Building Web3 Super Applications: From Fat Protocols to Fat Applications

Since Joel Monegro proposed the concept of fat protocols in 2016, this idea has achieved good results as an investment theme. However, in the long run, this concept seems insufficiently comprehensive for protocols that create most of the value.

Therefore, we propose the concept of Fat Application (FAPP) and assume that applications offering a wide range of products will accumulate the greatest value.

In the Web2 era, dominant applications usually start from a specific professional field, and once they gain a leading position, they will offer a range of different products to fully leverage network effects and user advantages. As the saying goes: "Attract users with tools, retain users with the network."

In the field of cryptocurrency, the successful applications and products to date also exhibit similar characteristics. Certain trading platforms are typical representatives, leaving no user behind and offering almost all crypto-related products on their platform.

From the very beginning, the main Web 2.1 applications are exchanges that provide diversified services, which seem to constitute the portal to Web3. We believe the same logic applies to pure Web3 on-chain products.

Currently, the most profitable crypto protocols and applications ( include centralized and decentralized ) primarily focused on areas like exchanges, lending platforms, and NFT markets. This reflects a new "paradigm shift": value accumulators are shifting from protocols to applications. Ironically, exchanges are not truly Web3 applications; they are essentially still permissioned and centralized Web2 products that extract significant value from the entire ecosystem.

In the future, on the battlefield for value, we believe that Web3 native applications may surpass protocols mainly through two paths: application chains ( Appchains ) and all-encompassing super applications.

We define the super application as "WeChat for the crypto space." This may sound somewhat unsettling, but this vision is indeed possible. The internet follows a long-tail model: at the front are a few dominant players, while a large number of small players compete for the remaining market share.

Historical Insights

Many people compare blockchain to a city and Ethereum to modern Manhattan. However, we have a different view. The current blockchain ecosystem is still in its early stages, more akin to the medieval relationship between religion and city-states. Blockchain can be likened to religion, while Ethereum is similar to the medieval Catholic Church.

Medieval cities were established on the foundation of the papal protocol, enjoying only limited autonomy, with the Pope holding supreme power. The Pope was involved in formulating tax policies and guidelines, with the Bible serving as the main basis for tax law, and various fees flowing to Rome.

As time went by, cities and duchies gradually gained more independence, and the influence of the papacy over the flow of funds gradually diminished. The papacy still played a certain role, but the public began to accept the ideas of nation-states and secularism, giving rise to new economic models.

This historical analogy tells us that the concept of fat protocols has not become obsolete, as we are still in the early stages of the blockchain era. However, over time, applications, especially super apps or application chains, will accumulate more value, weakening the fee-generating capacity of the underlying protocols.

Application Chain and Super Application

The concept of application chains first appeared in the Polkadot white paper in 2016, proposing the idea of heterogeneous chains achieving security through a shared set of validators. Cosmos, on the other hand, proposed a different approach: each chain is self-contained and only unified through the SDK.

Today, the concept of shared security has been widely accepted. People realize that building a high-quality validator set from scratch is not easy, and doing so before a product finds its market may be meaningless. Clearly, low-quality block space wastes validator resources, and many times there are no real use cases.

Application chains are tailored: core chains will be optimized for existing and future use cases. For example, liquidity chains can support decentralized finance applications through specific designs. Such application chains will not compete for block space with other applications and can advance the execution and fee logic that best fits their use cases.

We believe that ( is likely to become a candidate for a super application, with the most outstanding ) application chain. Its development trajectory is roughly as follows:

1. Launch applications on the universal chain to conduct proof of concept and demonstrate the product-market fit.

2. After achieving success, expand to multi-chain and even launch your own execution environment ( application chain ) to gain greater control and value.

3. Eliminate all on-chain traces and execution environments, providing a seamless super application experience. Attract users in a gradual manner, adding features that encourage users to invest more time and money.

4. Ultimately become a super application.

For example, some DeFi projects are attempting to build super applications that integrate social and financial aspects. This integration is expected to create a strong moat (, such as credit/social scoring ) for unsecured loans. There are also some projects that have customized their own rollups and lending markets to align with existing options products. The key point of these projects is non-fully collateralized lending, which is expected to unlock true DeFi 2.0.

Currently, the largest applications calculated by fees all start from their respective strengths in a single use case, accumulating a critical number of users through this. They later also acquired NFT aggregators to consolidate core products or achieve horizontal expansion of products.

As long as there is liquidity, users can be acquired; as long as there are users, more products and customized experiences can be provided to them. One method is to offer a proprietary product wallet to the user base and improve the user experience. ( not only involves better UI/UX but also includes wallet features tailored to the product. ) Successfully launching a product suite ( platform ) and seamlessly absorbing consumer-facing applications will stand out.

