Ethereum achieved a record $480 billion in stablecoin volume, driven by automated trading bots and lower gas fees.
USDC emerged as the dominant stablecoin, reflecting the growing importance of payment-driven DeFi.
Despite Ethereum’s resurgence, layer fragmentation remains a challenge that could impact its DeFi leadership in the future.
Ethereum has made a dramatic return to the heart of decentralized finance (DeFi) as the blockchain continues to assert its dominance in the stablecoin market. In May 2025, Ethereum reached a record $480 billion in stablecoin transactions on its Layer-1 network, driven by significant improvements in transaction efficiency and liquidity.
The role of automated trading bots has become pivotal in driving this surge, making Ethereum a top choice for real-world, payment-driven applications. But while Ethereum is enjoying renewed momentum, critical challenges related to layer fragmentation and scaling issues could determine whether it maintains its position as the leader in DeFi 2.0.
Ethereum’s remarkable resurgence in DeFi can be largely attributed to the growing influence of automated trading bots. These bots, once criticized for contributing to miner extractable value (MEV) and sandwich attacks, are now being hailed for increasing the efficiency and liquidity of transactions within the Ethereum ecosystem.
According to a report from CEX.io released on June 4, bots played a crucial role in executing over 4.84 million stablecoin transfers on Ethereum’s Layer-1 network in May 2025. This was a significant factor in helping Ethereum process $480 billion in stablecoin volume, setting a new all-time high for the blockchain.
Automated bots facilitated 32% of Ethereum’s decentralized exchange (DEX) volume in May, with USDC emerging as the most-traded asset. This surge reflects a shift toward utility-based DeFi, with stablecoins now being primarily used for payment-driven applications.
Ethereum’s return to prominence is also due to a reduction in gas fees during Q1 2025, making Ethereum more competitive against Layer-2 solutions and alternative chains.
Lower gas fees have encouraged liquidity providers to return to Ethereum’s mainnet, which was previously losing market share to Ethereum’s Layer-2 solutions (such as Optimism and Arbitrum) and other blockchains like Solana and Avalanche.
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Following Ethereum’s resurgence, USDC has firmly established itself as the dominant stablecoin on the network. The rise of USDC’s trading volume in May 2025 reflects a broader trend toward stablecoin utility over speculative assets, particularly within the DeFi ecosystem. Stablecoins, such as USDC, are increasingly favored for payment-driven applications, which are seen as more stable and practical compared to volatile tokens.
According to CEX.io’s lead analyst Illia Otychenko, lower gas fees were instrumental in helping Ethereum regain its position as a leading settlement layer. This shift not only underscores the growing importance of payment-focused DeFi but also highlights USDC's role as a bridge for real-world applications in the DeFi space.
In Otychenko’s words, "Speculative tokens come and go, but stablecoins stick because they solve real problems."
In 2025, Ethereum’s Layer-1 network experienced an 11% growth in its stablecoin market capitalization. Despite Ethereum’s Layer-2 solutions continuing to grow, Ethereum mainnet regained some of its market share, particularly for payment-driven applications.
The growing adoption of stablecoins is evident in Ethereum’s mainnet transaction volume, as it serves as the preferred network for real-world use cases requiring efficient payments.
While Layer-2 networks continue to play a role in addressing Ethereum’s scalability issues, Ethereum Layer-1 remains the primary choice for many DeFi applications, especially for users seeking stability and security for their transactions.
Stablecoins have become essential in DeFi because they provide stability in a volatile crypto market, and are especially beneficial for global payments.
Although Ethereum has made significant strides in stablecoin transactions and regained market share, it faces a pressing issue: layer fragmentation. This fragmentation arises from the growing competition between Ethereum’s Layer-1 and Layer-2 solutions, as well as competing blockchains that offer lower fees and faster transaction speeds.
Otychenko warns that Ethereum's next chapter will not be determined solely by transaction volume. Cross-layer cost and liquidity fragmentation could hinder Ethereum’s ability to sustain its leadership in DeFi infrastructure.
He states, "This isn’t just a technical issue. It’s what will decide whether Ethereum leads or lags in the next phase of adoption."
For Ethereum to continue to lead DeFi 2.0, it must address these scaling and fragmentation challenges while maintaining its position as the go-to platform for stablecoin payments and real-world applications.
Ethereum has the potential to maintain its leadership in the DeFi space, but it must overcome the fragmentation of its Layer-1 and Layer-2 solutions. Ethereum's dominance in stablecoin transactions and its 11% growth in stablecoin market cap indicate a bright future for the blockchain, particularly in payment-driven DeFi.
However, Ethereum must continue to improve its transaction efficiency and cost-effectiveness to remain competitive. If Ethereum can successfully address scaling issues and cross-layer liquidity fragmentation, it could be poised to lead the charge in DeFi 2.0, leveraging its strong stablecoin ecosystem and growing institutional interest.
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