Blockzeit
  • News
    • Bitcoin News
    • Business
    • Politics
    • Metaverse
    • NFTs
    • AI
    • Markets
    • Investing
    • Technology
    • Trends
    • Switzerland
  • Tools
    • Crypto Charts
    • Crypto Heatmap
  • Education
    • Reviews
    • Guides
    • Bitcoin Price Analysis
  • Crypto Exchanges
No Result
View All Result
  • EnglishEnglish
    • EnglishEnglish
    • DeutschDeutsch
    • PortuguêsPortuguês
  • News
    • Bitcoin News
    • Business
    • Politics
    • Metaverse
    • NFTs
    • AI
    • Markets
    • Investing
    • Technology
    • Trends
    • Switzerland
  • Tools
    • Crypto Charts
    • Crypto Heatmap
  • Education
    • Reviews
    • Guides
    • Bitcoin Price Analysis
  • Crypto Exchanges
No Result
View All Result
Blockzeit
No Result
View All Result
Home Technology
Fat Protocol vs Fat App

Fat Protocol vs Fat App

Crypto Valuation: Exit “Fat Protocol Thesis,” Enter “Fat App Thesis”

Vincent Munene by Vincent Munene
September 16, 2022
in Technology
Reading Time: 3 mins read
0
Share on FacebookShare on TwitterShare on LinkedinShare via WhatsappShare via Email

The underlying notion of the Fat protocol thesis on blockchain technology is that it allows the protocol layer to accrue more value than the application layer. The argument is based on a shared data layer and speculative token attachment. 

However, there has been a change in the paradigm shift on how we value crypto tokens. The change resulted from the death of the “fat protocol thesis” towards a long-lasting “fat app thesis.”

Why the Change

From its coining in 2016 by Joel Monegro, the goal was to highlight what Monegro believed to be the differences in value accrual between the internet and blockchain applications. The belief was based on the argument that web infrastructure allowed applications to retain most of the value over the underlying protocols. On the other hand, blockchains would retain almost all the value at the base protocol, not applications hence the term “fat protocol.”

The idea of a shared data layer leads to open and permissionless capabilities for blockchains, which leads to greater competition and reduced barriers to entry. Thus, it pushes fees close to zero as there is an optimization for user experience.

Additionally, a protocol token allows for a flywheel in which the token price appreciation draws in more adopters of the network. As more individuals adopt and build apps on the network, the token increases in value. It was Monegro’s perspective that the market cap of the protocol always grows faster than the combined value of the application built on top since the success of the application layer drives further speculation at the protocol layer. This paradigm shift is, however, quickly changing.

Towards “Fat App Thesis”

We are, therefore, in a place where applications are coming into their own. We are also shifting to a space where cash flow is king. Unlike Total Value Locked (TVL), where manipulation can easily occur, fees and revenue are generated to become the new scoreboard.

Cash flow can also be an exact measure of where value accrues along the transaction pipeline.

Beyond the direct cash flow, most base protocol value accrual stems from Maximal Extractable Value (MEV) extraction. Applications are now designing methods to mitigate or absorb the value of the MEV. An example is CowSwap’s CoW and Manifold Finances OpenMEV.

Having the unforkable state, applications do not need to have their fees converge to zero, as users are willing to pay for the distinct value they provide.

Thus, as applications continue to grow their user base, create moats, increase revenue and achieve product-market fit, we will have a world where applications accrue more value than the networks. Thus the “fat app thesis” is born and here to stay.

Vincent Munene
Vincent Munene

Vincent Munene is a freelance writer and a great blockchain enthusiast. Blockchain has changed his life in terms of financial freedom and in return, he likes to educate people and keep them up to date on everything blockchain. He is a Biochemist by profession and also loves to play the piano.

Previous Post

Aztec Network: ZK-ZK-Rollups and a Tornado Cash Alternative

Next Post

What Are Blockchain Nodes? A Quick Guide

Related Posts

Microsoft Xbox

Microsoft Xbox Crypto Wallet Integration Leaked

by Giancarlo
September 26, 2023
0

Software and gaming giant Microsoft is potentially gearing up to revolutionize the world of cryptocurrency. Leaked internal documents containing the...

NASA to launch blockchain in the moon

Blockchain On The Moon: Opportunities And Challenges In The Ambition Of NASA

by Giancarlo
September 25, 2023
0

The United States National Aeronautics and Space Administration (NASA), in collaboration with computer startup Lonestar and the Isle of Man,...

Mina Protocol

MINA Protocol Review: Meet The World’s Smallest Blockchain

by Vincent Munene
September 21, 2023
0

TL;DR Mina maintains a constant blockchain size, allowing easy verification for end-users. Users don't need to delegate trust to full...

Load More

Get updates to your inbox!

Subscribe to our mailing list to receive daily updates!

Find the next Crypto Gem on KuCoin copy

FOLLoW US:

Blockzeit Logo 10 1

Blockzeit was founded in 2021 in Switzerland with the mission of bridging the gap between the complex blockchain technology and the general public. Blockzeit is a news and education platform that aims to make blockchain more accessible and bring more transparency to the scene.

Popular Categories

Categories
  • AI
  • Bitcoin News
  • Blockchain Terms
  • Business
  • Buy Cardano
  • Education
  • Investing
  • Markets
  • Metaverse
  • NFTs
  • Politics
  • Press Release
  • Switzerland
  • Technology
  • Trends

Important Links

  • Privacy Policy
  • Disclaimer
  • About us
  • Contact us
  • Blockchain Jobs
  • Events

Contact & Social

For guest posts, contact us via info@blockzeit.com

 

Contact: info@blockzeit.com
Press: press@blockzeit.com

Facebook Twitter Linkedin Instagram
  • Home
  • Markets
  • Investing
  • Technology
  • Trends
  • NFTs
  • Education
  • Events
© Copyright by Blockzeit.com. All rights reserved.

Disclaimer

Claim your €10 Bitvavo Welcome Bonus

Sign Up Now
No Result
View All Result
  • News
    • Bitcoin News
    • Business
    • Politics
    • Metaverse
    • NFTs
    • AI
    • Markets
    • Investing
    • Technology
    • Trends
    • Switzerland
  • Tools
    • Crypto Charts
    • Crypto Heatmap
  • Education
    • Reviews
    • Guides
    • Bitcoin Price Analysis
  • Crypto Exchanges
  • DeutschDeutsch
  • PortuguêsPortuguês

© 2021 Blockzeit by Blockzeit.