantly, while Ethereum was the home of DeFi innovation (Uniswap v3, Fluid, Aave, Ethena, etc.), I’m no longer seeing that same level of innovation take place on the chain. When was the last time an exciting DeFi protocol launched on Ethereum?

Third, stablecoin dominance is slowly declining. 

This is the one I’m less confident in and what I would consider Ethereum’s last standing moat. Ethereum still holds roughly 51% of stablecoin supply. Its position remains strong, and predictions of an imminent collapse have repeatedly underestimated how sticky that capital is. However, Ethereum’s supply is down from approximately $178B at its November 2025 peak to around $156B today. Meanwhile, Tron, Solana, Base, Robinhood Chain, and Hyperliquid all have stablecoin supply near all-time highs.

Looking at Ethereum’s stablecoin utilization, approximately 46% of its stablecoins sit on centralized exchanges, and about 14% are deposited in lending protocols. Ethereum also still has the deepest onchain liquidity for stable-to-stable swaps. But why would the marginal dollar of stablecoin supply land on Ethereum? Exchanges have an incentive to keep that supply on their own chains, whether that’s Coinbase on Base, Robinhood on Robinhood Chain, or even Hyperliquid, now that it shares revenue with Circle.

This mostly ties back to points 1 and 2. If new use cases are happening on other chains, and Ethereum’s own apps have incentives to grow elsewhere, where does the marginal dollar go?

I have no idea how quickly this translates into lower stablecoin dominance. Ethereum’s liquidity has repeatedly proved harder to displace than people expected. But existing capital staying on Ethereum is only part of the equation. Where is growth going to come from? Ethereum doesn’t need a mass exodus to lose its moat. It just needs the next wave of growth to happen somewhere else.

— Carlos

Ethena Pay hit a new all-time high of $645k in weekly volume, with active accounts approaching 1,000. It’s still early for Ethena in a market dominated by EtherFi, which hit a record $7M in daily spend last week.

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