BIS Study Shows USDT Growth on Ethereum Did Not Boost Smart Contract Holdings

New data challenges DeFi growth assumptions

A working paper published by the Bank for International Settlements (BIS) on September 15, 2026, reports that the growth of Tether (USDT) on the Ethereum network did not lead to a sustained increase in tokens held by smart contracts. A smart contract is a self-executing program on a blockchain often used in decentralized finance (DeFi). The study suggests that a larger supply of stablecoins does not automatically mean more capital is being used in DeFi applications.

The research indicates that while more USDT was issued throughout 2024, the percentage of those tokens sitting in smart contract accounts actually fell. This trend occurred alongside a rise in tokens held in standard user wallets, known as externally owned accounts.

Key findings from the BIS analysis

• Ethereum's share of USDT held in smart contracts dropped from roughly 15-20% in late 2024 to about 10-15% as total issuance grew.
• On the Tron network, smart contract holdings remained near 1% for most of the historical period studied.
• The study distinguishes between the total amount of tokens in contracts versus the percentage share of the total supply.
• Current third-party data shows significant USDT market caps on both chains, but does not confirm how much is currently in DeFi contracts.

What the Bank for International Settlements report details

The BIS paper reconstructed USDT holdings by analyzing transfer logs on Ethereum and Tron. It classified addresses as either smart contracts or external accounts based on deployment events. The authors noted that the share of tokens in contracts on Ethereum was higher during parts of 2021 and 2022, exceeding 20% at times.

According to the study's charts, the absolute dollar value of USDT in Ethereum smart contracts fluctuated between $10 billion and $15 billion toward the end of the plotted period. In contrast, Tron's contract-held balance remained around $1 billion or less. The report emphasizes that a declining percentage share can happen even if the absolute amount in contracts stays steady, provided that new tokens are issued and held outside of contracts.

Limits of current data

The study clarifies that knowing an address is a smart contract does not reveal its specific economic purpose. A contract might hold funds for a bridge, a wrapper, or a custodian service rather than for lending or trading strategies. Similarly, funds in personal wallets could be used for payments or savings.

While recent data from DefiLlama shows a USDT market cap of approximately $183.7 billion across chains as of September 28, with $73.3 billion on Ethereum and $92.5 billion on Tron, the BIS report notes these figures do not update the historical breakdown of contract usage. Therefore, rising total supply alone cannot prove increased demand for DeFi or specific network tokens like ETH or TRX.

Why the distinction matters

The findings challenge the common assumption that an expanding stablecoin supply equates to growing decentralized finance activity. The data shows that newly issued tokens accumulated largely in non-contract accounts. Consequently, the percentage drop in contract holdings reflects a shift in distribution rather than necessarily a withdrawal of funds from DeFi.

Understanding the methodology

Unlike traditional measures that track "Total Value Locked" (TVL) in specific applications, this study followed individual tokens across addresses. This method avoids double-counting tokens that move between protocols. However, the authors caution that neither method fully verifies the intent of the holder, as account types do not perfectly map to economic activities.

Where to find the data

• CryptoSlate