Key Takeaways
- • Ark Invest Director of Research Lorenzo Valiente found that off-chain and centralized cryptocurrency companies generated approximately $70 billion in 2025 revenue, 8.5x more than on-chain protocols and Layer 1 chains, fundamentally shifting where value accrues in crypto markets.
- • Cathie Wood endorsed the analysis on August 18, 2026, articulating an investment thesis centered on "getting as close to the end user as possible," emphasizing that centralized players (exchanges, brokers, stablecoin issuers) abstract away cryptocurrency complexities and effectively monetize user relationships.
- • The research identifies a critical market dynamic: on-chain protocols remain in a bear market, while centralized intermediaries capture disproportionate value by controlling custody, trading, and staking infrastructure closer to retail and institutional end users.
- • Wood's endorsement reinforces Ark Invest's existing bullish stance on Bitcoin, Ethereum, and Solana—the firm's identified "big three" projects with robust ecosystems—while simultaneously validating a strategic pivot toward user-facing, centralized market infrastructure.
Summary
Cathie Wood, CEO of Ark Invest, publicly endorsed an analysis by her colleague Lorenzo Valiente, Director of Research at Ark, on August 18, 2026, regarding optimal cryptocurrency investment positioning in the current market cycle. Valiente's examination of 2025 global cryptocurrency revenue pools revealed a structural imbalance in value capture: off-chain and centralized companies—including cryptocurrency exchanges, brokers, and stablecoin issuers—generated approximately $70 billion in annual revenue, representing 8.5 times the revenue generated by on-chain protocols and Layer 1 blockchain networks.
The research identifies a critical competitive advantage held by centralized intermediaries: their proximity to end users. By abstracting away the technical complexities inherent in cryptocurrency—custody requirements, trading mechanics, and staking processes—these centralized entities have successfully positioned themselves as primary value captors in the ecosystem. Valiente emphasized that while on-chain infrastructure operates in a bear market environment, the strategic lesson for protocols and Layer 1 chains remains clear: they must "build and verticalize more" to capture greater share of end-user relationships and resulting monetization opportunities.
Wood framed the analysis as offering a "great perspective" on the optimal investment approach during this cryptocurrency cycle, distilling the thesis into actionable guidance: "Follow the developers, as always, and get as close to the end user as possible." This endorsement from one of institutional crypto's most prominent voices signals validation of a market structure increasingly dominated by centralized infrastructure providers rather than purely on-chain protocols. The statement aligns with Ark Invest's existing investment focus on Bitcoin, Ethereum, and Solana—which the firm characterizes as the "big three" projects with robust ecosystems and demonstrable utility—while acknowledging the superior cash generation and user penetration metrics of centralized market participants.
The research identifies a critical competitive advantage held by centralized intermediaries: their proximity to end users. By abstracting away the technical complexities inherent in cryptocurrency—custody requirements, trading mechanics, and staking processes—these centralized entities have successfully positioned themselves as primary value captors in the ecosystem. Valiente emphasized that while on-chain infrastructure operates in a bear market environment, the strategic lesson for protocols and Layer 1 chains remains clear: they must "build and verticalize more" to capture greater share of end-user relationships and resulting monetization opportunities.
Wood framed the analysis as offering a "great perspective" on the optimal investment approach during this cryptocurrency cycle, distilling the thesis into actionable guidance: "Follow the developers, as always, and get as close to the end user as possible." This endorsement from one of institutional crypto's most prominent voices signals validation of a market structure increasingly dominated by centralized infrastructure providers rather than purely on-chain protocols. The statement aligns with Ark Invest's existing investment focus on Bitcoin, Ethereum, and Solana—which the firm characterizes as the "big three" projects with robust ecosystems and demonstrable utility—while acknowledging the superior cash generation and user penetration metrics of centralized market participants.
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