Ethereum valuation inverted! Locked-up amount exceeds 300 billion, but ETH drops below $3000

Ethereum staking surpasses 120 billion, TVL exceeds 300 billion, stablecoin market share reaches 58%, but ETH drops below $3,000. With 59% of TVL, market cap only accounts for 14%, indicating valuation inversion. The top 5 stakers hold 48% of the stake, raising centralization concerns; Vitalik proposes DVT to address this. Trading volume hits new highs, but 67% of transactions are dust attacks; L2 sharding generates $100 million in revenue for the mainnet.

Ethereum’s Trillion-Dollar Staking Ecosystem Can’t Mask Centralization Risks

(Source: ValidatorQueue)

Recently, Ethereum’s staking ecosystem delivered a seemingly perfect report card. According to ValidatorQueue data, as of January 22, 2026, the total staked ETH reached a record high of nearly 120 billion USD, with over 36 million ETH staked, accounting for about 30% of circulating supply.

However, behind this prosperity lurks centralization risks. The top 5 liquidity stakers control nearly 18 million ETH, representing 48% market share. This high concentration not only contradicts the original decentralization goal but also exposes the network to single points of failure and censorship risks, potentially jeopardizing network security and ecosystem health.

On January 21, Vitalik officially proposed the “Native DVT (Distributed Validator Technology)” solution on the Ethereum research forum, aiming to solve issues of validator single points of failure and staking centralization, and to enhance Ethereum’s security and decentralization. Vitalik admitted that Ethereum had previously become overly centralized in node operation and block construction in pursuit of user growth. Native DVT aims to eliminate reliance on single entities or cloud providers like AWS.

Furthermore, the high market share of liquidity staking providers like Lido has always been a community concern. Native DVT seeks to lower staking barriers, allowing small and medium validators to participate, thereby increasing Ethereum’s “Satoshi coefficient.” Lastly, Vitalik emphasized increased focus on anti-censorship and quantum resistance. Native DVT enables validators to distribute nodes across different geographic locations and client implementations, significantly improving resilience against geopolitical risks or client-specific vulnerabilities.

Four Pillars of the Native DVT Solution

Multi-Private Key Cluster Management: Allows a validator to register up to 16 independent private keys

Threshold Signature Mechanism: Blocks are valid only when signed by more than 2/3 of related nodes

Protocol-Level Integration: Runs directly at the consensus layer, reducing operational complexity

Low-Performance Overhead: Adds only one delay cycle during block production, with no impact on proof speed

If implemented, native DVT will profoundly impact the validator ecosystem. Individual stakers can form teams or rent multiple inexpensive servers to operate with minimal downtime, greatly reducing penalties. Institutional validators will no longer need to build costly, complex failover systems; native DVT will provide a standardized fault-tolerance solution.

TVL Breaks 3 Trillion USD, Stablecoin Market Share Reaches 58%

(Source: Token Terminal)

In early 2026, Ethereum reached a historic milestone: on-chain application TVL surpassed 3 trillion USD. This milestone signifies not just numerical growth but also a diversification of the Ethereum ecosystem. Funds within Ethereum are no longer just speculative bubbles. According to Onchain research director Leon Waidmann, these funds are active in DeFi, stablecoins, RWA, and staking applications, representing real economic activity.

As TVL exceeds 3 trillion USD, Ethereum is no longer just a platform for applications but a settlement protocol capable of handling sovereign-grade assets globally. This scale means any competitor attempting to challenge Ethereum’s dominance must not only match performance but also have liquidity depth comparable to Ethereum.

If TVL is Ethereum’s “muscle,” then stablecoins are its “blood.” As of January 22, Ethereum’s market share in stablecoins has reached about 58%. Electrical Capital’s report emphasizes that stablecoins on Ethereum are not only transaction media but also collateral supporting DeFi loans worth over 19 billion USD.

