According to new data from Token Terminal, Ethereum has increasingly evolved into a platform for high-value finance, even as on-chain innovation shifts to faster, cheaper networks.
Since peaking in Q2 2021 with 5.9 million smart contracts deployed, new Ethereum contract launches have fallen by roughly 95% to just 310,000 in Q3 2025. Yet, over the same period, Ethereum’s ecosystem total value locked (TVL)has surged from $120 billion to $379 billion, marking one of the most robust capital consolidations in DeFi history.
This divergence between contract deployment and capital growth highlights a structural shift: while experimentation and new projects are flourishing elsewhere, Ethereum’s mainnet remains the settlement layer of choice for institutional-grade DeFi and established protocols.
Layer-2s and Alternative Blockchains Take the Lead in Experimentation
The report notes that Layer-2s and alternative Layer-1s have absorbed much of the ecosystem’s creative energy. Networks like Base and Solana have become the go-to destinations for new applications, driven by lower fees and higher throughput.
- Solana’s ecosystem TVL expanded from $4.3 billion to $37.3 billion, fueled by the viral success of Pump.fun, which generated $866 million in fees since January 2024.
- Base recorded 167.5 million contract deployments in Q2 2025, alongside explosive growth in Aerodrome’s $408 million in fees, with TVL climbing from $425 million to $11.7 billion.
While Ethereum retains the largest pool of institutional capital, these emerging ecosystems have captured the developer frontier, leading the creation of next-generation decentralized apps.
Fusaka Upgrade Could Reignite Ethereum’s On-Chain Innovation
Historical data suggests that peaks in contract deployment often precede major TVL expansions. The 2021 boom serves as a prime example, Ethereum’s 5.9 million contract surge in Q2 2021 foreshadowed its record DeFi inflowslater that year.
Now, analysts believe this dynamic could soon return with the upcoming Fusaka upgrade, expected in December 2025. The update aims to increase transaction throughput and significantly reduce gas costs, potentially luring developers back to Ethereum’s mainnet.
If Ethereum regains even a fraction of the contract deployment activity now seen on Base and Solana, Token Terminal suggests it could trigger another wave of on-chain innovation and capital inflows, reasserting Ethereum’s dominance in DeFi’s next cycle.
A Shift from Quantity to Quality
The data underscores Ethereum’s maturation: fewer contracts, but more value per transaction. As DeFi becomes increasingly institutionalized, Ethereum’s base layer appears to be transitioning from a hub of experimentation to a foundation for large-scale, high-value financial infrastructure, while its ecosystem continues to expand across L2s and interoperable networks.
With the Fusaka upgrade on the horizon, Ethereum may soon bridge the gap between capital concentration and developer experimentation, potentially reigniting both ends of its network economy heading into 2026.
