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Author: Grayscale Research; Compilation: ALMan@Bitchain Vision
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The Cryptocurrency sector is a proprietary framework developed in partnership with FTSE Russell Index to organize the digital asset market and measure returns.In the second quarter of 2025, the price returns and changes in fundamental indicators of each cryptocurrency sector were performed in a different way.
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We recently launched the AI crypto sector, which contains 24 assets and has a total market value of US$15 billion.According to the index method, the sector rose 10% in the second quarter.
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We have updated Grayscale Research’s Top 20 token list.The Top 20 list covers diversified assets in the cryptocurrency space, which we believe have great potential in the coming quarter.New assets added this quarter include Avalanche (AVAX) and Morpho (MORPHO).All assets in our Top 20 token list have high price volatility and should be considered high-risk assets.
Every asset in a cryptocurrency has some connection with blockchain technology and shares the same basic market structure—but the commonality is limited to that.The asset class covers a wide variety of software technologies, applied in consumer finance, artificial intelligence (AI), media and entertainment fields.To make the data clear, Grayscale Research uses a proprietary taxonomy and index series developed in collaboration with FTSE/Russell, called the “cryptocurrency sector” (Crypto Sectors, see Figure 1).As of the latest adjustment, the cryptocurrency sector framework now covers six different market segments, including the AI cryptocurrency sector to be discussed below.They contain 261 tokens with a total market value of US$3 trillion.
Chart 1: The Crypto Sectors Framework Helps Organize Digital Asset Markets
The return rate in the second quarter of 2025 was mixed, with both the “Liberation Day” tariff announcement and the United States’ military operations in the Middle East.Our market cap-weighted composite FTSE/Grayscale cryptocurrency industry total market index remained largely unchanged this quarter (Figure 2).The currency cryptocurrency industry index performed well as Bitcoin prices rose 30% during this period.The FTSE/Grayscale Finance Cryptocurrency Industry Index and the FTSE/Grayscale Artificial Intelligence Cryptocurrency Industry Index also saw a slight increase.By contrast, the FTSE/Grayscale Consumption and Culture Cryptocurrency Industry Index fell due to weakness in some Meme coins and game-related tokens.The FTSE/Grayscale Utilities & Services Cryptocurrency Industry Index also fell, reflecting general weakness in its constituent stocks.
Figure 2: The returns of various cryptocurrencies in Q2 2025 are uneven
Blockchain is not a business, but its economic activity and financial health can be measured in a similar way.The three most important indicators of on-chain activity are users, transactions and transaction fees.Since blockchains are anonymous, analysts often use “active addresses” (the blockchain address with at least one transaction) as an imperfect alternative indicator of the number of users.
Similar to the token price returns, indicators of blockchain financial health in the second quarter of 2025 are also mixed.On the one hand, the average number of transactions processed by smart contract platforms climbed to more than 130 million, or about 1,500 transactions per second; transaction volumes increased by nearly 30% over last year (Figure 3).On the other hand, the transaction fees paid by users have dropped across the board.This reflects to a certain extent the further cooling of memecoin trading activity on Solana, which is the main source of transaction fees in previous quarters.Based on the blockchain involved in this analysis, the actual transaction fee for the smart contract platform is approximately USD 0.03 (i.e. 3 cents per transaction).Despite the decline in application layer costs on a quarter-on-month basis, annualized growth rates in the past four quarters have reached between $5 billion and $10 billion.
Figure 3: Declining transaction fees in the cryptocurrency industry
Last month, we launched the AI cryptocurrency sector, a change that has been officially included in the FTSE/Grayscale cryptocurrency sector series indexes in the latest index adjustments.The AI cryptocurrency sector currently contains 24 tokens with a total market cap of approximately $15 billion, up from approximately $5 billion in 2023, but is still less than 1% of Bitcoin’s market cap (Figure 4).The most valuable asset in the AI cryptocurrency sector is Bittensor, a platform designed to incentivize decentralized AI development.
