A new Bank of America research report identifies Ethereum as the foundational network powering over half of all stablecoin value, establishing the blockchain as critical infrastructure for the convergence of traditional and decentralized finance. The analysis underscores Ethereum’s combination of robust smart contract functionality, decentralization, and extensive developer community as instrumental in its dominance.
Institutional adoption continues to accelerate, driven by stablecoins’ capacity to reduce transaction costs, enable programmable yield generation, and serve as liquid settlement assets. The report notes that ongoing regulatory developments are poised to catalyze further growth, potentially allowing central bank digital currencies (CBDCs) and regulated private stablecoins to coexist.
Ethereum’s network health benefits significantly from stablecoin activity through mechanisms like ETH token burns and enhanced validator engagement. Layer-2 scaling solution adoption is also increasing as an answer to network congestion, though challenges remain from competing Layer-1 blockchains and regulatory complexity.
Bank of America emphasizes that the synergy between Ethereum and stablecoins creates substantial opportunities for innovation across payments, remittances, and decentralized finance applications, despite scalability hurdles.