A brand new thesis that argues that almost all crypto worth right this moment is captured in apps, fairly than blockchains, is gaining recognition with the rise of Hyperliquid and will shift investor habits over the subsequent few months, a crypto government says.
“All of the cool youngsters are speaking in regards to the ‘fats app’ thesis. Seems like that could possibly be a dominant theme within the coming months,” Bitwise chief data officer Matt Hougan stated in an X publish on Wednesday. The fat-app principle suggests crypto purposes will soak up extra worth than the underlying blockchain protocols sooner or later.
“It’s the type of thesis that I believe will seem within the mainstream media in 1-3 months. As such, I feel it’s a beneficial psychological mannequin to bear in mind as of us watch crypto unfold,” Hougan defined.
Just a few layer-1s may 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 — fairly than purposes.
As an alternative, 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 may change how buyers worth layer-1 tokens in comparison with utility tokens.
The Fats Protocol thesis has additionally garnered loads of controversy through the years.
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 appropriate but, because it could possibly be resulting from causes that “don’t have anything to do with worth being captured.”
He stated it could be resulting from retail buyers treating layer-1s as a straightforward index wager and enterprise capital funds favoring the extra important performs out there.
“Digital asset investing remains to be dominated by early stage enterprise capital funds, who deal with whole addressable market (TAM) over monetary valuation, and have a tendency to hunt out what “could possibly be” over “what at present is,” he defined.
Dorman stated on Feb. 9 that “Fats protocol thesis has performed main injury to crypto.”
“It’s nonsense, it causes each app to attempt to change into an L1, it drives all VC {dollars} to L1s, and it makes useless L1s price $1 bn+.”
Crypto business has “already began voting,” says funding agency
“Just a few L1s will win, however none shall be price 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 yr, the relative worth motion of core blockchain tokens versus utility tokens tells the story clearly. Ethereum, Solana, Avalanche, choose your chain, have gone sideways or bled towards BTC,” the agency stated.
The SOL/BTC ratio, which measures Solana’s relative power towards Bitcoin, is down 16.11% over the previous 12 months, in keeping with TradingView.
“The market has already began voting,” the agency stated. “Essentially the most explosive token efficiency has come from purposes, not protocols.”
Bitwise exec disagrees with “anti-L1 take”
Nevertheless, Hougan disagrees with the agency’s “anti-L1 take.”
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“I feel main L1s are literally well-positioned for the subsequent yr. Nevertheless it’s well-argued and positively price contemplating,” Hougan stated, claiming that Hyperliquid (HYPE) has been the standout crypto token out there in current instances.
“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 keeping with CoinMarketCap.
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