Why Applications May Outshine Blockchains in the Next Crypto Cycle

A competing view, nicknamed the “Fat App” thesis, argues that the biggest winners will be at the application layer, where tokens tied to actual usage and revenue flows are already outpacing the blockchains they run on. The theory has gained new momentum thanks to Hyperliquid, whose HYPE token has become one of the standout performers in recent months.

Market Signs Point to Applications

Bitwise CIO Matt Hougan said this week that the narrative is spreading quickly and could spill into mainstream media within months. Starkiller Capital added weight to that view, pointing out that while major layer-1 tokens have stagnated against Bitcoin over the past year, application tokens have delivered most of the explosive gains.

Not everyone is convinced. Hougan himself stressed that base chains are still well positioned, while critics like Arca’s Jeff Dorman have blasted the older “Fat Protocol” mindset, claiming it funneled too much money into underused blockchains and distracted developers from building real products.

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A Shift in How Crypto Is Valued

What makes Hyperliquid important in this debate is that its growth stems directly from activity — trading volume, token velocity, and user demand — rather than simply existing as “blockspace.” For supporters of the Fat App view, that’s proof the center of gravity in crypto is moving upward, away from infrastructure and toward the apps people actually use.

If this thinking continues to spread, investors may start valuing application tokens more highly than the blockchains beneath them, a reversal of one of crypto’s longest-standing investment assumptions.

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