TL;DR
· Infrastructure is saturated; consumer applications are the next frontier. After years of pouring funds into new L1s, Roll-ups, and development tools, technical marginal returns are minimal, and users do not automatically flood in just because the technology is "good enough". Now, attention creates value, not architecture.
· Liquidity is stagnant, and retail investors are absent. The total stablecoin market value is only about 25% higher than the 2021 historical peak, with recent increments mainly from institutions purchasing BTC/ETH for their balance sheets, rather than speculative capital circulating within the ecosystem.
· Core assertions
-Friendly regulatory policies will unlock the "second wave" of development. More clear US policies (Trump administration, stablecoin bill) will expand TAM and attract Web2 users who only care about touchable applications, not underlying technical architectures.
-The narrative market rewards real usage. Projects with significant revenue and PMF—such as Hyperliquid (around $900 million ARR), Pump.fun (around $500 million ARR), Polymarket (around $12 billion trading volume)—far outperform infrastructure projects with high financing but lacking users (Berachain, SEI, Story Protocol).
-Web2 is essentially an attention economy (distribution > technology); as Web3 deeply integrates with Web2, the market will follow—B2C applications will expand the pie.
· Currently achieved PMF consumer tracks (crypto-native):
-Trading/Perpetual Contracts (Hyperliquid, Axiom)
-Launchpad/Meme Coin Factory (Pump.fun, BelieveApp)
-InfoFi and Prediction Markets (Polymarket, Kaito)
· Next wave of ascending tracks (Web2 coding):
-One-stop deposit/withdrawal + DeFi super app—integrating wallet, bank, yield, and trading (Robinhood-style experience without ads).
-Entertainment/Social platforms, with on-chain monetization (exchange, staking, prize pools, creator tokens) replacing ads, optimizing UX and improving creator earnings.
· AI and gaming are still pre-PMF. Consumer AI needs safer account abstraction and infrastructure; Web3 games are troubled by "wool party" economics. A breakthrough will only occur after a game that focuses on gameplay, not crypto elements, emerges.
· Superchain theory. Activity is concentrating towards chains friendly to consumer applications (Solana, Hyperliquid, Monad, MegaETH). One should select killer apps from these ecosystems and infrastructure directly supporting them.
· Perspective on investing in consumer applications:
-Distribution and execution > pure technology (network effects, viral cycles, brand).
-UX, speed, liquidity, and narrative alignment determine success.
-Assess as an "enterprise" rather than a "protocol": real revenue, scalable models, clear industry dominance path.
· Bottom line: Pure infrastructure trading can no longer replicate 2021-style valuation multiplication. Excess returns in the next 5 years will come from consumer applications that transform crypto infrastructure into daily experiences for millions of Web2 users.
· B2C applications can easily create topics through user behavior, incentives, or community (Pump.fun vs Hyperliquid)
· Viral spread brings attention, attention brings users → Viral applications will attract new retail investors and expand the market
Consumer Application Types in the Market
Vertical Tracks with Achieved PMF – Crypto Coded
Trading
· Hyperliquid: Around $900 million ARR; Funding $0
· Axiom: Around $120 million ARR; Funding $21 million
Launchpad
· Pump.fun: Around $500 million ARR; Funding $0
· BelieveApp: Annual fees around $60 million; Funding $0
InfoFi + Prediction Market
· Polymarket: Annual trading volume around $12 billion (0% fee rate); Funding $0
· Kaito: Around $33 million ARR; Funding $10.8 million
Projects in such tracks should be closely watched.
Comparison:
· Berachain: Fees only $165,000 since launch; Funding $142 million; Dropped over 85% from ATH
· SEI: Annual fees only $68,000; Funding $95 million; Dropped over 75%
· Story Protocol: Fees only $24,000 since launch; Funding $134 million; Dropped 60%
Pure technical/infrastructure projects lacking actual use cases are no longer a viable path. Institutions can no longer rely on such targets to replicate 2021-style excess returns.
From these platforms, most are more Web3 native, aligning with their crypto functional positioning. However, some traditional consumer tracks have been disrupted by crypto trajectories and are moving towards the mainstream.
Vertical Tracks That Can Be Upgraded with "Crypto Technology" and Ultimately Achieve PMF – Web2 Coded
Web2⇄Web3 Deposit/Withdrawal + DeFi Frontend
As Web2 users continue to pour into Web3, it's time for one or two mainstream solutions to emerge that enable deposits/withdrawals and access to DeFi. The current market is highly fragmented, with clumsy user processes.
Current Pain Points
· Hop-scotch Onboarding: 75-80% of first-time crypto buyers still first purchase coins on centralized exchanges (Binance, Coinbase), then transfer to self-custodial wallets or DeFi protocols, resulting in 2 KYC processes, 2 sets of fees, and at least 1 cross-chain bridge.
· Withdrawal Difficulty: US licensed CEXs can freeze fiat for 24-72 hours; European banks increasingly mark outbound SEPA transfers as "high risk".
· High Fees: Deposit spread ~0.8% (ACH) to 4-5% (credit card); stablecoin withdrawal fees fluctuate between 0.1-7% depending on region and volume.
· Lack of Aggregated Yield Solutions: No one-stop DeFi module exists for users to centrally obtain yield stacks.
