The second half is becoming a key period for network upgrades. Especially Ethereum is at the center of this.
The biggest upgrade since the merge has entered its final testing phase. The upgrade, known as Glamsterdam and targeted for the 2nd Half of 2026, focuses on improving the way Ethereum works at the protocol level.
Introduces parallel transaction processing and gradually increases the gas limit from 60 million to 200 million; these changes were designed to increase efficiency.
From an on-chain perspective, the timing couldn’t be better.
Following back-to-back DeFi attacks that instantly wiped out more than $10 million from Ethereum’s TVL in Q2, the network is still working to rebuild on-chain liquidity and user activity. As seen in the chart below, the TVL of Aave, Ethereum’s largest lending protocol, dropped from around $35 billion in the first quarter to around $13 billion.
Against this backdrop, the upcoming Glamsterdam upgrade becomes an important infrastructure catalyst.
The logic is simple: By improving scalability and expanding network capacity, the upgrade can help Ethereum meet higher DeFi demand as liquidity slowly returns to the ecosystem. This becomes particularly interesting with the planned increase of Ethereum’s gas limit towards 200 million, which could significantly increase transaction capacity and reduce pressure during periods of peak on-chain activity.
The effect may also translate into price movement.
ETH started the third quarter strong, up 11%, but maintaining that momentum will take more than short-term flows. A successful Glamsterdam upgrade could add a stronger fundamental narrative, supporting a more infrastructure-focused rally.
Naturally, the question becomes: Ethereum (ETH) Are we gearing up for a strong H2 cycle, or will macro uncertainty and weak on-chain activity continue to limit the upside?
Ethereum H2 faces reality check as DeFi liquidity weakens
Stablecoins remain the key liquidity engine behind DeFi activity.
However, the broader liquidity environment is showing signs of weakness, with total stablecoin market cap falling to a four-month low. Over the past four months, approximately $5.82 billion worth of stablecoin supply has been wiped out, underscoring a clear slowdown in capital availability in crypto markets.
Tether recently increased the pressure by burning $2.5 billion USDT on Ethereum, reducing the network’s total USDT supply to approximately $77 billion. This pushes stablecoin liquidity further away from Ethereum, widening the gap. TRONIt currently holds the largest USDT supply of over $87 billion.
This burn highlights a significant challenge for Ethereum’s H2 cycle.
On the one hand, the upcoming Glamsterdam upgrade is building a bullish narrative around Ethereum’s scalability. On the other hand, weakening DeFi activity and decreasing stablecoin liquidity are putting pressure on the chain.
Since Ethereum’s smart contract ecosystem relies heavily on stablecoin flows, a persistent liquidity crunch could slow the DeFi recovery and make it difficult for the network to gain momentum.
Enterprise flows, meanwhile, add another layer to the picture.
Recently a large corporate wallet transferred 63,000 ETH to Coinbase. Combined with weak liquidity conditions, this suggests that Ethereum’s recent rise may be a short-term relief move rather than the start of a sustainable trend.
Final Summary
- Ethereum’s Glamsterdam upgrade is entering final testing and will bring major scalability improvements in the second half of 2026.
- ETH needs stronger DeFi activity to continue its rise.
