Why Institutions Stick to Ethereum: Liquidity Outweighs Speed in 2026

Despite the technical allure of high-speed blockchains offering theoretical throughput breakthroughs, institutional capital remains firmly anchored to Ethereum due to its superior liquidity depth, according to Kevin Lepsoe, CEO of ETHGas. While engineers often focus on transactions per second (TPS) as a primary performance metric, traditional finance (TradFi) entities prioritize the stability, scale, and capital depth that currently only the Ethereum ecosystem can provide.

Lepsoe, a former derivatives executive at Morgan Stanley, emphasizes that while newer chains promise lower costs and faster execution, they lack the massive concentration of stablecoins and decentralized finance (DeFi) capital required for institutional-grade transactions. For large asset managers, the ability to execute high-volume trades with tight spreads and minimal slippage is far more critical than raw processing speed.

To explain the institutional mindset, Lepsoe uses a real estate analogy, comparing Ethereum to a bustling city center. "I think of Ethereum as like downtown," Lepsoe stated. While alternative blockchains might offer a "suburban" experienceperhaps more convenient or with a different vibethe deepest markets remain "downtown." If an institution wants to ensure their orders are absorbed without distorting prices, they must operate where the money sits.

This liquidity advantage is quantifiable. Ethereum currently leads the industry with a stablecoin market capitalization of $160.4 billion. This dominance acts as a gravitational force; simply building a faster network is insufficient to pull capital away if the counter-parties and assets are not there. While networks like Solana have attracted retail traders during memecoin frenzies, institutional players are focused on sustainable use cases like Real-World Assets (RWAs).

The preference for Ethereum is evident in the strategies of major financial titans. The USD Liquidity Fund (BUIDL) by BlackRock, the world's largest asset manager, originated on Ethereum and continues to hold over 30% of its market capitalization on the network, despite branching out to other chains. Samara Cohen, BlackRock’s global head of market development, has described stablecoins as the essential bridge between traditional finance and digital liquidity, further cementing Ethereum's role as the primary distribution layer for tokenized assets.

While liquidity is the primary draw, Ethereum is not ignoring technical scaling. The network is preparing for the "Glamsterdam" fork in 2026, a significant upgrade designed to enhance the main chain's capacity. This update is expected to raise the block gas limit from 60 million to 200 million, setting the Layer 1 (L1) foundation on a path toward 10,000 TPS over time.

This shift back to L1 scaling comes as Ethereum co-founder Vitalik Buterin recently noted that many Layer 2 (L2) solutions have failed to decentralize adequately. While L2s successfully prevented capital from fleeing to competing L1s during periods of high fees, the focus is now returning to scaling the main network to support the next generation of financial services directly.

Why do institutions prefer Ethereum over faster chains like Solana?
Institutions prioritize liquidity depth over speed. Ethereum offers the deepest pool of capital and stablecoins ($160.4 billion), allowing for large trades with lower slippage compared to faster but less liquid chains.

What is the Glamsterdam fork?
The Glamsterdam fork is a major Ethereum upgrade scheduled for 2026 that aims to increase the block gas limit from 60 million to 200 million, significantly boosting the main chain's transaction capacity.

The industry is witnessing a maturity phase where "speed" is becoming a commodity, while "liquidity" remains the true scarcity. Kevin Lepsoe’s insights confirm that for TradFi, blockchain is less about tech specs and more about market structure. The upcoming Glamsterdam fork in 2026 is a critical pivot; by re-emphasizing L1 scaling, Ethereum is effectively telling institutions that they won't have to choose between security and throughput forever. If Ethereum can deliver on the 200 million gas limit while maintaining its liquidity moat, the "Ethereum Killer" narrative may finally be put to rest.