A brand new thesis that argues that the majority crypto worth in the present day is captured in apps, fairly than blockchains, is gaining recognition with the rise of Hyperliquid and will shift investor habits over the following few months, a crypto government says.
“All of the cool children are speaking concerning the ‘fats app’ thesis. Looks like that could possibly be a dominant theme within the coming months,” Bitwise chief info officer Matt Hougan said in an X publish on Wednesday. The fat-app principle suggests crypto purposes will take up extra worth than the underlying blockchain protocols sooner or later.
“It’s the sort of thesis that I think will seem within the mainstream media in 1-3 months. As such, I believe it’s a worthwhile psychological mannequin to bear in mind as people 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 the majority worth will accrue to the bottom layer — chains like Ethereum, Solana or Avalanche — fairly than purposes.
As a substitute, the Fats App thesis means that worth concentrates on the software layer, with purposes capturing extra income and person consideration than the blockchains they run on.
Ought to extra folks undertake the thesis, it may change how buyers worth layer-1 tokens in comparison with software tokens.
The Fats Protocol thesis has additionally garnered loads of controversy over time.
Digital asset Funding agency chief funding officer Jeff Dorman explained in a report again in 2021 that the Fats Protocol Thesis has not been confirmed right but, because it could possibly be because of causes that “don’t have anything to do with worth being captured.”
He stated it could be because of retail buyers treating layer-1s as a simple index guess 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 concentrate on complete addressable market (TAM) over monetary valuation, and have a tendency to hunt out what “could possibly be” over “what at the moment is,” he defined.
Dorman said on Feb. 9 that “Fats protocol thesis has completed 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 lifeless L1s value $1 bn+.”
Crypto business has “already began voting,” says funding agency
“Just a few 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 said 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 software 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 power in opposition to Bitcoin, is down 16.11% over the previous 12 months, according to 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.”
Associated: Crypto traders’ current fear won’t last long, analysts say
“I believe main L1s are literally well-positioned for the following yr. But it surely’s well-argued and positively value contemplating,” Hougan stated, claiming that Hyperliquid (HYPE) has been the standout crypto token available in the market 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, according to CoinMarketCap.
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