Tokens from Injective, a layer-1 blockchain in the Cosmos ecosystem, and Render, a GPU rendering network that migrated this year to Solana from Ethereum, dominated the year's return rankings among the CoinDesk Market Index (CMI) benchmark index of 184 digital assets.

Sure, we love to geek out about blockchain technology, and wonder if all of this might someday serve as the foundation for an entirely new-built infrastructure of digital finance. But hey, what about the money end?

A cornerstone of capitalism is letting investors bet on the emergence of new technologies, and one thing that's notable about blockchain is that the industry has developed its own markets to bet on blockchain winners and losers. (Whether these markets pass muster with regulators is an entirely separate question; in the meantime you won't find Solana's SOL token trading on Wall Street.)

With that in mind, what better prism is there on the performance of digital-asset markets during 2023 than the benchmark CoinDesk Market Index (CMI), accompanied by a breakdown of year-to-date returns for the various industry sectors?

Below please find six charts highlighting some of the biggest takeaways from 2023.

CoinDesk's Bradley Keoun, founding editor of The Protocol newsletter, wrote this article, based on charts prepared by Tracy Stephens of CoinDesk Indices.

CoinDesk Market Index (CMI) has 5x'd the S&P 500 this year

The CoinDesk Market Index (CMI) is CoinDesk's broadest, most inclusive gauge of digital-asset markets – "Crypto's S&P 500," as we like to call our benchmark index. In the year through Dec. 21, the CMI more than doubled, gaining 125% to be precise. As seen in the chart above, the bulk of the year's returns came during the first quarter of the year, and during the last quarter; in between, there were a lot of doldrums, bringing a lot of gut-wrenching anxiety (and layoffs) for the crypto industry, before the green shoots started to show. Bitcoin (BTC), the largest cryptocurrency by market capitalization, outperformed the benchmark, while Ethereum's ether (ETH), the second-biggest, underperformed. The CMI's year-to-date return was roughly five times the 23% figure for the Standard & Poor's 500 Index, the benchmark for U.S. stocks.

This article is featured in the latest issue of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday. Also please check out our weekly The Protocol podcast.

CoinDesk Computing Index (CPU) leads sector index returns

The CoinDesk Computing Index (CPU) led gains among the CMI sector indices, with a 167% return in 2023. The index corresponds to the Computing sector within the CoinDesk Digital Asset Classification Standard.

The definition of the Computing sector is as follows: "The Computing sector consists of projects that aim to decentralize the sharing, storing and transmission of data by removing intermediaries and ensuring privacy for all users. All projects that aim to gather, transmit, store and share data and web services in a decentralized manner play a key factor in building the infrastructure of Web3. This includes on-chain and off-chain data transmission, social data platforms, peer-to-peer secure data transactions, open networks, free market private computation and decentralized file storage and file sharing."

Ranking second among the sector indices was the CoinDesk Currency Index (CCY), with a 150% return. That index includes bitcoin (BTC), XRP (XRP), Stellar lumens (XLM) and dogecoin (DOGE).

Injective, RenderToken, Solana led CMI token returns

Can you say 32x? That was the return for Injective Protocol's INJ token (INJ). Injective is a blockchain built for finance, using Cosmos blockchain technology, that claims to be the fastest among layer 1s. In August we reported on its “2.0” tokenomics upgrade to “dramatically increase the amount of INJ burned weekly,” citing a blog post at the time.

RenderToken (RNDR) from Render, a GPU rendering network that migrated this year to Solana from Ethereum, surged 972%. (RenderToken, for what it's worth, was the top performer in the top-performing Computing sector.) Solana's SOL zoomed 833%.

In notoriously volatile digital-asset markets, there is exactly zero guarantee that any of these gains are deserved or enduring. What is safe to say is that digital-asset markets in 2023 saw the reappearance of the type of mind-blowing returns – and high risk – that historically have attracted a lot of traders to crypto.

