Not all crypto is equal: Schwab maps where the money actually is in digital assets

A new report from Schwab’s Center for Financial Research reveals the crypto market is split into three industries, and shows most of the value has been concentrated in just one of these foundational blockchains such as Bitcoin and Ethereum.

But Schwab remarked that as spot crypto exchange-traded funds have opened the door to more mainstream investors, “crypto isn’t one asset class but an ecosystem with deep structural differences,” underscoring the importance of where you invest.

The crypto market is defined in three layers, and the report identifies it as being an “advancer” of . Foundational networks such as Bitcoin and Ethereum are at the bottom of. The backbone of almost every other crypto app is based on these base-layer blockchains process and record transactions that form the basis for such transaction. They accounted for nearly 80 percent of crypto’s $33 market cap, Schwab said. As of the end in 2025, as of late 20, 2 trillion words were spelled out.

Infrastructure, or software that connects blockchains and applications, is the second layer (or infrastructure) to . For example, this includes oracles importing external data (oracular) bridge that transport assets between blockchains and scaling tools which accelerate transactions faster). They are critical protocols but Schwab says they have a tough business model users don’t interact directly with them and switching to new competitors is often easy.

Those at the top are products such as exchanges, lending platforms, staking services and other tools that users directly interact with. They are more likely to have loyal users, lower switching costs and a higher chance of becoming industry standards. Schwab refers to protocols such as Aave AAVE$154. For example, 25 for crypto lending and Lido (LDO) for staking are examples of this but it does not recommend specific investments.

Swaby, for example, compared crypto with the traditional software industry to illustrate the point. AWS or Microsoft Azure – on which everything else is built, are foundational networks like cloud computing platforms and the platform where it is written. Product lines are like Salesforce or Netflix, and direct user interaction is similar to products. The essential infrastructure software, which is often sucked and too far from the customer to be loyal (and so over-replaced to demand pricing power) tends to get squeezed and replaced.

The report also includes an algorithm to evaluate cryptocurrencies which are based on investment in growth equity. In a statement, Schwab suggests that “analysis of protocols is done by four criteria network effects, market share, the ability to perform services in order to evaluate and understand” tokenomics which includes factors like token distribution, reward mechanisms, and supply management.

For example, Ethereum is a case study of using as an example of the . In its ecosystem, it is the smart contract industry leader with more than 10 times market share of its next closest competitor according to total value locked (TGL) in its marketplace. Developers have opted for its early start and wide adoption of its , which has had a strong network effect as it is the default choice among developers. Schwab notes that Ethereum’s slower transaction speeds and concentrated ownership raise concerns about its lower transaction rates, but the problem with blockchain is that it has been more difficult to secure transactions.

One important lesson is that, while it’s essential to the ecosystem, infrastructure protocols (which are often a key part of the equation) struggle to maintain value. Report shows that among projects with market caps over $100 million, product protocols were nearly twice as common as infrastructure protocols. Most of the market’s value was derived from its aggregate value, and foundational networks while fewer in number – were held by most of it.

Schwab argues that “cryptocurrencies remain highly risky and are still speculative.” The report says it’s not enough to just “buy crypto” for those who are entering the market. For example, in Schwab’s view, a value really lives (which is likely to be the networks that everything is built on and the tools people use every day) should be understood by investors.

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