Fortress Labs is arguing that crypto’s lengthy tail is structurally overbuilt and that almost all tokens will in the end be priced towards zero until they will show actual enterprise traction and tighter token alignment. The thesis, revealed in a protracted X publish, frames the present market as a variety part quite than a broad-based restoration story.
The core level shouldn’t be that crypto itself is failing, however that token provide has far outpaced sustainable demand. Fortress Labs says the result’s a market the place a handful of majors dominate whereas hundreds of smaller property compete for shrinking liquidity.
Too Many Crypto Tokens
Fortress Labs factors to focus information to make the case. In accordance with the publish, the highest 5 crypto property account for 84.4% of whole market capitalization, leaving the remainder of the market with 15.6%, or roughly $330 billion, unfold throughout hundreds of tokens.
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It contrasts that with US equities, the place the MAG7 symbolize 31% of the market and the S&P 500 represents 84.7%. In Fortress Labs’ framing, crypto has reached roughly the identical focus degree as the highest 500 US firms, however with solely 5 property doing the heavy lifting.
“Through the years, so many cash have been created that 99% of them must go to zero for the business’s good,” the agency wrote. It provides that the mismatch has turn into tougher to disregard for buyers who purchased into crypto’s institutional adoption narrative however stay deep underwater in alt-heavy portfolios.
Fortress 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 soak up extra of the capital. It argues the third consequence is the almost certainly, even when the primary can be more healthy in idea.
A significant a part of the argument is straightforward market mechanics. Fortress 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 subsequent 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, Fortress 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 whole 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 turbines had launched tokens to date: Hyperliquid, Pumpfun, and Jupiter and says solely HYPE materially outperformed.
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That backdrop helps clarify Fortress 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 Downside
Fortress Labs additionally argues the market is punishing tokens that aren’t economically aligned with the merchandise they symbolize. 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 usually are not a authorized illustration of the enterprise and don’t supply any precise rights over the corporate’s income, not like fairness,” the agency wrote. “Traders, once they obtain tokens, have these rights by the fairness they maintain. So they’re in a greater place, however token holders? They’re on the venture’s mercy in relation to aligning their product with their token.”
In that framework, buybacks are handled as one of many clearest indicators of alignment. Fortress Labs highlights Hyperliquid and Aave, and says Uniswap is barely absolutely 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 might rely much less on narrative and extra on whether or not extra initiatives undertake the type of KPI- and revenue-led launch fashions Fortress 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