ApeCoin, Luna, DASH, BAL, OMG, ZEC were the big 2023 losers in CMI

We don't need to belabor the point here; in 2023, the biggest rewards probably accrued to crypto traders who went long. But it's possible some lucky or smart managers succeeded in shorting the right horses, as it were. A few of these projects were legacy failures i.e. Terra's LUNA (LUNA). Others just sort of lost steam, like EthereumPOW's ETHW (ETHW), which basically died on the vine as the main Ethereum blockchain successfully completed its transition to a proof-of-stake blockchain, culminating in the so-called "Shapella" upgrade earlier this that allowed staking withdrawals for the first time. Ethereum Name Service's (ENS) and Zcash's ZEC (ZEC), representing projects still considered by many crypto analysts to be interesting enough, had a tough year.

Bitcoin extended its dominance

Sometimes it can be hard for normies to really get this, but bitcoin (BTC) is actually seen by many savvy crypto traders as the safe play. So on a risk-reward basis, one would be pretty hard-pressed to complain about the OG cryptocurrency's 164% year-to-date return through Dec. 21. (The chart above shows YTD leaders in the CoinDesk Currency Index (CCY).)

XRP (XRP), the payments token used in Ripple Labs's network, had a decent year with an 83% climb – as a crucial decision went its way in a pending case before the U.S. Securities and Exchange Commission. (Read Sam Kessler's story from earlier this year on why that decision suddenly made it worthwhile again to study the technology behind the XRP Ledger.)

The XLM (XLM) tokens from Stellar, which spent the year readying for its big "Soroban" smart-contracts upgrade expected in early 2024, weren't far behind, with a 73% return.

CoinDesk Smart Contract Platform Sector (SMT)

Regular readers of The Protocol newsletter – highlighting blockchain tech; please subscribe here! – will quickly recognize this index: the CoinDesk Smart Contract Platform Index (SMT); it captures the biggest core blockchain infrastructure plays beyond Bitcoin; those include heavyweight Ethereum as well as the myriad alt-layer-1 blockchains and rapidly-proliferating layer-2 networks that are vying for relevance.

In 2023 the SMT index has returned 107%, slightly underperforming the benchmark CMI, at least partly due to the outperformance of bitcoin, which isn't a member.

We've already talked about the market leaders Injective and Solana.

Ethereum's ETH turned in a respectable 87% climb, though the anti-#Flippening crowd will certainly note the drastic gap versus bitcoin's 164%.

Avalanche's AVAX (AVAX) had a big year, riding the narrative that it might get traction from institutional blockchain adopters; the project played a leading role in a big proof-of-concept demonstration by JPMorgan and Apollo.

The Optimism ecosystem's OP (OP) token gained as Coinbase's Base and several other projects chose the technology as the template for new layer-2 networks they wanted to build.

The SKALE SKALE token from Skale Network – describing itself as an "Ethereum-native multichain network built to scale Ethereum dApps with a focus on high-throughput, fast finality, and zero gas fee transactions" – scored big with a 151% 2023 rally.

Notable was the lackluster performance of Polygon's MATIC (MATIC) token, with 6.2% – even though the project was one of the most aggressive in positioning itself at the forefront of the Ethereum layer-2 race, and a leader in the adoption of hotter-than-hot "zero-knowledge" cryptography.

The Cosmos ecosystem's ATOM token was also somewhat of a disappointment on a relative basis, gaining just 20% even though its vision for a multi-chain, interoperable blockchain universe has pretty much taken hold throughout the blockchain universe. And it landed some major projects, including a new layer-1 blockchain for decentralized derivatives exchange dYdX, which migrated away from its prior status as a layer-2 network atop Ethereum. (We covered that here.)

What will happen with crypto markets in 2024?

What happens next? Check out our 2024 predictions for blockchain tech here.

But in terms of crypto markets? Historically the quadrennial Bitcoin halvings like the one that's expected next year, have driven a four-year market cycle. But that history only goes back 14 years.

One area where crypto markets are exactly like traditional markets: Nobody really knows what's going to happen – everyone's just guessing.

Or as it's been said in the past about Wall Street stock pitchers: If they tell you to buy it, it means they've already bought.