Blockchain
|3 min ReadBitwise CIO says fat apps set to shape crypto narrative
Maya Chen
Senior Analyst
Published
Jan 16, 2026
The trade is shifting in plain sight. Money follows users, not logos. Miss this and you will chase later.
Bitwise chief information officer Matt Hougan put it bluntly on Wednesday. The market is buzzing about the “fat app” thesis. He says it could dominate the next few months. The idea is simple. Apps capture more value than the base chains they sit on. Hyperliquid is the live example.
Why this idea is catching fire
The fat app thesis challenges Joel Monegro’s 2016 “fat protocol” view. That older view said value would pool in layer 1 tokens like Ethereum or Solana. The new view says applications win the revenue, the attention, the stickiness. If investors accept that, they will reprice the stack. App tokens rise. L1s still matter, but the multiple moves to where users live.
Analysts have pushed back for years. In 2021, ARCA’s Jeff Dorman argued the original fat protocol thesis was not proven. Retail often treats L1s like an easy index bet. Venture funds chase total addressable market and go big on chains. As Dorman wrote, investors have favored what “could be” over “what currently is.” On Feb. 9 he went further. He said the thesis “has done major damage to crypto,” calling it nonsense that pushes every app to pretend to be an L1 and props up dead chains at billion dollar values.
The blueprint: markets are already voting
Starkiller Capital says the shift is visible now. Its Tuesday report argues that application tokens have outperformed protocol tokens over the past year. Ethereum, Solana, Avalanche. Against Bitcoin they went sideways or bled. The SOLBTC pair is down 16.11 percent over 12 months “The market has already started voting,” the firm writes. “The most explosive token performance has come from applications, not protocols.”
Hougan agrees momentum is with apps, but he rejects an anti-L1 spin. He says major L1s are well positioned over the next year. His key exhibit is Hyperliquid. He calls HYPE a pure expression of application demand. Real users. Real flows. Token velocity tied to usage, not just a generic “blockspace toll.” HYPE trades at $55.56, up 1,636 percent over 12 months.
What it means right now
If the fat app view wins, investor behavior will change. You value the trains more than the rails. A few L1s still win, but none should be worth more than the sum of their apps. That is the claim. Traders do not need to overthink it. Follow users, measure cash flows, track velocity. Watch the app layer.
There is still fear in the market. Analysts say it will not last long. Related: Crypto traders’ current fear won’t last long, analysts say.
Hougan’s timing call is clear. He expects the mainstream to pick this up in one to three months. The crowd arrives later. Professionals move first. If you believe the thesis, you position now. If you doubt it, you still watch the tape. Because the tape is already speaking.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.