Most important highlights
- QwQiao claims that main L1 networks and tokens lack a sturdy aggressive benefit, often known as a “moat,” making them susceptible.
- He believes the primary downside is that it has develop into too straightforward for customers and builders to change between completely different blockchains, decreasing the long-term worth of the token.
- He proposed an answer, saying that blockchain ought to enable apps and providers to be constructed instantly on the community.
On November 27, Alliance DAO companion QwQiao shared a tweet elevating questions concerning the long-term worth of the L1 token.
(Supply: QwQiao on X)
In his newest put up about X, he says: “Onerous to persuade” individuals to carry Layer 1 (L1) blockchain tokens for lengthy intervals of time. His concern wasn't about present excessive costs. As an alternative, he stated that the L1 community had no “moat” and questioned its very core construction.
With out this much-needed safety, he believes these infrastructure chains would develop into easy commodities like electrical energy and water. This prevents them from gaining important worth over time.
L1 token has no moat: QwQiao
The essence of QwQiao's argument could be very easy. He stated that in right now's crypto sector, there may be little friction that forestalls customers, builders, and capital locked in blockchains from migrating from one blockchain to a different.
In accordance with QwQiao, it takes simply minutes to maneuver digital property between completely different blockchains because of superior bridge applied sciences akin to Wormhole and LayerZero. The full worth of those cross-chain transfers will already exceed billions of {dollars} by 2025.
For builders, the method of transferring purposes can also be straightforward. Normally, you may switch code between suitable chains inside a couple of days. The rise of user-friendly improvement instruments has additionally simplified the method of migrating to incompatible networks.
Other than this, with the assistance of available kits, it takes simply weeks as a substitute of years to launch a wholly new blockchain or application-based rollup.
This infrastructure makes the price of switching between blockchains low in comparison with the problem of migrating an organization's knowledge from a cloud service supplier akin to Amazon Net Companies (AWS).
Qw stated:It's straightforward to imagine in exponential issues, however one of the simplest ways to precise this view is by betting on the app layer. ”
QW is a companion of Alliance DAO, a company often called some of the profitable DAOs within the cryptocurrency house. Often known as DeFi Alliance. The group has helped launch main initiatives akin to Pump.enjoyable and Fantasy Prime.
The corporate has raised $50 million in a funding spherical led by prime funding companies together with Sequoia and Paradigm.
Earlier than this, Qw has additionally beforehand warned concerning the dangers of retail ETFs in 2025, and AI Token has been confirmed right. At the moment, his views on the L1 token are a subject of debate among the many crypto neighborhood.
QwQiao believes vertical integration is the answer
QwQiao additionally shared options to maintain L1 networks alive. He argues that they should cease performing as pure infrastructure and as a substitute absolutely transition to proudly owning the appliance layer constructed on prime of it.
“So far as I can inform, the one manner a sequence can strengthen its outer moat is by verticalizing and proudly owning the app layer. My understanding is that the chains Solana, Base, and Hyperliquid have come to this conclusion and are actively engaged on it. And, after all, rising company chains like Tempo,” he stated.
He cited Base, Coinbase's L2 community, for instance. New DeFi actions are quickly attracting a big person base. He additionally talked about Hyperliquid. A decentralized trade (DEX) constructed on a proprietary high-performance layer 1 blockchain.
