Ethereum Reclaims DeFi Throne with $480B Stablecoin Surge: Dawn of DeFi 2.0?
Ethereum is once again at the center of decentralized finance (DeFi), reasserting its dominance with a record-breaking $480 billion in stablecoin transactions on its Layer-1 network in May 2025. This surge is driven by improved transaction efficiency, growing liquidity, and the increasing influence of automated trading bots.
While Ethereum enjoys a renewed wave of momentum, ongoing challenges with scaling and ecosystem fragmentation may shape its role in the next phase of DeFi—commonly dubbed DeFi 2.0.
Trading Bots Power Ethereum’s Record Transaction Volume
A key catalyst behind Ethereum’s recent rise is the expanding role of automated trading bots. Once scrutinized for exploiting miner extractable value (MEV) and enabling sandwich attacks, bots are now recognized for streamlining trades and enhancing liquidity.
According to a June 4 report from CEX.io, bots facilitated more than 4.84 million stablecoin transfers in May, contributing significantly to Ethereum’s all-time high transaction volume. These bots were responsible for 32% of decentralized exchange (DEX) activity on Ethereum, with USDC leading as the most-traded asset.
This marks a shift toward more utility-focused DeFi use cases, with stablecoins increasingly being used for real-world, payment-driven applications.
📉 Lower Gas Fees Attract Liquidity Back to Layer-1
Ethereum’s resurgence is also attributed to a notable reduction in gas fees during Q1 2025. This made Layer-1 transactions more cost-effective, reversing the previous trend of users and liquidity migrating to Layer-2 networks like Arbitrum and Optimism, or alternative blockchains such as Solana and Avalanche.
The lowered transaction costs helped reestablish Ethereum’s Layer-1 as a competitive platform for payment-driven DeFi, encouraging liquidity providers to return to the mainnet.
💵 USDC Emerges as the Stablecoin of Choice
As stablecoin volume soars, USDC has solidified its position as the dominant stablecoin on Ethereum. The trend reflects a broader move away from speculative tokens and toward practical, payment-oriented crypto assets.
CEX.io’s lead analyst, Illia Otychenko, emphasized that stablecoins like USDC serve real-world needs, stating, “Speculative tokens come and go, but stablecoins stick because they solve real problems.”
USDC’s growing transaction volume illustrates Ethereum’s potential as a reliable settlement layer for global payments and financial infrastructure.
📈Ethereum Layer-1 Sees 11% Growth in Stablecoin Market Cap
Ethereum’s mainnet experienced an 11% growth in stablecoin market capitalization in 2025, further reinforcing its resurgence. While Layer-2 scaling solutions continue to expand, Ethereum Layer-1 is regaining traction for stablecoin transactions tied to real-world use cases.
Stablecoins are now seen as vital for DeFi, offering stability in a volatile crypto market and streamlining global payments. Many users still prefer Ethereum Layer-1 for its security and ecosystem maturity, despite scalability concerns.
Layer Fragmentation Could Undermine Ethereum’s Progress
Otychenko warns that Ethereum’s success won’t be determined by transaction volume alone. “This isn’t just a technical issue. It’s what will decide whether Ethereum leads or lags in the next phase of adoption.”
Liquidity fragmentation and inconsistent user experiences across layers could limit Ethereum’s ability to function as a unified DeFi platform.
What’s Next: Can Ethereum Dominate DeFi 2.0?
Ethereum is well-positioned to continue leading DeFi into its next evolution—but only if it can resolve its structural challenges. With robust growth in stablecoin activity, lowered gas fees, and rising institutional interest, Ethereum has a strong foundation.
To maintain its leadership, Ethereum must focus on unifying its Layer-1 and Layer-2 environments, improving scalability, and ensuring seamless liquidity movement across layers.
If these issues are addressed, Ethereum could become the undisputed backbone of DeFi 2.0, built around stablecoin utility and real-world financial applications.
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