New Trends in the Crypto Market: Analyzing the Changes in Grayscale's Top 20 Asset Rankings

In the ever-changing world of encryption, the movement of institutional capital is often the key clue to insight into the future. As a pioneer in the field of crypto asset management, Grayscale Investments updates its Top 20 asset list every quarter, which can be regarded as a "treasure map" of the crypto market from an institutional perspective, outlining a deep forecast of the "fact-based adoption trend" for the next stage of the market.

In the third quarter of 2025, Grayscale's "treasure map" has quietly adjusted: the newcomer Avalanche(AVAX) and Morpho(MORPHO) have jumped onto the list, while the former giant Lido DAO(LDO) and the Layer 2 hopeful Optimism(OP) have regrettably exited. Amid this ebb and flow, what changes in the crypto market are hidden? Let us delve deeper and uncover the new narrative of crypto investment in 2025 behind this seemingly ordinary list change.

Signals of Structural Reform

Avalanche(AVAX): The strong pulse of on-chain "heartbeat"

Avalanche depicts a scalable and customizable blockchain future. Its "Avalanche consensus mechanism" achieves high throughput, low latency, and decentralization, with a three-chain architecture (X-Chain, C-Chain, P-Chain) ensuring sub-second transaction finality, laying the foundation for large-scale applications.

In 2025, the trading volume on Avalanche's C-Chain soared from 250,000 to nearly 1.2 million, thanks to the Etna upgrade which reduced average transaction fees by over 90%, greatly stimulating on-chain vitality.

Avalanche precisely captures the demand for GameFi and enterprise-level applications, with games like MapleStory Universe launching on the subnet ( Subnets ). It also actively embraces the traditional world, collaborating with Web2 giants such as Amazon Web Services ( AWS ) and Alibaba Cloud to promote the tokenization of real-world assets, which is a key step for the Web3 economy to penetrate the mainstream.

Grayscale is optimistic about Avalanche because of its technological advancements, strategic ecological expansion, and the "multidimensional growth flywheel" formed by its integration with Web2. This indicates that the competition for Layer 1 is shifting towards a broader new track with real economic activities and the potential for integration between Web2 and Web3.

Morpho(MORPHO):"Transformers"-style decentralized lending

Morpho is charting a new institutional path for decentralized lending. It is a DeFi lending protocol based on Ethereum and Base chain, optimizing yields and ensuring security through "Morpho Vaults" and isolated markets. Its protocol design focuses on low transaction fees and has undergone over 25 audits.

Morpho has achieved remarkable results: annual fee income has reached 100 million USD, and the total locked value (TVL) has doubled to over 4 billion USD, firmly holding the second position in DeFi lending. On the Base chain, it is the largest protocol in terms of TVL and active loan volume. Top venture capital firms like a16z Crypto and Pantera Capital have invested over 69 million USD.

More significantly, a certain trading platform has integrated Morpho into its main application, allowing users to borrow USDC by collateralizing with Bitcoin, which is one of the largest institutional-level adoption cases in the DeFi space to date. The release of Morpho V2 further demonstrates the determination to bring DeFi into traditional financial institutions.

The rise of Morpho validates its potential as a "DeFi institutional engine." It deeply understands the requirements of institutions for risk management and compliance, addressing the pain points of traditional finance entering DeFi through refined market design and support for licensed markets. Grayscale favors it because it is optimistic about its ability to enhance DeFi efficiency, reduce risks, and effectively connect with traditional finance.

The Departure of the Old Guard: Farewell to Lido and Optimism

Lido DAO(LDO): The "liquid staking empire" faces headwinds.

Lido DAO was once the undisputed "empire" giant in the Ethereum liquid staking space, managing about 33% of staked ETH. However, behind its success lies concerns about centralization risks: the "permissioned" validator set, control of core permissions by the LDO token, and the Chorus One hot wallet breach incident in May 2025 have all raised alarms.

The Ethereum Shanghai upgrade in April 2023 allowed for ETH withdrawals, weakening Lido's "moat" in terms of liquidity. Users have more options and are turning to centralized platforms like ( such as certain trading platforms, certain platforms ), or emerging non-custodial competitors. Innovations in restaking like EigenLayer have also intensified the competition.

Lido's removal is a reflection of Grayscale's reassessment of "centralization risk." After the Shanghai upgrade, Lido's "centralization" characteristics have become more prominent against the backdrop of intensified competition and clearer regulations, where ( SEC views "protocol staking" as a non-security activity ). Grayscale may believe that its risk-return ratio is no longer attractive. Lido's exit marks a rise in the evaluation standards of institutional investors regarding liquid staking, placing greater emphasis on decentralization, governance transparency, and potential regulatory risks.

Optimism(OP): The grand vision of Layer 2, trapped in the "myth" of value capture.

Optimism, as a leading Layer 2 scaling solution for Ethereum, bears the important responsibility of enhancing transaction capabilities, reducing Gas fees, and improving user experience. Its "Superchain" (Superchain) vision has attracted star projects like Base chain from a certain trading platform through OP Stack. However, in terms of TVL and activity, it still lags slightly behind its competitor Arbitrum.

OP tokens are the core of the Optimism Collective's decentralized governance structure. However, there is a "myth" regarding its revenue distribution model: currently, the income of the sequencer goes to the Optimism Foundation, which is used to fund public goods rather than being directly distributed to OP token holders. Although sharing is expected in the future, this uncertainty affects the direct value capture of the tokens and leaves institutional investors in doubt.

In addition, the governance of Optimism has not been smooth sailing. The low voter participation and the significant control over the voting process by core contributors and early investors show that the commitment to "decentralization" still has room for improvement in practice.

