L1 is dead, Appchain should rise

By: rootdata|2026/04/20 04:12:49
0
Share
copy

Author: iwillpat

Compiled by: Jiahua, ChainCatcher

Since the era of "Rollup as a Service" (RaaS) began, the outcome has already been determined. This is a precursor to the execution layer falling into a death spiral and commoditization.

What I mean is that general-purpose L1 tokens will continue to trend towards zero, and possibly without exception. I will try to explain the reasons, and how I would pivot if I were an L1 operator.

The main drivers of L1 failure are as follows: linear token release, failed value propositions, poor management, and the industry's "leadership."

I will briefly elaborate on these points—these are just personal opinions, not conclusions.

The current form of linear staking release has some benefits, namely distribution through liquid staking ("My 7% annualized!"), but it has failed in several key areas.

Delegated Proof of Stake (DPoS) makes it easy for the "decentralization purists" who talk a big game to participate in network security, but it does not properly incentivize insiders, users, and developers. At best, it only incentivizes people to hold tokens, which does nothing to create any actual value.

I have heard the classic argument about PoS: large validators have economic incentives not to dump on you. But that hasn't stopped them from selling every possible unlock amount and block reward.

This leads to my next point: they sell because L1 tokens have no long-term value proposition.

A "Tissue" That Breaks with a Poke

The arguments about "Gas tokens" and "governance" are old and unconvincing—like two Bounty tissues that fall apart with a single poke. The value of network tokens depends on what you can buy with them.

Therefore, the goal of all blockchain teams should be to promote their tokens as widely as possible for circulation as currency. In the pursuit of higher TPS and lower block times, the industry's vision of "peer-to-peer electronic cash" seems to have been lost.

To put it bluntly: throughput, TVL, and low latency do not give tokens any value. Liquidity and usage do.

The next point is the most practical and painful: blockchain "labs." (And various foundations.)

Dumping tokens after the lock-up period, off-market trades at huge discounts, jaw-dropping operational expenses, incentive programs to attract hot money, hiring "KOLs"... we can all name a few.

Ultimately, every penny spent by Labs is a tax levied on token holders. Unless the Labs generate revenue through some service, first-party wallet, or application, they are surviving by selling tokens.

This is not necessarily a bad thing—they provide valuable services through engineering resources, browsers, and APIs. But if Labs do not bring net new buying pressure to the tokens, and spending continues to rise unsustainably, they will slowly bleed to death.

One of the primary goals

You may also like

How to choose between buying discounted ETH, Bitmine, and SharpLink?

The answer may not lie in whose story is told better, but in specific dimensions such as cost of holding, financing ability, liquidity, and whether the narrative can be realized.

Semiconductor stocks plummet, yet Anthropic wants to create a 2nm chip

Abandoning TSMC and teaming up with Samsung. Anthropic launches a self-developed 2nm chip program, challenging Nvidia and starting a battle to break through computing power costs.

A South Korean company that learned the strategy of hoarding coins, from a bull market to delisting?

When the overall momentum of the Korean stock market is strong, this batch of cryptocurrency concept stocks, branded as the "Korean version of Strategy," finds itself at a crossroads of life and death.

Where is Zhao Changpeng's billion-dollar investment going? YZi Labs' investment landscape fully revealed

Zhao Changpeng's billion-dollar new "family office" YZi Labs investment landscape revealed: 70% of the funds are committed to the crypto ecosystem, while 30% are cross-industry bets on AI and biotechnology, launching a new capital experiment in the post-Binance era.

Ethereum Foundation Report: A Basic Guide to Ethereum for Governments and Financial Institutions

The Ethereum Foundation has released this non-technical introductory report aimed at government officials, central banks, regulators, and corporate decision-makers, explaining how Ethereum works, how it is governed, how it differs from other blockchains, and how institutions and governments are alre...

A pre-announced harvesting case: After the cryptocurrency price dropped by 99%, the public chain Saga exited to transform into AI

True failure often isn't a single price drop, but rather a pricing mechanism that repeatedly rewards those who tell stories while repeatedly punishing those who believe in the stories.

Popular coins

Latest Crypto News

Read more
iconiconiconiconiconiconicon
Customer Support:@weikecs
Business Cooperation:@weikecs
Quant Trading & MM:bd@weex.com
VIP Program:support@weex.com