Grayscale recently released its industry report for Q1 2025, which not only pointed out the underperformance of Ethereum compared to Solana, but also noted that investors are increasingly focusing on Altcoins such as Sui and Ton. Additionally, Grayscale's top 20 coins have seen major changes, with the addition of HYPE, ENA, VIRTUAL, JUP, JTO, and GRASS. Meanwhile, established DeFi protocols like Maker, Stacks, UMA, TON, NEAR, and CELO have been removed.
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ToggleTrump's victory driving a strong Q4
Grayscale states that a significant portion of the strong performance in Q4 can be attributed to the victory of President Trump in the US election. According to Grayscale's Crypto Sector Market Index (CSMI), the industry's total market capitalization increased from $1 trillion to $3 trillion this quarter. This market share is roughly equivalent to the global inflation-linked bond market and more than double the size of the US high-yield bond market, but still significantly smaller than the global hedge fund industry or the Japanese stock market.
Grayscale names ETH, SOL, SUI and OP as leaders in the Altcoin race
Turning to the race among smart contract platforms, while Ethereum has undergone the Cancun upgrade and been approved for a US stock ETF, its token performance has still lagged behind the third-largest market cap Solana, the high-performance public chain Sui, and the Telegram-backed TON.
One way to measure the value of smart contract platforms is their network fee revenue, and while metrics like TVL are also important, Grayscale believes that fee revenue is the key for public chains. There is a positive correlation between a platform's fee revenue and its market capitalization, as the stronger a network's ability to generate fee revenue, the stronger its ability to transmit value to the network through token burning or staking rewards. This is why Grayscale has highlighted ETH, SOL, SUI, and OP in the first quarter.
What to watch in Q1? AI, Solana, and DeFi
Looking ahead to Q1 2025, Grayscale is focusing on tokens related to the following three key areas:
- The US election and its potential impact on industry regulation, particularly in the areas of decentralized finance (DeFi) and staking;
- Continued breakthroughs in decentralized artificial intelligence (AI) technology and the use of AI agents on blockchains;
- The growth of the Solana ecosystem.
Grayscale names six coins
Hyperliquid (HYPE): Hyperliquid is a DeFi-focused Layer 1 blockchain. Its primary applications are a decentralized exchange for perpetual futures and a fully on-chain order book.
Ethena (ENA): The Ethena protocol issues a new stablecoin, USDe, which generates yield through term structure arbitrage, primarily collateralized by Bitcoin and Ethereum.
VIRTUAL: Virtual Protocol is a platform for creating AI agents on a Base chain. These AI agents mimic human decision-making and autonomously execute tasks. Users can create and tokenize AI agents on the platform using VIRTUAL tokens.
Jupiter (JUP): Jupiter is the largest DEX aggregator on Solana, with the highest TVL on the Solana network. Grayscale expects that as more retail investors enter the crypto market through Solana, and Solana-based memecoins and AI agent tokens thrive, Jupiter will be in a favorable position.
Jito (JTO): Jito is a liquid staking protocol on Solana, whose adoption has grown significantly in the past year. Impressively, its fee revenue exceeded $550 million in 2024.
Grass (GRASS): Grass is a decentralized data network that rewards users for sharing their unused bandwidth through a Chrome extension. This bandwidth is used to crawl online data, which is then sold to AI companies and developers for training machine learning models, effectively performing web data crawling while compensating users.
Risk Disclaimer
Cryptocurrency investments carry a high degree of risk, and their prices may fluctuate dramatically. You may lose your entire principal. Please carefully evaluate the risks.
