The market is falling, but fat apps are constantly capturing value from order flow

author:Mason Nystrom

Compiled by: Xiaobai Navigation coderworld

In the past 30 days, Ethereum’s order flow exceeded $25 billion, of whichNearly halfFrom a proprietary application.

As the value of blockspace commodities increases, privatization of order flow will increase and pave the way for “fat apps”.(Translator's note: "Fat Apps" is a metaphorical term derived fromBlockchainandcryptocurrencyObservation of the value accumulation of the application layer in the ecosystem. It refers to thoseBlockchainDominant applications at the application level not only control a large number of users and transactions, but also significantly improve their own value and competitiveness by vertically integrating key components and functions.

source:Orderflow.art

But how did we get here, and where is the future heading?

The short answer is foodcoins. The slightly more detailed explanation is that the DeFi summer spawned a large number of consumer and retail transactions, and then trading aggregators like 1inch came into being, providing users with better price execution through private order routing.wallet(such as MetaMask) also quickly followed suit, realizing that they could monetize the convenience needs of users by adding exchange functions within the application, which proves that any application that can control the user's attention and orders has aGreat valuebusiness model.

Over the past two years, we have seen two new players enter the private order flow space - Telegram bots and solver networks. Telegram bots are similar to MetaMask's "convenience fee" model, providing users with a way to easily trade long-tail assets in group chats. As of June, Telegram bots accounted for 18% of the total order flow in the private order flow space.Trading volumeAbout 21% of transactions and 11% of transactions were conducted mostly through private memory pools.

source:Dune

On the other side of the market, solver networks (such as Cowswap, UniswapX) have become core trading venues for large liquid trading pairs (such as stablecoins and ETH/BTC). Solver networks have changed the order flow market structure by outsourcing the task of finding the best trade route to a highly competitive group of solvers (market makers).

As a result, there has been an initial differentiation in trading venues. Convenient front-ends (such as TG Bots,walletBuilt-in exchange functionality and a front end for Uniswap) are primarily used for longer-tail, lower-value (less than $100k) trades, while aggregators and solution networks are for larger trades (usually involving stablecoins and majorcryptocurrency ETH/BTC).

通过更细致的筛选，你会发现大部分私人订单流量来自前端（如 TG 机器人、钱包和前端）。

The privatization of order flow is even more pronounced considering that only 15-30% of Ethereum transactions go through private memory pools, meaning that a small number of exchanges contribute a large amount of private order flow.

source:Dune

In other words, valuable order flow is more important than order volume. The power law of users and order flow suggests that the application will accumulate the largest proportion of overall value. In other words,The “fat app” argument is alive and well.

Approaching "Fat Apps"

Uniswap’s protocol is undoubtedly valuable, but the more interesting story happens at the application level. Uniswap is working hard to become a consumer-facing application by vertically integrating key components of its stack to expand the capabilities of its interface, mobile wallet, and aggregation layer. For example, Uniswap Labs’ applications, including Uniswap’s front-end, wallet, and aggregator UniswapX, have grown by 1.3% in the past 30 days.produceThe total order flow (including private and public) was approximately $13 billion of 25% and total order flow (including private and public) was nearly 40%.

Elsewhere in the crypto space, applications like Worldcoin account for nearly 50% of Optimism mainnet activity, driving theirstart upIt has its own application chain, further proving the argument of /”fat applications” and the power of controlling needs (such as users and transactions).

Even top NFT projects with strong brands like Pudgy Penguins are building their own chains.Luca, CEO of Pengu Explaining that controlling the blockchain space built on top of its distribution is beneficial to the accumulation of value for the Pudgy brand and IP.

Going forward, applications should aim to create new types of order flow, whether by creating new assets (such as Pump and memecoins), building applications that bring new user utility (such as Worldcoin and ENS),Or by creating a better consumer experience,These experiences are vertically integrated and support valuable transactions, such as Farcaster and frames, Solana Blinks, Telegram and TG apps, or on-chain games.

Final Thoughts on “Fat Apps”

It is worth noting that the “fat app” argument has beenThe focus of many in the cryptocurrency space, because the argument of application chain has become part of the consensus.

My current take on the “fat app” thesis is that most value will accumulate at the application level of the stack, where control of users and order flow puts applications in a strong position. These applications will likely be combined with on-chain protocols and primitives, similar to today’s UniswapX and Uniswap Protocol, Warpcast and Farcaster, Worldcoin and Worldchain. Eventually, these protocols, especially those that are fully on-chain (such as Maker) will be the most popular.DAO), can still accumulate a lot of value, but apps are likely to capture more value because they are closer to users and the offline component gives apps a stronger defensible moat.

Finally, I still believe that Layer 1 BlockchainAs non-sovereign reserve assets, it is still possible to capture a largeXiaobai NavigationThe underlying assets (such as ETH) will accumulate huge value. Over time, applications may try to build their own L1, just as they build their own L2 But launching a commercial L2 This is completely different from launching an L1 and turning governance tokens into commodities and collateral assets, which may be an issue to be discussed in the future.

The core conclusion is thatAs more applications are created and have valuable order flow, people will inevitably conclude that “fat apps” are inevitable and the crypto world will re-evaluate the value of applications.

The article comes from the Internet:The market is falling, but fat apps are constantly capturing value from order flow

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