Payment Giants Are Rushing In
· PayPal now allows US users to directly withdraw PYUSD to Ethereum and Solana and refund to any debit card within <30 seconds (fee 0.4-1%).
· Stripe will open "Crypto Withdrawal" API to all platforms in April 2025, enabling instant USDC withdrawal to local channels in 45 countries.
· MoonPay processed $18.6 billion in transactions for 14 million users last year, achieving 123% year-on-year growth due to new instant withdrawal services covering 160+ countries.
PMF Portrait
A global super app where users can seamlessly deposit/withdraw, with a clean interface, and access all DeFi functions on the same platform.
· Single platform account holding funds, seamlessly connecting bank accounts and crypto wallets
-Only large amounts require KYC
-No high fees or withdrawal delays
-Similar to savings account but priced in crypto
· Yield aggregator, integrated with mainstream lending protocols (Aave, Kamino, Morpho) and staking
· Covering mainstream spot/perpetual trading interfaces
Currently, Robinhood is closest to this North Star: minimalist UI/UX, combined with bank and wallet integration; it may be the leader in this track.
Entertainment/Media/Social
Current content platforms (YouTube, Twitch, Facebook) primarily profit by capturing user attention and selling it to advertisers through ad displays. However, this conversion chain is inherently inefficient, losing potential customers at multiple funnel stages. More critically, display ads "forcibly insert" content, naturally destroying UX.
The crypto paradigm can completely rewrite and optimize the traditional Web2 entertainment platform structure.
Platform Layer Unlocking:
· Introduce and create new revenue streams
-DEX integration——exchange fees
-Creator-linked tokens
-Live event betting
-Prize pools
-Airdrops to users
· Remove ads, improve user retention
· No longer dependent on external stakeholders
· New profit-sharing method with creators
-Exchange fee sharing
-Event fee sharing
In this new paradigm, the platform itself is a distribution channel, not a monetization product. Web2 has precedents: Twitch → Amazon, Kick → Stake, Twitter → Membership subscription + GrokAI; Web3 also shows early signs, such as Parti and Pump.fun live streaming.
User Layer Unlocking
-Ad removal brings better UX
-Benefit from prize pools, airdrops by supporting/watching favorite creators
-Token dividends
Creator Layer Unlocking
· Contribution-based revenue model; more transparent and fair
-Exchange fee sharing
-Event fee sharing
· Creator tokens enable direct value flow from fans to creators
· Ad removal improves user retention
· Platform model inherently drives user growth, benefiting creators
Why Not AI or Gaming?
Current AI consumer applications are still premature. We need to wait for applications that can truly achieve "one-click DeFi/account management" before a breakthrough; current infrastructure for safety and feasibility is still insufficient.
In gaming, chain games struggle to break through because core users are mostly "Farmers" chasing money rather than game enjoyment, resulting in low retention. However, future games might invisibly use crypto paradigms at the underlying level (such as economic, item systems), while players/developers still focus on playability—if CSGO had used on-chain economics, it might have been very successful.
In this regard, small games utilizing crypto mechanisms have already seen some success (Freysa, DFK, Axie).
Arguments and Framework
Overall view: Market maturity → Reduced inter-chain fragmentation → Few "super chains" win → Institutions should bet on next-generation consumer applications and supporting infrastructure on these super chains.
This trend is already happening, with activity concentrating on a few chains, rather than being dispersed across 100+ L2s.
Here, "super chains" refer to consumer-centric chains optimizing speed and experience, such as Solana, Hyperliquid, Monad, MegaETH.
Analogy:
· Super chains: iOS, Android
· Applications: Instagram, Cash App, Robinhood
· Supporting stack: AWS, Azure, Google Cloud
As mentioned earlier, consumer applications can be divided into two key categories:
Web2 Native: Applications first attracting Web2 users, leveraging crypto paradigms to unlock new behaviors—focus on products with seamless backend crypto integration that don't tout themselves as "crypto applications" (like Polymarket).
Web3 Native: The verified decisive factors are better UX + ultra-fast interface + sufficient liquidity + one-stop solution (breaking fragmentation). The new generation of Web3 users care more about UX > returns or technology, only caring about the latter two after crossing a certain threshold. Teams and applications understanding this should be valued at a premium.
They generally need to possess the following elements:
Conclusion
Consumer investment targets do not necessarily rely entirely on differentiated value propositions (although they can). Snapchat is not a technological revolution, but rather a recombination of existing technologies (chat modules, camera AIO), creating a new unlock. Therefore, evaluating consumer targets from a traditional infrastructure perspective is biased; institutions should consider: Can this project become a good business and ultimately create returns for the fund?
To this end, they should assess:
1. Distribution capability trumps the product itself - can they reach users?
2. Can they effectively reorganize existing modules to create an entirely new experience?
Funds can no longer drive returns through pure infrastructure. This is not to say that infrastructure is unimportant, but rather that in a narrative-driven market, they must possess genuine appeal and use cases, not value propositions that no one cares about. Overall, for consumer targets, most investors are overly "right-leaning" - too literally adhering to "first principles", while the real winners often prevail through better branding and UX - these qualities are implicit yet critical.
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