Grayscale Adds Avalanche, Morpho to Top 20 List, Drops Lido DAO, Optimism

Grayscale Investments, a leading crypto asset manager, has updated its Top 20 list for the third quarter of 2025, adding Avalanche (AVAX) and Morpho (MORPHO) to the rankings. This update reflects Grayscale's assessment of the strong potential these assets hold within the crypto market. The additions come at the expense of Lido DAO (LDO) and Optimism (OP), which have been removed from the list. This adjustment underscores Grayscale's strategic focus on assets with near-term momentum and growth potential.

Avalanche (AVAX) has gained traction as a smart contract platform, experiencing an increase in transactions and user engagement. This growth is partly attributed to new partnerships in the gaming sector, including collaborations with the popular MapleSTory ecosystem. Morpho (MORPHO), a decentralized lending protocol built on Ethereum and Base, has also shown significant promise. With over $4 billion in Total Value Locked (TVL), Morpho is now the second-largest lending platform in decentralized finance. The recent launch of Morpho V2 aims to integrate traditional financial institutions, further enhancing its market position.

The removal of Lido DAO (LDO) and Optimism (OP) from the Top 20 list is noteworthy. Despite their strategic importance within the Ethereum ecosystem, these projects face challenges that have led to their exclusion. Lido DAO could encounter increased competition if new U.S. regulations favor centralized staking solutions. Optimism, while powering major layer-2 networks, has not shown significant short-term upside, leading Grayscale to prioritize assets with stronger near-term momentum.

Grayscale's update also highlights the official addition of the Artificial Intelligence Crypto Sector, which now includes 24 AI-focused tokens with a combined market cap of $15 billion. This sector, led by projects like Bittensor, has seen a 10% gain in the second quarter, indicating growing interest in the intersection of blockchain and artificial intelligence. The AI sector's performance, along with moderate gains in the Financials sector, contrasts with the underperformance of the Consumer and Culture and Utilities and Services sectors, which have experienced a cooling in utility-driven tokens.

The update also notes the continuous growth in blockchain usage, with smart contract platforms processing over 130 million transactions last quarter. Despite a drop in average transaction fees to $0.03, application-layer activity remains robust, bringing in around $5 to $10 billion annually. This suggests healthy long-term engagement and highlights the sector's resilience amidst global economic and political headwinds.

Grayscale reiterates that all assets in its Top 20 list are high-risk, high-volatility investments. Smart contract platforms, in particular, face exposure to regulatory developments and evolving macroeconomic conditions. However, innovation in areas like AI, DeFi, and smart contract platforms continues to drive growth and offer valuable insights for investors with a high-risk appetite.