Here we are in 2024 and people are still largely building underlying protocols/infrastructure vs. apps. There’s been a bigger movement towards building apps, but the space is still heavily infra leaning. While VC dynamics play a role, the crux lies in the anticipations of where value will accrue.

We’re actively seeing value capture at the transactions layer - particularly when wallets are enshrined into applications. There are already various threads on this, between talks of enshrining account abstraction into Eth L1, the rise of embedded wallets (here, here, and here), Uniswap adding a fee on their frontend and expanding vertically into a consumer facing Uniswap wallet, etc.

Transactions are already being initiated and completed in applications more than in standalone wallets and wallets themselves are on track to make more than underlying protocols (eg. Metamask made $367k in swap fees last week whereas Optimism made only $101k last week in fees).

The demand for robust applications in crypto seems to be inelastic. Uniswap’s frontend continues to draw users despite the added fees, contributing significantly to its revenue. This pattern can continue as the integration of wallets within applications gains momentum.

The overarching narrative, then, for the future of crypto infrastructure and applications, pivots from the question of who controls the underlying protocol to who can provide a seamless transaction experience at the point of user need (see: Kevin’s post & a talk I did at the Modular Summit 2023) As the transaction experience evolves, it’s clear there’s a more strategic emphasis to alternate, new business models.