The removal of Optimism reflects a profound questioning by Grayscale of its OP token "value capture mechanism". Grand ecological visions cannot be directly translated into clear token value. Institutional investors tend to prefer clear and direct paths to token value capture. Low governance participation and the concentration of voting rights within the core team also increase the complexity and risk of institutional investment. In the face of fierce competition in the Layer 2 track, Grayscale may believe that OP will struggle to provide "more attractive risk-adjusted returns" in the short term. The exit of Optimism reflects a deepening assessment by institutions of Layer 2 token economics: mere technological leadership is insufficient to support long-term value; tokens must possess a clear, sustainable value capture mechanism and true decentralized governance.

Behind the Grayscale Rankings: The "Barometer" and "Structural Changes" of Crypto Investment in 2025

The "tide" of institutional funds: from Bitcoin to the vast deep sea of diversified applications

In the first quarter of 2025, institutional interest in digital assets continues to soar. Surveys show that up to 86% of surveyed institutional investors have held or plan to allocate to digital assets, with nearly 60% planning to invest over 5% of AUM in encryption. The successive approvals of Bitcoin and Ethereum ETFs are like the mainstream financial world opening the door to encryption, and a certain asset management company's Bitcoin ETF even set the record for the fastest growth in history.

This tide has long surpassed the "islands" of Bitcoin and Ethereum. Data shows that 73% of investors already hold alternative encryption currencies, with DeFi participation expected to triple in two years. The tokenization of real-world assets (RWA) and the adoption of stablecoins are accelerating, with a total market value reaching $234 billion, as certain lending platform protocols connect DeFi with traditional finance.

Institutional investment is moving from a simple "Bitcoin belief" to a broad ocean of "diversified allocation" and "application scenarios landing." The inclusion of Avalanche and Morpho in the Grayscale list is a profound reflection of the trend of institutional investment "from point to surface" and "from speculation to application."

( The "Evolution of DeFi": From "Rugged Growth" to "Refined Survival"

In 2024, the total locked value of DeFi surged by 129% to ) TVL ###, while the trading volume of derivative decentralized exchanges ( DEXs ) skyrocketed by 872%. DeFi is developing yield-bearing stablecoins to attract traditional finance. Trends like embedded finance, automation, and artificial intelligence/machine learning ( AI/ML ) are reshaping the landscape. The success of Morpho is a microcosm of DeFi lending innovation.

DeFi is undergoing an "evolution" from "wild growth" to "refined survival." Layer 2 and AI/ML applications aim to address pain points and enhance efficiency. Yield-bearing stablecoins and embedded finance enrich product forms, seamlessly connecting with traditional finance. The explosive growth of derivatives DEXs and Morpho's institutional path indicate that DeFi is meeting the complex trading and risk management needs of institutions. Grayscale's favor towards Morpho is a recognition of the trend of DeFi "self-evolution and external integration," optimistic about protocols that can enhance efficiency, reduce risks, and connect with traditional finance.

( Layer 2's "racing": a comprehensive competition of ecology, technology, and value capture

Layer 2 solutions, like Ethereum's "highway", significantly enhance its scalability and reduce user costs. Optimistic Rollups) such as Optimism, Arbitrum###, and ZK-Rollups are mainstream technologies. The Layer 2 market is highly competitive, with Arbitrum currently maintaining a lead in TVL and the number of protocols. Optimism, with its "superchain" vision and OP Stack, is committed to building an interoperable ecosystem, attracting heavyweight projects like the Base chain of a certain trading platform.

The competition of Layer 2 has shifted to a comprehensive contest of "ecosystem building capabilities" and "token value capture models." The removal of Optimism precisely illustrates that even with a grand ecological vision, if the token value capture mechanism is not clear enough or if there are centralization risks, it will be difficult to gain long-term favor from institutions. Grayscale's assessment of Layer 2 has surpassed surface indicators and delved into long-term sustainable value creation and distribution mechanisms.

( Regulatory "filter": compliance, institutional funds' "ticket to entry"

In 2025, the cryptocurrency regulatory environment in the United States gradually becomes clear, acting as a "filter" for institutional funds entering the crypto market. The U.S. Securities and Exchange Commission ) SEC ### released new guidelines, clarifying that "protocol staking" is not a securities issuance. The U.S. Congress passed a bill abolishing the IRS ( broker reporting obligations for non-traditional fiat currency deposits and withdrawals on DeFi platforms ).

The clarification of regulations is a key "catalyst" for institutional large-scale entry into the crypto market, while also serving as a precise "filter". It reduces the legal and operational risks for institutions, encouraging more compliant entities to enter the PoS ecosystem and DeFi. However, clear regulations also mean stricter compliance requirements. Lido's removal may partly be due to concerns over its "licensing system" and governance centralization. Grayscale, as a strictly regulated asset management company, places a high emphasis on compliance in its investment decisions. This indicates that, from 2025 onwards, compliance has upgraded to become the "ticket" for attracting institutional capital.

Summary

The adjustment of the Grayscale Top 20 asset list clearly outlines the evolution path of institutional investment in the crypto market by 2025. It focuses on the project's technological innovation, real application scenarios, sustainable value capture models, and decentralized governance practices. The inclusion of Avalanche and Morpho represents the market's recognition of the explosive potential of high-performance public chains in GameFi/enterprise-level applications, as well as the expectations for DeFi lending to develop towards institutional-level and compliance. The exit of Lido DAO and Optimism warns of the centralized risks of liquid staking and the impact of uncertainty in value capture within the Layer 2 token economic model on institutional attractiveness.