The introduction of regulatory frameworks like the 《GENIUS Act》 is a strong boost, as mainstream payment companies and traditional financial institutions accelerate adoption of stablecoins. As long as Ethereum maintains its role as the “settlement hub” for stablecoins, even if other chains outperform in transaction count, their “liquidity black hole” effect will persist. 21Shares predicts the stablecoin market could reach 1 trillion USD by 2026.

Dust Attacks and L2 Sharding Fail to Capture Value

Recently, Ethereum staged an counterintuitive spectacle: the 7-day moving average of transactions reached 2.49 million, a record high, more than double the same period last year. Meanwhile, the 7-day average Gas fee dropped below 0.03 Gwei, the lowest in history, with single transfers costing about $0.15.

Strangely, despite surging on-chain activity, ETH price reacted calmly. Security researcher Andrey Sergeenkov suggests this may be due to large-scale “address poisoning” attacks rather than genuine demand growth. Studies show about 80% of new addresses are abnormally associated with stablecoins, and about 67% of new active addresses perform initial transfers of less than $1, consistent with dust attacks.

This phenomenon is linked to the December Fusaka upgrade, which introduced PeerDAS (Peer Data Availability Sampling), effectively performing “data reduction surgery” on the network. With Fusaka, transaction fees were significantly lowered, making dust attacks and similar low-cost attacks feasible. This indicates that the record-breaking transaction volume may be inflated by spam, weakening the credibility of demand growth and preventing ETH price from rising.

Adding to the woes, besides the demand illusion caused by address poisoning, Ethereum is experiencing a “growing pain” in value capture on the mainnet. To foster L2 ecosystem expansion, Ethereum’s mainnet actively sacrificed revenue in 2025, significantly reducing “pass-through fees” paid by L2s. Growthepie data shows L2 total revenue in 2025 was $129 million, while fees paid to the mainnet plummeted to only $10 million. This means Ethereum’s mainnet sacrificed over $100 million in potential revenue.

Moreover, HODL Waves indicator shows a large amount of new holdings occurred between July and October 2025. These mid- to long-term holders showed a strong willingness to exit near breakeven when prices approached $3,200, partially explaining why on-chain data looks strong but ETH price faces short-term resistance.

Valuation Inversion and the Digital Oilfield Await Revaluation

On one hand, the ecosystem data is extremely prosperous; on the other, market pricing is severely lagging. ETH is deeply trapped in a “valuation inversion.” In crypto valuation logic, the ratio of market cap to ecosystem assets is a key metric for assessing capital efficiency and valuation reasonableness.

However, as rip.eth points out, Ethereum currently carries 59% of the entire crypto market’s TVL, but its native token ETH’s market cap only accounts for 14% of the total crypto market cap. This imbalance may indicate Ethereum is in a valuation trough and is currently the most undervalued public chain.

This deep inversion may stem from Ethereum’s ongoing role transition into a “digital oilfield,” yet it remains undervalued. Large portions of TVL are locked in staking protocols, DeFi contracts, and L2 ecosystems, altering liquidity logic. Meanwhile, market capital is more focused on “oil” (ecosystem applications) while neglecting the “oilfield” (Ethereum’s intrinsic value).

Additionally, with RWA expansion, Ethereum is becoming a settlement layer for traditional financial assets. This cash-flow-generating capability will further drive its MC/TVL ratio back to a reasonable range. In fact, Ethereum’s prosperity is walking a “tightrope”: technological upgrades improve performance but may distort real data; ecosystem subsidies erode mainnet value capture to some extent.

Ethereum’s challenge is no longer just scaling but finding a dynamic balance in the “impossible triangle” of maintaining decentralization, technological advantage, and value capture. As the market shifts perception or enters a fundamentals-driven recovery cycle, this “valuation dam” could unleash significant energy.

Key Data on Ethereum’s Valuation Inversion

TVL Market Share: 59% (supports nearly 60% of crypto assets)

Market Cap Share: only 14% (severely below ecosystem capacity)

MC/TVL Imbalance: market cap relative to TVL at historic lows

Potential for Rebound: if ratios normalize, ETH valuation could be substantially re-rated