Figure 4: Artificial Intelligence Encryption has 24 assets and a market capitalization of $15 billion
Top 20 tokens for grayscale research
The Grayscale Research team analyzes hundreds of digital assets every quarter to provide reference for the rebalancing process of the FTSE/Grayscale cryptocurrency industry index series.Based on this process, the Grayscale Research team will generate a list of assets for the top 20 in the cryptocurrency industry.This list covers a diversified portfolio of assets in the cryptocurrency industry that we believe have great potential in the coming quarter (Figure 5).Our approach covers a range of factors including network growth/adoption, upcoming catalysts, fundamental sustainability, token valuation, token supply inflation, and potential tail risks.
Over the past quarter, the focus of cryptocurrency markets has included stagflation and other macroeconomic risks (which may be favorable to Bitcoin), as well as U.S. progress in regulation of stablecoins and market structures (which also seem to support Ethereum and DeFi-related assets).These themes and the advancements in decentralized artificial intelligence are fully reflected in the Top 20 list.
Therefore, we made only two changes this quarter that are more relevant to the fundamentals of a specific agreement than to add new topics.Specifically, we will add:
1. Avalanche (AVAX):Avalanche is a well-known smart contract platform blockchain – currently ranked sixth in its cryptocurrency by market value.This is a highly competitive segment, with many high-quality projects working to build the best platform for users and developers.In fact, it is difficult to determine which platform will achieve the most lasting network effect based on technology alone.Therefore, Grayscale Research places great emphasis on de facto adoption trends.Recently, Avalanche has seen an increase in transaction volume (and users and fees have also increased), which is out of place with its ecosystem (which may be related to the addition of the video game MapleStory and the associated stablecoin transaction volume).While we don’t know if the growth in activity will continue, this growth in organic adoption bodes well for Avalanche’s competitive position in the field of crypto-encryption in smart contract platforms and may support its native AVAX tokens.
2. Morpho (MORPHO):Morpho is an over-mortgage decentralized lending protocol characterized by an independent lending pool that pairs a mortgaged asset with a loan asset.Morpho is mainly built on Ethereum and Base, with a simple structure, allowing users to lock assets in customizable vaults.Morpho has grown rapidly over the past year, with annual fee revenues rising to about $100 million, and total locked value (TVL) more than doubled to more than $4 billion, and by this metric it became the second largest lending application.Last month, Morpho announced the launch of the Morpho V2, aiming to bring DeFi to traditional financial institutions.Grayscale Research is optimistic about the future of on-chain lending activity, and Morpho appears to be in a good position to potentially get a share of this growth (and other lending-related agreements Aave and Maple Finance on the top 20 list).
Figure 5: AVAX and MORPHO ranked among the top 20 tokens in Q3 2025
To make room for Avalanche and Morpho, we will remove Lido DAO (LDO) and Optimism (OP) this quarter.Both projects are leaders in their respective fields (staking and Layer 2, respectively) and are at the heart of the Ethereum ecosystem.However, if U.S. regulatory changes allow for wider use of staking services (e.g., in ETP), Lido may face competition for fees from centralized staking providers.Optimism’s technology is widely used by the Ethereum Layer 2 network, including Coinbase’s Base chain, Uniswap’s Unichain and the OP mainnet itself.However, the fee income generated by OP tokens is limited.Furthermore, we are not sure how Optimism’s vision for “Super Chain” will be coordinated with the Ethereum Foundation’s own efforts to improve interoperability, possibly through alternative rollup designs (i.e. “based” and “native” rollups).LDO and OP’s long-term investment theme remains the same: Lido provides core liquid staking services, while Optimism leads Ethereum’s expansion path.However, we are not sure about the near-term outlook and will therefore remove both assets in the next quarter.
Investing in crypto asset classes involves risks, some of which are unique to crypto asset classes, including smart contract vulnerabilities and regulatory uncertainties.In addition, our top 20 assets are highly volatile and should be considered high risk and therefore not suitable for all investors.Given the risk of this asset class, any investment in digital assets should be considered in the context of the portfolio and the financial objectives of investors are taken into account.
