If you’ve been keeping up with cryptocurrency news, you might have seen Laura Shin’s recent post on X about a big shift in the crypto world. On March 21, 2025, she shared insights from her Unchained podcast, featuring Ryan Watkins, discussing whether apps are starting to outshine the blockchains they run on. The big question? Are Layer 1 blockchains—like Ethereum or Solana—doomed as apps launch their own chains? Let’s break it down in simple terms.

Why Are Apps Making More Money Than Blockchains?

Traditionally, the crypto space followed the "Fat Protocol" thesis, a 2016 idea by Joel Monegro. It suggested that most value in blockchain networks would stay at the base layer (Layer 1), like Ethereum, while apps built on top would capture less value—think of it like the foundation of a house being more valuable than the rooms inside. But now, Ryan Watkins points out that many apps, or decentralized applications (dapps), are generating more revenue than the blockchains they’re built on. This shift is giving rise to what people are calling "Fat Apps."

For example, Ethena, a crypto project, recently announced its "Convergence" initiative, launching its own blockchain. Similarly, PumpSwap launched on Solana, showing apps are breaking away from relying solely on existing Layer 1s. Why? These apps want more control, lower costs, and the ability to capture more value for themselves instead of sharing it with the base layer.

What Does This Mean for Layer 1 Blockchains?

This trend raises a big question: Are Layer 1 blockchains, like Ethereum or Bitcoin, at risk of losing their dominance? Layer 1s are the main networks, handling transactions and smart contracts for apps built on them. But if apps start creating their own chains, they could reduce their dependence on these bigger networks, potentially shrinking their value and influence.

In the podcast, Ryan Watkins dives into topics like:

• Why apps are launching their own chains: They can tailor the technology to their needs, avoid high fees, and keep more profits.
• The rise of ‘Fat Apps’: Apps are becoming so powerful that they’re challenging the traditional value distribution in crypto.
• Who wins in this battle?: Will Layer 1s adapt, or will app-chains dominate the future?

He also explores how crypto founders today think differently from past builders, focusing on building specialized chains for specific use cases rather than general-purpose blockchains.

The Future of Crypto: Apps vs. Blockchains

So, what’s next? Some folks on X, like banditxbt, jokingly said Layer 1s might be "doomed," while others, like icunova, worry that too many app-chains could recreate the inefficiencies of the old web (Web2.0). But Ryan suggests Layer 1s aren’t going away—they’ll need to evolve to stay relevant, perhaps by offering unique features or better economics for apps.

For instance, Ethena’s move with Convergence isn’t just about leaving Ethereum behind. It’s about connecting DeFi (decentralized finance), CeFi (centralized finance), and traditional finance (TradFi) through its synthetic dollar, iUSDe, as mentioned in Ethena’s 2025 roadmap. This shows how apps are thinking bigger, aiming to bridge gaps in the financial world while building their own infrastructure.

Why This Matters for Crypto Fans

If you’re into crypto, this debate is exciting because it could reshape the industry. Apps gaining power might mean more innovation and competition, but it could also lead to fragmentation—too many chains might confuse users or make interoperability (chains working together) harder. On the flip side, Layer 1s adapting could create a healthier ecosystem where both apps and blockchains thrive.

Laura’s post also highlights how metrics like MEV (Maximal Extractable Value, a way blockchains earn from transaction fees) might not be the best way to measure a blockchain’s value anymore. Instead, the focus could shift to how apps and chains create real-world utility and revenue.

What People Are Saying on X

The thread on X shows a mix of reactions. Some, like exorc1stNFT, tied this trend to AI-driven apps, suggesting even more evolution with projects like $HOOP. Others, like 2chainz, are just curious to see how it unfolds. It’s clear this topic has sparked a lot of buzz in the crypto community.

Final Thoughts

Laura Shin’s post and the discussion with Ryan Watkins open up a fascinating conversation about the future of crypto. Are we heading toward a world where apps rule, or will Layer 1 blockchains find ways to stay king? Only time will tell, but one thing’s for sure: 2025 is shaping up to be a pivotal year for blockchain and its apps. If you’re following crypto, keep an eye on projects like Ethena and how they navigate this shifting landscape—it could redefine how we think about money and technology online.

Want to dive deeper? Check out Laura’s Unchained podcast for more insights, or explore Ethena’s Convergence announcement to see how apps are pushing boundaries in 2025.