How Does the Concept of “Realized Cap” Attempt to Improve on Simple Market Cap for Layer 1s?

Realized cap improves on simple market cap by valuing each unit of the circulating supply at the price it was last moved on-chain, rather than the current market price. This provides a more accurate measure of the total capital actually invested in the asset.

By ignoring tokens that have been lost or are dormant, and by valuing old tokens at their lower acquisition cost, realized cap filters out speculative bubbles and offers a better proxy for the network's fundamental value base.