- DeFiance Capital’s Arthur believes the Fat Protocol Thesis has lost relevance in a maturing crypto market.
- Infrastructure projects trade at inflated valuations while applications with real-world utility dominate investor interest.
- Crypto markets now prioritize adoption-driven applications over speculative blockchain protocols.
Is the “Fat Protocol Thesis” – the long-held belief that blockchain infrastructure is more valuable than applications – finally dead? Arthur Cheong, CEO of DeFiance Capital, thinks so.
He argues the once-popular investment principle has led to overvalued infrastructure projects and relatively undervalued applications that has stifled crypto investment beyond Bitcoin.
The Fat Protocol Thesis claimed the primary value of blockchain technology lies in the underlying protocols, not the applications built on top.
Cheong points out that successful applications today are reasonably valued at 5x to 15x price-to-revenue ratios, while blockchain infrastructure projects – many of which have seen minimal growth in recent years – boast massively inflated valuations, anywhere from 150x to 1000x price-to-revenue.
“The speculative…
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