Most Crypto Assets Need To Go To Zero, Research | Crypto News
Castle Labs is arguing that crypto’s long tail is structurally overbuilt and that most tokens will in the end be priced toward zero unless they will show real business traction and tighter token alignment. The thesis, revealed in a long X post, frames the current market as a choice section slightly than a broad-based recovery story.
The core level isn’t that crypto itself is failing, but that token provide has far outpaced sustainable demand. Castle Labs says the result’s a market where a handful of majors dominate while 1000’s of smaller belongings compete for shrinking liquidity.
Too Many Crypto Tokens
Castle Labs factors to focus data to make the case. According to the post, the top 5 crypto belongings account for 84.4% of complete market capitalization, leaving the remaining of the market with 15.6%, or roughly $330 billion, unfold across 1000’s of tokens.
It contrasts that with US equities, where the MAG7 characterize 31% of the market and the S&P 500 represents 84.7%. In Castle Labs’ framing, crypto has reached roughly the same focus degree as the top 500 US corporations, but with only 5 belongings doing the heavy lifting.
“Over the years, so many coins have been created that 99% of them need to go to zero for the industry’s good,” the firm wrote. It provides that the mismatch has develop into more durable to ignore for buyers who purchased into crypto’s institutional adoption narrative but stay deep underwater in alt-heavy portfolios.
Castle Labs outlines three broad paths for rebalancing: majors lose share to smaller tokens, exterior liquidity lifts the broader market, or weaker tokens lose worth while majors take up more of the capital. It argues the third consequence is the most doubtless, even if the first can be more healthy in concept.
A major half of the argument is simple market mechanics. Castle Labs says token unlocks will continue to add provide into a market where demand is already selective, citing $8.51 billion in unlock worth this 12 months and $17.12 billion over the next 5 years.
That overhang, it argues, is colliding with poor business efficiency across a lot of the sector. Out of more than 5,600 protocols listed on DeFiLlama, Castle Labs says only 76 generated more than $1 million in income in the last 30 days, and only 237 cleared $100,000.
Revenue is concentrated too. The post says the top 10 protocols in 2025 accounted for 80% of complete crypto income, while the top three accounted for 64%, with Tether alone representing 44%. It also notes that only three of those top 10 income mills had launched tokens so far: Hyperliquid, Pumpfun, and Jupiter and says only HYPE materially outperformed.
That backdrop helps clarify Castle Labs’ skepticism toward new listings. It says there have been about 118 major token launches in 2025, and 84.7% traded below their TGE valuation, which it describes as evidence of inflated launch pricing and weak post-launch construction.
The Alignment Problem
Castle Labs also argues the market is punishing tokens that are usually not economically aligned with the merchandise they characterize. It cites Circle’s acquisition of Interop Labs, where Axelar’s token AXL was not half of the deal, as an instance of product worth and token worth diverging.
“Tokens are not a legal representation of the business and don’t offer any actual rights over the company’s profits, unlike equity,” the firm wrote. “Investors, when they receive tokens, have these rights through the equity they hold. So they are in a better position, but token holders? They are at the project’s mercy when it comes to aligning their product with their token.”
In that framework, buybacks are handled as one of the clearest indicators of alignment. Castle Labs highlights Hyperliquid and Aave, and says Uniswap is only absolutely aligned with tokenholders after more than 5 years of its token’s existence.
The firm’s conclusion is blunt but particular: capital ought to rotate toward protocols with real income, tokenholder alignment, and credible mechanisms to offset dilution. Whether that thesis holds in the next cycle might rely less on narrative and more on whether or not more tasks undertake the sort of KPI- and revenue-led launch fashions Castle Labs says are now beginning to emerge.
At press time, the full crypto market cap stood at $2.16 trillion.
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