The assumption that rising stablecoin issuance automatically translates into increased capital flowing into decentralized finance (DeFi) has been challenged by recent data from the Bank for International Settlements (BIS). A working paper published on September 15, 2026, revealed that while the total supply of Tether’s USDT on the Ethereum blockchain expanded significantly throughout 2024, the proportion of that supply held by smart contract accounts stalled and ultimately declined.
This divergence suggests that the massive influx of new USDT issuance was primarily absorbed by externally owned accounts (EOAs)—such as exchange custody wallets or individual holdings—rather than being deployed into DeFi protocols like lending, trading, and liquidity provision. The findings force a distinction between mere stablecoin growth and verifiable DeFi adoption on the Ethereum network.
International settlements: stalled DeFi capital
The BIS study, which tracked USDT holdings on both Ethereum and Tron, provided granular detail on how stablecoin balances were distributed across account types. On Ethereum, the share of USDT held in smart contract accounts—typically associated with DeFi protocols—fluctuated in the low tens of billions of dollars.
Smart contract accounts on Ethereum reached over 20% of the network’s total USDT supply during 2022. This share remained relatively strong, hovering between 15% and 20% until late 2024. However, as Tether continued to mint new supply, that percentage began to shrink, falling to approximately 10% to 15% by the end of the plotted period in late 2024.
This reduction represents a change in proportion, not necessarily an absolute dollar withdrawal from DeFi. According to the research, the absolute value of USDT held in Ethereum smart contracts sat roughly between $10 billion and $15 billion toward the end of the data series. The BIS authors noted that the issuance growth did not bring a sustained, proportional increase in these contract holdings, suggesting limited adoption within the broader Ethereum ecosystem growth.
Stablecoin Supply Growth Driven by Non-DeFi Usage
The central finding of the BIS paper is that the stablecoin supply expansion was largely funneled into accounts outside of smart contracts. When new USDT tokens are issued, if they accumulate in EOAs faster than they are deposited into DeFi protocols, the contract-held share naturally drops.
EOAs are used for a variety of purposes, including retail payments, individual savings, remittances, and large custodial holdings managed by centralized exchanges. The study shows a pronounced trend: as the overall supply grew, far more USDT accumulated in these non-contract accounts, overshadowing the growth of funds locked in smart contracts.
This trend separates stablecoin market cap growth from ecosystem health metrics. A significant part of Tether’s supply surge, which went from $89.1 billion in November 2023 to $180.9 billion by October 2025, seems to have served crypto trading and exchange custody rather than pure DeFi innovation.
The distinction between account types is critical for accurate market analysis. Traditional DeFi metrics, such as Total Value Locked (TVL), measure assets assigned to specific protocols, often counting the same token multiple times across complex liquidity chains. The BIS reconstruction, however, follows the token across all addresses, offering a cleaner picture of how supply is actually divided between economic uses.
Contrasting Ethereum and Tron’s Stablecoin Profiles
The BIS report drew a sharp contrast between Ethereum and Tron, the two largest networks for USDT issuance. Tron’s profile suggested an even more transaction-focused utility for the stablecoin.
On Tron, the smart contract-held share of USDT remained remarkably low, hovering consistently near 1% through most of the study’s historical series. This low percentage indicates that the vast majority of Tron-based USDT is held in EOAs, reinforcing the view that Tron is primarily utilized for transactional activity and as a store of value rather than for complex DeFi deployments.
While Ethereum’s DeFi proportion shrank, the absolute dollar value of $10 billion to $15 billion still represents a substantial amount of capital committed to decentralized applications. In contrast, Tron’s contract balances were calculated at around $1 billion or less, demonstrating the vast difference in DeFi scale between the two chains. This data is critical for understanding the underlying health of the Ethereum price drivers.
Re-evaluating Decentralized Finance Adoption Metrics
The Bank for International Settlements’ detailed methodology provides a necessary corrective to generalized narratives about stablecoin proliferation. It emphasizes that a rising stablecoin total, in isolation, establishes neither increased DeFi deployment nor greater end-user payments.
Researchers reconstructed the holdings by analyzing transfer event logs and classifying addresses based on contract deployments. This allows for a deeper understanding of economic activity compared to relying solely on TVL metrics, which can be prone to double-counting and manipulation. The method highlights that even a smart contract holding USDT may not be a DeFi protocol in the traditional sense; it could be a bridge, a wrapper, or a custodian’s vault.
Conversely, an EOA might be owned by a user intending to purchase DeFi tokens or participate in lending, but the token is not yet locked in a smart contract. The report clearly states that neither its balance breakdown nor TVL measures can provide a verified description of the holder’s true purpose, only the account type.
For the crypto industry, the BIS data underscores a maturity in market composition. USDT is now a crucial component of the trading and arbitrage infrastructure, serving as crypto’s core reserve asset for centralized exchanges and high-frequency trading firms. This utility, which is executed primarily via EOAs, currently outweighs its direct deployment into decentralized applications on Ethereum.
Implications for the Ethereum Ecosystem
For the Ethereum ecosystem, the findings suggest that the network’s value proposition is diversifying beyond purely smart-contract-driven decentralized finance. While Ethereum remains the dominant platform for complex DeFi transactions, its increasing utilization as a primary layer for holding large, liquid assets like stablecoins—even outside specific protocols—affirms its role as the de facto settlement layer for the broader crypto market.
The concentration of USDT in EOAs may also reflect lingering concerns about smart contract risk, network congestion, or transaction costs, particularly during periods of high market activity when stablecoin issuance tends to accelerate. Users might prefer to keep large holdings liquid in centralized custody or individual wallets, ready for immediate deployment, rather than locking them into DeFi contracts.
Understanding this balance is crucial for projecting future demand for the native asset, ETH. If Ethereum USDT growth is decoupled from DeFi deployment, then the demand for transaction fees (gas) and staked ETH might be less sensitive to stablecoin issuance surges than previously assumed. Demand would instead be driven by the usage patterns of the non-DeFi accounts, such as exchange inflows and outflows.
Ultimately, the BIS paper provides valuable insight by correcting a common statistical assumption. It confirms that the expansion of the stablecoin market is a complex phenomenon, driven by several factors beyond just the immediate need for decentralized liquidity. It requires the crypto sector to move toward more precise metrics that differentiate between custodial, transactional, and truly decentralized financial use cases to accurately gauge where capital is truly being put to work.