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The total crypto market cap is around $2.7T today—but if you remove Bitcoin and stablecoins, that drops to just $1T.
If you're investing beyond Bitcoin, it’s worth understanding what that $1T is really made of.
You can break it down into two main categories:
🔹 Blockchains – the infrastructure layer, running everything behind the scenes 🔹 dApps – the apps people actually use, built on top of those blockchains
Hint: We think one of these is seriously mispriced.
But let’s not get ahead of ourselves. First, let’s break down how the remaining $1 trillion market cap is split up and how much each category pulled in from fees in 2024.
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Blockchains make up around 70% of the total market cap and brought in about $6 billion in fees, mostly driven by just five major networks.
On the flip side, dApps only account for 30% of the market cap, yet they still managed to generate $3.3 billion in fees. So dApps are 30% of the market, yet generated more than 35% of the fees in 2024. Not a huge deal, right? Wait until you see dApp vs blockchain revenue so far in 2025 (shown in a chart in just a second).
But first, why does it matter? Because blockchains are just the plumbing—they keep things running in the background.
👉 The real value, the real user interaction, and the real money? We believe that’s all happening on the apps.
Think about it: no one logs on just to use a blockchain. They come for the apps—where they trade, play, invest, socialize, and spend. That’s where attention goes, and where revenue flows.
And if that's where the users are, that’s where we think the long-term value is heading.
Apps are closer to the end user, which means they have way more potential to capture demand, create sticky experiences, and grow revenue.
✍️ Blockchains may have built the roads—but the apps are building the cities.
Before we dive into what this all means there’s one chart we think you should see. It’ll help set the stage for everything we’re about to cover.
Let’s take a step back and look at the monthly fees generated by both blockchains and apps.
When you zoom out and look at monthly fees from apps compared to blockchains—a clear trend is starting to take shape.
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In 2024, app fees started to rise significantly—and by the end of the year, they officially surpassed blockchain fees. In February of this year, app fees were already 58% of all fees generated on blockchains.
So the shift is already underway! But the market cap hasn’t caught up to it just yet.
Intrigued? Good—because today, we’re breaking down our Fat App Thesis.
It’s a big idea, and it could change the way you think about where the real value in crypto is heading.
Here’s today’s agenda:
- Why blockchains hold higher valuations today
- 6 reasons why apps will capture much more value in the future
- What this means for our portfolio
We believe it can offer you a fresh perspective on the market—one that could eventually shape your future investment decisions. And really, that’s what this is all about.
That’s why we’re here: to explore new ideas and keep pushing our thinking forward.
So let’s get started.
THE FAT PROTOCOL THESIS
To understand the Fat App Thesis (the idea that apps will capture more value), we need to take a quick step back and look at where it started.
Because it didn’t just appear out of thin air—it evolved from an earlier concept known as the Fat Protocol Thesis.
👉 We believe that taking a quick look at the history can help make a lot more sense of today’s market and the valuations we’re seeing now.
It all started with an essay published back in 2016—the one that introduced what’s now known as the famous “Fat Protocol Thesis”. And this image quickly became the symbol of that thesis.
The basic idea behind the Fat Protocol Thesis is this:
👉 Protocols (aka blockchains) end up being more valuable than the apps built on top of them.
Why? For a couple of reasons.
- First, crypto apps don’t have strong defenses or moats—someone can easily copy the code and launch a competitor (this is called "forking"). And we've seen plenty of examples like this play out across the crypto space (Uniswap → SushiSwap → PancakeSwap, etc.).
- Second, when an app gets popular, it brings more users to the blockchain it runs on. That means more people need the chain’s token to interact with the app.
More demand = higher token prices = a stronger network overall.
In short: apps create value, but it’s the underlying protocol (the blockchain) that captures most of it.
And don’t forget—this essay was written way back in 2016, when Bitcoin was just $650 and Ethereum was only $10!
But it took the market a few years to really catch on to what smart contract blockchains could actually do—and what kind of apps could be built on top of them.
You could say that 2021 was the first real cycle where we saw truly usable apps come to life on these protocols.
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During that cycle, blockchains captured far more value than the apps built on top of them.
It looked like the Fat Protocol Thesis was playing out perfectly—the real winners weren’t the apps, but the underlying chains powering them.
So naturally, attention shifted toward protocols. VCs, major investors, and retail all piled in.
This kicked off a wave of new L1 and L2 launches, many backed by top-tier firms and debuting with sky-high valuations.
👉 Everyone was chasing the next big chain, convinced that’s where the real upside—and the future of crypto—was waiting.
But even though this thesis was incredibly spot-on at the time, we’re starting to see the market shift away from it.
What made sense in the early days and in the previous cycle doesn’t fully apply anymore—and that shift is exactly why it’s time to talk about the Fat App Thesis.
THE FAT APP THESIS
Funny enough, the guy who came up with the Fat Protocol Thesis actually started his essay with this picture showing how value is captured on the internet.
But then followed it up by explaining why things would play out differently on blockchains.
…maybe it’s not so different after all.
👉 Maybe crypto will follow the same path as the internet (the web)—where, in the end, it's the apps that capture most of the value, not the underlying infrastructure.
We’re going to walk you through 6 key reasons why we believe this shift is happening right now and why we think the future belongs to apps.
By the end, you’ll have everything you need to form your own opinion about this thesis. Plus we’ll also show you how this view is shaping the way we allocate our portfolio. 😉
Let’s start with the 6 reasons why we believe apps are the stronger bet:
Uh, Oh… 😧 The rest of this report is exclusive to Milk Road PRO members!
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WHAT’S LEFT INSIDE? 👀
- How app fees are now outpacing incentives (and what that means for the future)
- Why apps are still being undervalued by the market
- Our current app token allocations
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