Original Author: Matt
Original Compilation: Chopper, Foresight News
Today, even cryptocurrency applications are gradually becoming standardized infrastructure, serving Web2 and traditional financial institutions with user-friendly front-end interfaces.
Each cryptocurrency cycle gives rise to a new theory about "how value accumulates in the crypto ecosystem," and these theories are reasonable at the time.
- In 2016, Joel Monegro proposed the "Fat Protocol Theory": value converges toward underlying public chains like Ethereum through shared data, tokens, and network effects.
- In 2022, Westie proposed the "Fat App Theory": as Layer 2 networks significantly reduce transaction costs, applications like Uniswap, Aave, and OpenSea build liquidity and user experience barriers, earning even more fees than the public chains they belong to.
By 2025, the industry has officially entered a new phase: cryptocurrency applications themselves have become replaceable, standardized products.
The reason for this shift is simple: the crypto industry has invested excessive resources in infrastructure and technical optimization. We have relentlessly researched complex automated market maker (AMM) algorithms, innovative liquidation mechanisms, customized consensus protocols, and zero-knowledge proof cost optimizations, but now we are facing diminishing marginal returns. Technical improvements in applications are no longer perceptible to end users.
Users don’t care about a 1-basis-point reduction in oracle data costs, a 10-basis-point increase in lending rates, or improved pricing accuracy in decentralized exchange liquidity pools. What they truly care about is using an interface they already trust and are familiar with.
This trend is becoming increasingly evident: applications like Polymarket, Kalshi, Hyperliquid, Aave, Morpho, and Fluid are investing more time and resources into B2B partnerships. Instead of struggling to attract new users to adapt to cumbersome on-chain operations, they are transforming into backend services embedded in other product ecosystems.
Convincing 25 million new users to download browser extensions, manage private keys, prepare gas fees, transfer assets across chains, and adapt to complex on-chain processes—or having platforms like Robinhood add an "earnings" feature to directly channel user deposits into your lending market. Clearly, the latter is easier to achieve.
Integration partnerships will ultimately win out, distribution channels will ultimately win out, front-end interfaces will ultimately win out; and crypto applications will merely become simple conduits for traffic.
Coinbase’s case perfectly illustrates this: users can borrow USDC by using their platform’s Bitcoin (cbBTC) as collateral, and this transaction flow is directed to the Morpho lending market on the Base chain. Although Aave and Fluid on the Base chain offer significantly better interest rates for borrowing stablecoins using cbBTC as collateral, Morpho still dominates the market. The reason is simple: Coinbase users are willing to pay extra for "immediate and convenient operations."
However, not all applications will become invisible infrastructure. Some will still adhere to the B2C (business-to-consumer) track and will not adopt B2B2C (business-to-business-to-consumer) as their primary profit model. But they must undergo a complete transformation: adjusting core priorities, restructuring profit logic, building new competitive barriers, optimizing marketing strategies and development plans, and rethinking the core pathways for users to enter the crypto space.
This does not mean that infrastructure-type applications can no longer create value, but rather that the front-end platforms that truly control user traffic will capture a larger share of the value.
In the future, competitive barriers will no longer be built around liquidity or crypto-native user experience but will focus on distribution capabilities.
