The crypto market values chains more than standalone applications

The cryptocurrency industry often prioritizes applications based on adoption and revenue, overlooking the crucial role of blockchains. This prioritization is misguided, as DApps are entirely dependent on their underlying blockchains for functionality. The long-term value of the crypto ecosystem rests on the health and stability of its blockchain infrastructure.

Joel Monegro’s “Fat Protocols” thesis, initially suggesting that blockchain protocols would accrue more value than applications, has been challenged. While initially appearing accurate, recent data indicates that DApps are generating significant revenue, potentially surpassing the revenue of some blockchains. In 2024, blockchains controlled 70% of the market cap (excluding Bitcoin and stablecoins) and earned $6 billion in fees, while DApps, with a 30% market share, generated $3.3 billion (35% of total onchain fees). This trend continued into Q1 2025, with DApps exceeding blockchain fee revenue.

This shift highlights the importance of DApps in generating user interaction and real value, reflected in higher transaction fees. However, this doesn’t diminish the fundamental importance of blockchains. The assertion that “Blockchains may have built the roads—but the apps are building the cities” is incomplete. Without the “roads” (blockchains), the “cities” (DApps) cannot exist.

Blockchains provide the essential trust infrastructure, acting as immutable ledgers that arbitrate transactions and maintain the integrity of DApp interactions. They serve as the timekeepers for all on-chain data, facilitating trustless interactions. The blockchain versus DApp debate is inherently flawed, as blockchains are integral to DApp functionality. While DApps generate revenue and user adoption, blockchains are the foundational layer. The rise of modular app chains further underscores this dependence, demonstrating that individual apps often require their own blockchain infrastructure to handle their resource demands and prevent network congestion.

Therefore, while financial metrics are important, the value of blockchains extends beyond mere revenue generation. Their critical role in the functioning of the entire cryptocurrency ecosystem warrants ongoing market support, regardless of short-term revenue comparisons with DApps. Blockchains are the essential underpinning of the crypto industry and will remain vastly more valuable than individual applications.