Restructuring of the Encryption Asset Landscape: In-depth Insights from the Grayscale Rankings

In the rapidly changing field of encryption, the movements of institutional capital are often seen as key clues to insight into the future of the market. Grayscale Investments, as a pioneer in crypto asset management, undoubtedly provides a highly valuable "treasure map" with its quarterly updated Top 20 asset list, outlining the development trends of the crypto market from an institutional perspective.

In the third quarter of 2025, this list was quietly adjusted: Avalanche (AVAX) and Morpho (MORPHO) made their debut, while Lido DAO (LDO) and Optimism (OP) dropped off the list. Behind this seemingly ordinary change lies a profound transformation in the encryption market.

Rising Stars: Dual Drivers of Technological Innovation and Ecological Expansion

Avalanche: Multidimensional Growth of High-Performance Public Chains

Avalanche achieves a perfect combination of high throughput, low latency, and decentralization through its innovative "Avalanche consensus mechanism" and three-chain architecture. In 2025, with the Etna upgrade reducing average transaction fees by over 90%, the transaction volume on Avalanche's C-Chain soared from 250,000 to nearly 1.2 million, significantly boosting ecosystem vitality.

Avalanche has not only made breakthroughs in the GameFi field but is also actively embracing the traditional world, collaborating with several Web2 giants to promote the tokenization of real-world assets. This "multidimensional growth flywheel" formed by technological refinement, strategic ecological expansion, and integration with Web2 is the key reason why Grayscale favors Avalanche.

Morpho: Institutional Transformation of DeFi Lending

Morpho is reshaping the future of decentralized lending. As a DeFi lending protocol based on Ethereum and Base chains, Morpho optimizes yields and enhances security through its innovative "Morpho Vaults" and isolated market design.

Morpho's achievements are impressive: annual fee revenue reached $100 million, and total value locked (TVL) doubled to over $4 billion. Notably, a well-known trading platform has integrated Morpho into its main application, marking one of the largest institutional-level adoptions of DeFi to date.

The rise of Morpho validates its potential as a "DeFi institutionalization engine." Through refined market design and support for permissioned markets, Morpho effectively addresses the pain points of traditional finance entering DeFi, demonstrating the ability to enhance DeFi efficiency, reduce risks, and effectively connect with traditional finance.

The Departure of Old Generals: Challenges of Centralized Risks and Value Capture

Lido DAO: The Dilemma of the "Liquidity Staking Empire"

Lido DAO was once the undisputed giant in the Ethereum liquid staking space, managing about 33% of staked ETH. However, the centralization risks hidden behind its success have gradually emerged: the permissioned validator set, the control of core permissions by LDO tokens, and the security incident that occurred in May 2025 have all raised market concerns.

After the Ethereum Shanghai upgrade, users have more staking options, weakening Lido's competitive advantage. Emerging non-custodial competitors and re-staking innovations have further intensified competition. Lido has been removed from the Grayscale list, reflecting institutional investors' heightened standards for evaluating liquid staking, with greater emphasis on decentralization, governance transparency, and potential regulatory risks.

Optimism: The Value Capture Dilemma of Layer 2

As a leading Ethereum Layer 2 scaling solution, Optimism's "superchain" vision has attracted many star projects. However, in terms of TVL and activity, Optimism still lags behind its main competitors.

Moreover, the value capture mechanism of the OP token is uncertain. Currently, the sorter income belongs to the Optimism Foundation, used to fund public goods, rather than being directly distributed to token holders. This ambiguous value distribution model raises concerns among institutional investors.

The governance practices of Optimism also face challenges. Low voter participation and significant control over the voting process by core contributors make its commitment to "decentralization" seem inadequate in practice.

Optimism has been removed, reflecting the deepening assessment of Layer 2 token economics by institutional investors: mere technological superiority is insufficient to support long-term value; tokens must have clear, sustainable value capture mechanisms and genuine decentralized governance.

New Trends in Cryptocurrency Investment for 2025

1. Institutional Fund Diversification: From Bitcoin to a wide range of encryption applications, institutional investment is shifting from a pure "Bitcoin faith" to "diversified allocation" and "application scenario implementation."

2. The Refined Evolution of DeFi: DeFi is undergoing a transition from "wild growth" to "refined survival", with the explosive growth of derivative DEXs and institutional-grade lending protocols as clear evidence.

3. Comprehensive Strength Competition of Layer 2: The competition of Layer 2 has shifted to a comprehensive contest of ecosystem building capabilities and token value capture models.

4. Compliance Becomes Key: As the regulatory environment gradually clarifies, compliance has become the "ticket" for attracting institutional capital. The compliance of a project will directly affect its chances of gaining institutional favor.

Conclusion

The adjustment of the Grayscale Top 20 asset list clearly outlines the evolution path of institutional investment in the encryption market by 2025. It focuses on the project's technological innovation, real application scenarios, sustainable value capture models, and decentralized governance practices.

For participants in the encryption world, this list provides valuable strategic guidance. Investors should move beyond short-term speculation and delve into the fundamentals of projects. Project builders need to establish healthy and sustainable economic models while achieving technological breakthroughs, strengthen decentralized governance, and actively integrate with the traditional financial world.

In 2025, the encryption market is transitioning from "barbaric growth" to "meticulous cultivation." Only by understanding the structural changes behind this can one truly grasp future investment opportunities.