Alts Dominate Economic Activity, but Lag in Market Cap

If you hold Bitcoin and Ethereum, you probably think you have decent exposure to the Web3 economy. Think again.

Bitcoin and Ethereum remain the dominant digital assets by market cap, representing over 80% of the market cap of the Top 100 tokens. But despite this skew in valuation, Bitcoin and Ethereum don’t necessarily reflect the majority of digital asset activity.

Looked at through the lens of broadly defined ‘fees’ (which we use as a proxy for economic activity on-chain), Bitcoin and Ethereum now represent only 5% of economic activity. The rest is made up of other Layer 1 blockchains, infrastructure, and applications, like DeFi protocols. Even when considering that Ethereum remains the largest smart contract platform, holding ETH alone does not get you direct exposure to the vibrant ecosystem of apps and businesses built on its rails.

As always, diversification is key. Exposure to the disruptive potential of digital assets is best achieved via a portfolio that considers the full spectrum of on-chain opportunities.

** The information herein is for general information purposes only and is not investment advice. An investment in digital assets involves a high degree of risk including the loss of principal. Past performance is no guarantee of future results.