DeFiance Capital founder: the speculative premium on infrastructure is collapsing, sustainable business model is the key

The investment logic of the encryption market is changing, and the value-capturing ability of the Application Layer will replace the 'Fat protocol thesis' as the future key. (Background: Binance's listing of contracts has become a 'death trap,' Arete Capital founder: the collapse of popular projects has become the norm) (Supplementary background: Is the altcoin season coming to an end? Hartmann Capital warns: institutions are accelerating profits and the subsequent downturn will be severe) Decentralized Financeance Capital founder and CIO Arthur recently posted on social media, indicating that the encryption market may have entered the tail end of the 'Fat protocol thesis.' This investment hypothesis has long fueled overhype of infrastructure protocols, but the market is now gradually adjusting. He believes that in the past two years, many infrastructure projects have hardly grown substantially, yet still enjoy overvalued income of 150 to 1000 times; in contrast, successful Application Layer projects are valued at only 5 to 15 times revenue, indicating that the speculative premium of infrastructure is collapsing. Arthur's viewpoint reflects the changing investment logic of blockchain infrastructure. In the past, investors generally believed that the value of blockchain mainly came from the underlying protocol, but now the development and revenue model of the Application Layer are beginning to receive more attention. I think we are finally at the tail end of the 'Fat protocol thesis' that has caused so much long-term harm to the crypto's investability outside of Bitcoin. Successful applications are valued at 5 to 15x Price/Revenue while infra projects that have not been growing at all... — Arthur (@Arthur_0x) March 13, 2025 'Fat protocol thesis' used to be applicable, but now? The 'Fat protocol thesis' is an investment perspective of the encryption industry, which believes that the value of the blockchain ecosystem mainly lies in the protocol layer (such as Ethereum, Solana, etc.), rather than the Application Layer. The core assumption of this theory is that the blockchain protocol itself will capture the majority of the value, while the value of the Application Layer is relatively limited. This concept was first proposed by the investment firm Union Square Ventures in 2016 and gained market favor during the rise of Decentralized Finance and Non-fungible Tokens. However, as the market develops, more and more investors are beginning to question whether this model is still applicable, especially in the case of slowing growth of infrastructure projects. Market skepticism: Is the 'Fat protocol thesis' outdated? The market's view on the applicability of the 'Fat protocol thesis' is divided, with some investors believing that the theory is too idealistic and does not consider actual market needs and commercial challenges. One netizen commented: The 'Fat protocol thesis' is essentially an ideology, not a true market rule. Ultimately, the value of blockchain should come from applications, not the promise of underlying technology. Another netizen expressed: The market has finally returned to reality, and what truly matters is not the protocol itself, but who can find a sustainable business model. In fact, looking at the development of the Web2 industry, although infrastructure companies (such as cloud services, network protocols) are crucial, ultimately, the real profit comes from the Application Layer, such as social media, streaming platforms, e-commerce, etc. The blockchain industry may also follow a similar development path. Related Reports Binance's listing of contracts has become a 'death trap,' Arete Capital founder: the collapse of popular projects has become the norm Is the altcoin season coming to an end? Hartmann Capital warns: institutions are accelerating profits and the subsequent downturn will be severe Cyber Capital founder: XRP is not a cryptocurrency, entirely controlled by the highly centralized XRP Foundation〈Decentralized Financeance Capital founder: the speculative premium of infrastructure is collapsing, sustainable business models are the key〉This article was first published on BlockTempo by Dynamic Zone, the most influential blockchain news media.