Written by: Arcana, Crypto Research Institute
Translated by: BlockBeats small deep
Editor's Note: The "Fat Application Theory" suggests that as block space costs approach zero, L1 blockchains will transition from monopolies to commodities, with value shifting from base protocol layers (such as Ethereum, Solana) to the application layer. Successful applications will capture more revenue through vertical integration, order flow control, and MEV capture, becoming sovereign application chains. The market is repricing L1/L2, and future winners will be applications close to demand and focused on utility, rather than chains pursuing high TPS.
The following is the original content (slightly edited for readability):
The crypto infrastructure phase is entering a post-marginal cost world. Like bandwidth and computing power, block space prices will rapidly approach zero. The only chains that can survive are those that can:
Achieve growth through subsidies today
Capture non-inflationary revenue tomorrow
Provide infrastructure that applications cannot easily replicate or abandon
But in this new environment, L1s are no longer monopolies defined by early advantages or native ecosystems. Instead, they have become commodities—interchangeable tools competing for economic activity based on performance, interoperability, and cost-efficiency.
Their value now depends on how well they can be embedded in application processes and provide indispensable or non-outsourceable services. The "protocol premium" that once drove high valuations is fading, replaced by a demand for real utility and performance. The current market repricing of many L1/L2 reflects this trend.
[The rest of the translation follows the same professional and accurate approach, maintaining the original meaning while translating into clear English.]This does not mean that infrastructure will become irrelevant; however, the signs of market maturity are evident. Nevertheless, L1/L2 transactions have become saturated. Low liquidity and high FDV sentiment reflect this. The FDV of newly launched L1s is several orders of magnitude higher than in the previous cycle. Monad, Bera, and Story Protocol have raised nine-digit funding before going online, while Solana only raised $45 million (including public token sales).
The next cycle will not be led by chains competing to reach 10,000 TPS. It will be driven by focused and composable applications that prioritize utility over architecture and sustainability over speculative hype. The winners will be those applications closest to the source of demand.