Trojan Middleware

In addition to the user-centric super application development approach, there is another option: Trojan middleware. It can provide applications with a better developer experience and various advanced features, such as account abstraction, front-running protection, and MEV cashback. Trojan middleware is essentially a top-tier transaction memory pool (mempool) that can dominate block construction by accessing the application's order flow.

By building through the blockchain, the Trojan middleware can provide functionalities that are difficult for the application itself to replicate, such as on-chain abstract transaction execution. Ultimately, by creating an excellent wallet/application store experience, control over touchpoints can be achieved.

We believe that the ultimate state of any ambitious super application should be to become a primary block builder. This can provide the best experience for super application users and offer the best guarantees for transaction execution in the way that the super application deems appropriate.

Just as major consumer enterprises in the Web2 space seek to build their own payment channels to avoid over-reliance on a single provider, Web3 super applications will also seek to exert control over users' financial operations.

Super applications are expected to ultimately become the wrappers for Ethereum and other blockchains, while hosting the terminals for all other future "applications," which will serve as individual functions of the super application. Even now, exchanges can be seen as applications that wrap the blockchain to provide a better user experience.

If native applications can span all reasonable underlying layers and achieve seamless bridging, extreme homogeneity of block space can be effectively realized. The optimal path for best execution will naturally emerge, and users may not even be aware of the specific execution trajectory. Of course, there are limitations here, as it relies on the quality and security level of the deployed blockchain being sufficiently high (.

In this sense, a super application requires different blockchains to provide services. Furthermore, an application chain is merely another way to enhance execution control. However, a super application may ultimately be a centralized place.

Users and developers can directly access the blockchain, but super applications, as blockchain abstractions, will excel in many aspects:

1. Lower transaction fees
2. A smoother application development process
3. Better user experience

Super apps will become a presence similar to Amazon, and in addition, users can still directly utilize a large number of blockchains, just like vendors and buyers use Shopify.

![Paradigm Shift: Is the Era of Web3 Super Applications Coming?])https://img-cdn.gateio.im/webp-social/moments-234466ab333e4f4f414446c9566daa44.webp(

The Blockchain Space War of the 2020s

The power struggle between applications and the underlying layer is inevitable. The underlying layer gains value through transaction fees ) even as the fees themselves are diminishing, making it increasingly difficult to maintain the currency premium (, while providing security and user base in return.

Successful applications with a loyal user base will also seek their own ways of value acquisition and exert greater control over how to best serve users. In other words, the application wants to share the successful foundation of blockchain: reflected in the monetary premium of native token demand.

This puzzle has a few key parts: where do transactions occur ) starting point (? Who controls the block building process ) turning externalities into value capture (? What is the user's intent? And who is setting the monetary rules?

The transactions that create value for the blockchain begin at the application ) or wallet ( level. What users need is the application, not the blockchain, because they are not idealists, but primarily pragmatists. This force will inevitably lead to a situation where blockchains specifically targeting applications become an execution option.

This provides a broader capability for value acquisition, allowing for better trade-offs in design, thus better meeting user needs than the standardized layer. The base layer currently only has an advantage in terms of currency rules. And this advantage is also temporary.

History tells us that when the foundational layer declines, applications will seize the opportunity to take the initiative, making conflict between both sides inevitable. It is worth noting that this does not mean completely abandoning the original foundational layer, but rather siphoning off their capabilities to acquire value for themselves. The demand for block space is the driving force behind the acquisition of protocol value, and the user terminal ) super application ( will determine the source and direction of that demand.

This will drive the value growth of applications, as greater choices correspond to the ability to make profitable decisions more frequently. The concept of fat applications is not a castle in the air; we believe it represents a scenario with the highest potential for paradigm shift. In this process, some will become monopolists of composability.

![Paradigm Shift: Is the Era of Web3 Super Apps Coming?])https://img-cdn.gateio.im/webp-social/moments-2e741677239df5b0275dba9be39da259.webp(

![Paradigm Shift: Is the Era of Web3 Super Apps Coming?])https://img-cdn.gateio.im/webp-social/moments-9d76dcbd7d6bff7803081ea6a2b5a159.webp(

![Paradigm Shift: Is the Era of Web3 Super Apps Coming?])https://img-cdn.gateio.im/webp-social/moments-d1ffd5ddc9d539591739c78583a51438.webp(

![Paradigm Shift: Is the Era of Web3 Super Applications Coming?])https://img-cdn.gateio.im/webp-social/moments-285fe9fb8123c476e4f29e3506dc678a.webp(