A brand new thesis that argues that almost all crypto worth right now is captured in apps, reasonably than blockchains, is gaining reputation with the rise of Hyperliquid and will shift investor habits over the following few months, a crypto govt says.
“All of the cool children are speaking concerning the ‘fats app’ thesis. Seems like that might be a dominant theme within the coming months,” Bitwise chief info officer Matt Hougan stated in an X submit on Wednesday. The fat-app idea suggests crypto purposes will take in extra worth than the underlying blockchain protocols sooner or later.
“It’s the type of thesis that I think will seem within the mainstream media in 1-3 months. As such, I feel it’s a useful psychological mannequin to bear in mind as people watch crypto unfold,” Hougan defined.
A couple of layer-1s might stand out, however apps will dominate
The Fats App thesis, which is a comparatively new thought, challenges Joel Monegro’s 2016 Fats Protocol thesis, arguing that almost all worth will accrue to the bottom layer — chains like Ethereum, Solana or Avalanche — reasonably than purposes.
As a substitute, the Fats App thesis means that worth concentrates on the utility layer, with purposes capturing extra income and consumer consideration than the blockchains they run on.
Ought to extra individuals undertake the thesis, it might change how traders worth layer-1 tokens in comparison with utility tokens.
The Fats Protocol thesis has additionally garnered loads of controversy over time.
Digital asset Funding agency chief funding officer Jeff Dorman defined in a report again in 2021 that the Fats Protocol Thesis has not been confirmed right but, because it might be attributable to causes that “don’t have anything to do with worth being captured.”
He stated it might be attributable to retail traders treating layer-1s as a straightforward index wager and enterprise capital funds favoring the extra vital performs available in the market.
“Digital asset investing remains to be dominated by early stage enterprise capital funds, who give attention to complete addressable market (TAM) over monetary valuation, and have a tendency to hunt out what “might be” over “what presently is,” he defined.
Dorman stated on Feb. 9 that “Fats protocol thesis has accomplished main harm to crypto.”
“It’s nonsense, it causes each app to attempt to develop into an L1, it drives all VC {dollars} to L1s, and it makes useless L1s value $1 bn+.”
Crypto business has “already began voting,” says funding agency
“A couple of L1s will win, however none can be value greater than the sum of the apps,” he added.
In the meantime, institutional funding agency Starkiller Capital stated in a report on Tuesday that there are indicators that the Fats App narrative is already taking maintain.
“Over the previous 12 months, the relative worth motion of core blockchain tokens versus utility tokens tells the story clearly. Ethereum, Solana, Avalanche, decide your chain, have gone sideways or bled in opposition to BTC,” the agency stated.
The SOL/BTC ratio, which measures Solana’s relative energy in opposition to Bitcoin, is down 16.11% over the previous 12 months, in accordance with TradingView.
“The market has already began voting,” the agency stated. “Probably the most explosive token efficiency has come from purposes, not protocols.”
Bitwise exec disagrees with “anti-L1 take”
Nonetheless, Hougan disagrees with the agency’s “anti-L1 take.”
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“I feel main L1s are literally well-positioned for the following 12 months. Nevertheless it’s well-argued and positively value contemplating,” Hougan stated, claiming that Hyperliquid (HYPE) has been the standout crypto token available in the market in latest occasions.
“It’s not an accident. HYPE is a pure expression of application-level demand, precise customers, precise flows, precise token velocity tied to utilization, not only a generalized blockspace toll,” Hougan stated.
Hyperliquid is buying and selling at $55.56, up 1,636% over the previous 12 months, in accordance with CoinMarketCap.
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