Cryptocurrency applications are shifting from being driven by technological innovation to competing on distribution capabilities, no longer attracting new users to adapt to on-chain operations, but transforming into backend services embedded in other product ecosystems. Front-end platforms that control user traffic will capture a larger share of value, and competitive barriers will focus on distribution capabilities rather than liquidity. This article originates from a piece by Matt, organized, compiled, and written by Foresight News. (Background: Arthur Hayes warns that Monad could crash by 99%: overvalued VC coins with low circulation) (Background Supplement: Monad officially launched! $MON opening price performance, token economics, Coinbase public sale results... comprehensive整理) Nowadays, even cryptocurrency applications are gradually becoming standardized infrastructure, serving those who have user-friendly front-end interfaces from Web2 and traditional financial institutions. Each round of cryptocurrency cycles spawns a new theory about "how value settles in the crypto ecosystem," and these theories were reasonable at the time. In 2016, Joel Monegro proposed the "Fat Protocol Theory": value aggregates toward underlying public chains like Ethereum through shared data, tokens, and network effects. In 2022, Westie proposed the "Fat Application Theory": as layer two networks significantly reduce transaction costs, applications like Uniswap, Aave, and OpenSea earn fees through building liquidity and user experience barriers, even exceeding the fees of their respective public chains. As of today in 2025, the industry has officially entered a new phase: cryptocurrency applications themselves have become interchangeable standardized products. The reason for this shift is simple: the crypto industry has invested excessive resources in infrastructure and technological optimization. We have been drilling into complex automated market maker (AMM) algorithms, innovative clearing mechanisms, customized consensus protocols, and zero-knowledge proof cost optimizations, but have now fallen into diminishing marginal returns. The technical improvements in applications are no longer perceptible to end users. Users simply do not care if the oracle data cost decreases by 1 basis point, borrowing rates increase by 10 basis points, or if the pricing accuracy of decentralized exchange liquidity pools improves; what they truly care about is using interfaces they have long trusted and are familiar with. The trend of shifting from B2C to B2B2C is becoming increasingly evident: applications like Polymarket, Kalshi, Hyperliquid, Aave, Morpho, and Fluid are investing more time and resources into B-side collaborations. They no longer struggle to attract new users to adapt to cumbersome on-chain operations but are transforming into backend services embedded in other product ecosystems. Convincing 25 million new users to download browser plugins, manage private keys, prepare gas fees, transfer assets across chains, while also adapting to complex on-chain processes; or having platforms like Robinhood add "yield" features to directly funnel user deposits into your lending market. Clearly, the latter is easier to achieve. Integration and collaboration will ultimately prevail, distribution channels will ultimately prevail, and front-end interfaces will ultimately prevail; while cryptocurrency applications will become mere traffic pipelines. The Coinbase case exemplifies distribution advantages The Coinbase case precisely exemplifies this point: users can use their Bitcoin (cbBTC) on the platform as collateral to borrow USDC, and this transaction flow will be directed to the Morpho lending market on the Base chain. Although the Aave and Fluid platforms on the Base chain provide significantly better rates for cbBTC collateralized borrowing of stablecoins, Morpho still dominates the market. The reason is simple: Coinbase users are willing to pay extra costs for "visible convenient operations." Future competition will focus on distribution capabilities However, not all applications will become invisible infrastructure. Some applications will still adhere to the B2C (business to consumer) track and will not consider B2B2C (business to business to consumer) as their main profit model. But they must undergo a thorough transformation: adjusting core priorities, restructuring profit logic, building new competitive barriers, optimizing marketing strategies and development plans, while also re-understanding the core pathways for users to enter the crypto realm. This does not mean that infrastructure-type applications cannot create value anymore; rather, it means that those who truly control user traffic through front-end platforms will occupy a larger share of value. In the future, competitive barriers will no longer be built around liquidity or crypto-native user experiences, but will focus on distribution capabilities. Related Reports 30 billion USD stablecoin defense battle: Tether CEO fires back at Wall Street credit rating agencies and Arthur Hayes Arthur Hayes stubbornly claims: Bitcoin will double to 250,000 USD by the end of the year Arthur Hayes: If Tether's Bitcoin and gold drop by 30%, USDT will be insolvent. "The 'Fat Application' is dead, welcome to the era of 'Fat Distribution'." This article was first published on BlockTempo (the most influential blockchain news media).

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