With the rise of appchains, will L1 become a cheap commodity?

Written by Arcana, compiled by the Crypto Research Institute

: Rhythm Deep

Editor's note: "Fat Application Theory" believes that as the cost of block space approaches zero, L1 blockchains will shift from monopoly to commoditization, and value will shift from the underlying protocol layer (such as Ethereum, Solana) to the application layer. Successful apps capture more revenue through vertical integration, control of order flow, and MEV to become sovereign appchains. The market is repricing L1/L2, and the winners of the future will be applications that are close to demand and focus on utility, rather than chains that are chasing high TPS.

The following is the original text (the original content has been edited for ease of reading and comprehension):

crypto infrastructure phase is entering a post-marginal cost world. As with bandwidth and hash power, the price of block space will quickly move towards zero. The only chains that can survive are those that can:

• Growing through subsidies today

• Capturing non-inflationary revenue tomorrow

• Provide infrastructure that applications can't easily replicate or abandon

but in this new environment, L1s are no longer monopolists defined by early advantages or native ecosystems. Instead, they have become commodities – interchangeable tools for competing economic activity based on performance, interoperability, and cost efficiency.

Their value now depends on how well they are embedded in application processes and provide services that are indispensable or cannot be outsourced. The "protocol premium" that once drove high valuations is fading and is being replaced by a demand for real utility and performance. The current market repricing of many L1/L2 is a reflection of this trend.