Fort Labs is arguing that crypto’s lengthy tail is structurally overbuilt and that the majority tokens will in the end be priced towards zero until they’ll show actual enterprise traction and tighter token alignment. The thesis, printed in an extended X publish, frames the present market as a variety part relatively than a broad-based restoration story.
The core level isn’t that crypto itself is failing, however that token provide has far outpaced sustainable demand. Fort Labs says the result’s a market the place a handful of majors dominate whereas 1000’s of smaller belongings compete for shrinking liquidity.
Too Many Crypto Tokens
Fort Labs factors to focus knowledge to make the case. In line with the post, the highest 5 crypto belongings account for 84.4% of complete market capitalization, leaving the remainder of the market with 15.6%, or roughly $330 billion, unfold throughout 1000’s of tokens.
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It contrasts that with US equities, the place the MAG7 signify 31% of the market and the S&P 500 represents 84.7%. In Fort Labs’ framing, crypto has reached roughly the identical focus degree as the highest 500 US corporations, however with solely 5 belongings doing the heavy lifting.
“Through the years, so many cash have been created that 99% of them must go to zero for the trade’s good,” the agency wrote. It provides that the mismatch has change into tougher to disregard for buyers who purchased into crypto’s institutional adoption narrative however stay deep underwater in alt-heavy portfolios.
Fort Labs outlines three broad paths for rebalancing: majors lose share to smaller tokens, exterior liquidity lifts the broader market, or weaker tokens lose worth whereas majors take in extra of the capital. It argues the third consequence is the probably, even when the primary could be more healthy in idea.
A serious a part of the argument is easy market mechanics. Fort Labs says token unlocks will proceed so as to add provide right into a market the place demand is already selective, citing $8.51 billion in unlock worth this 12 months and $17.12 billion over the following 5 years.
That overhang, it argues, is colliding with poor enterprise efficiency throughout a lot of the sector. Out of greater than 5,600 protocols listed on DeFiLlama, Fort Labs says solely 76 generated greater than $1 million in income within the final 30 days, and solely 237 cleared $100,000.
Income is concentrated too. The publish says the highest 10 protocols in 2025 accounted for 80% of complete crypto income, whereas the highest three accounted for 64%, with Tether alone representing 44%. It additionally notes that solely three of these high 10 income mills had launched tokens to date: Hyperliquid, Pumpfun, and Jupiter and says solely HYPE materially outperformed.
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That backdrop helps clarify Fort Labs’ skepticism towards new listings. It says there have been about 118 main token launches in 2025, and 84.7% traded under their TGE valuation, which it describes as proof of inflated launch pricing and weak post-launch construction.
The Alignment Drawback
Fort Labs additionally argues the market is punishing tokens that aren’t economically aligned with the merchandise they signify. It cites Circle’s acquisition of Interop Labs, the place Axelar’s token AXL was not a part of the deal, for example of product worth and token worth diverging.
“Tokens aren’t a authorized illustration of the enterprise and don’t provide any precise rights over the corporate’s income, not like fairness,” the agency wrote. “Traders, once they obtain tokens, have these rights by way of the fairness they maintain. So they’re in a greater place, however token holders? They’re on the challenge’s mercy relating to aligning their product with their token.”
In that framework, buybacks are handled as one of many clearest indicators of alignment. Fort Labs highlights Hyperliquid and Aave, and says Uniswap is simply totally aligned with tokenholders after greater than 5 years of its token’s existence.
The agency’s conclusion is blunt however particular: capital ought to rotate towards protocols with actual income, tokenholder alignment, and credible mechanisms to offset dilution. Whether or not that thesis holds within the subsequent cycle could rely much less on narrative and extra on whether or not extra tasks undertake the sort of KPI- and revenue-led launch fashions Fort Labs says at the moment are beginning to emerge.
At press time, the whole crypto market cap stood at $2.16 trillion.
Featured picture created with DALL.E, chart from TradingView.com
