I used to think that VCs funding things like wallets/analytics didn’t make any sense.

After all, the experience itself is pretty commodity and the value accrual flows to the protocols built underneath – Uniswap, Aave, etc.

This understanding has been the underpinning of the Fat Protocol thesis, which was the core to the alt-L1 thesis that drove much of 2021.

This mindset is especially present in DeFi, where the token driven nature of these protocols pushes value accrual to be front and center.

Projects like Opensea and Uniswap have changed my thinking here.

Opensea’s contracts (Seaport) don’t take any fees at all, and neither does Uniswap, outside of a fee charged for LPs.

What they’ve done instead is focus on taking value from the user layer.

With Opensea, they take 2.5% for transactions that use their front end, and with Uniswap, this will manifest in things like their wallet via PFOF/MEV, or their upcoming NFT lending aggregator.

The point is that in owning the user relationship via their UI, they control the distribution channel for new products, and even which contracts the user interfaces with. This is powerful for introducing fees at the routing layer for using the UI, or potential other verticals that the dapp will undertake.

Given the ability to fork/take liberal inspiration, it is trivial to expand into new vertical – you just need to ensure users use these features via your front end. We’ve seen this playbook with Super Apps of web2 – focus on a core service and expand radially into other verticals…

Meituan (food delivery) → General Ecommerce App

AliPay (payments) → Retail Bank

Gmail (mail) → Productivity Suite

… and we’re starting to see it with crypto apps as well.

With crypto, these services revolve around a core service, and inevitably a wallet – as it allows for more seamless integrations with the rest of their products.

Uniswap (dex) → Finance App

Bitgo (custody) → CeDeFi Prime Brokerage

Farcaster (microblogging) → Generalized Social

In a world driven by UIs, what role do tokens play?

Hyperapps are neat because it realizes that the value accrual/utility to tokens doesn’t stop (or maybe even begin) at the protocol, and include the UI.

If Uniswap Labs changes app.uniswap.com to push users toward a lending aggregator– $UNI holders see none of the benefits of this new model, even if their shareholders do.

The superapp model is uniquely suited for hyperapps where protocol expansion isn’t mainly spurred by advances in the core protocol, but by expansion into other verticals.

These are just some initial thoughts, and there are a few other interesting second and third order effects that result from this thesis – so heres a few predictions:

• “Protocols” truly become protocols (a la TCP/IP) as token value accrual takes the backseat to utility – if not completely ignored.

• governance tokens will trend to govern full stack applications, increasing the value alignment of equity vs tokenholders

• while permissionless protocols allow for greater decentralization, the power law nature of superapps are potentially more centralizing as the wallet like nature of super apps increases trust assumptions – creating sticky users

  • This will be amplified as the next cohort of users begins to be onboarded via mobile – already a tough battleground for attention

Thanks to Jai, Alberto, Hactar, Jacob, and others who have shaped my thinking and read over this draft. I’m trying to write more, so drop a follow if you think you’d be interested.

I used to think that VCs funding things like wallets/analytics didn’t make any sense.

After all, the experience itself is pretty commodity and the value accrual flows to the protocols built underneath – Uniswap, Aave, etc.

This understanding has been the underpinning of the Fat Protocol thesis, which was the core to the alt-L1 thesis that drove much of 2021.

This mindset is especially present in DeFi, where the token driven nature of these protocols pushes value accrual to be front and center.

Projects like Opensea and Uniswap have changed my thinking here.

Opensea’s contracts (Seaport) don’t take any fees at all, and neither does Uniswap, outside of a fee charged for LPs.

What they’ve done instead is focus on taking value from the user layer.

With Opensea, they take 2.5% for transactions that use their front end, and with Uniswap, this will manifest in things like their wallet via PFOF/MEV, or their upcoming NFT lending aggregator.

The point is that in owning the user relationship via their UI, they control the distribution channel for new products, and even which contracts the user interfaces with. This is powerful for introducing fees at the routing layer for using the UI, or potential other verticals that the dapp will undertake.

Given the ability to fork/take liberal inspiration, it is trivial to expand into new vertical – you just need to ensure users use these features via your front end. We’ve seen this playbook with Super Apps of web2 – focus on a core service and expand radially into other verticals…

Meituan (food delivery) → General Ecommerce App

AliPay (payments) → Retail Bank

Gmail (mail) → Productivity Suite

… and we’re starting to see it with crypto apps as well.

With crypto, these services revolve around a core service, and inevitably a wallet – as it allows for more seamless integrations with the rest of their products.

Uniswap (dex) → Finance App

Bitgo (custody) → CeDeFi Prime Brokerage

Farcaster (microblogging) → Generalized Social

In a world driven by UIs, what role do tokens play?

Hyperapps are neat because it realizes that the value accrual/utility to tokens doesn’t stop (or maybe even begin) at the protocol, and include the UI.

If Uniswap Labs changes app.uniswap.com to push users toward a lending aggregator– $UNI holders see none of the benefits of this new model, even if their shareholders do.

The superapp model is uniquely suited for hyperapps where protocol expansion isn’t mainly spurred by advances in the core protocol, but by expansion into other verticals.

These are just some initial thoughts, and there are a few other interesting second and third order effects that result from this thesis – so heres a few predictions:

• “Protocols” truly become protocols (a la TCP/IP) as token value accrual takes the backseat to utility – if not completely ignored.

• governance tokens will trend to govern full stack applications, increasing the value alignment of equity vs tokenholders

• while permissionless protocols allow for greater decentralization, the power law nature of superapps are potentially more centralizing as the wallet like nature of super apps increases trust assumptions – creating sticky users

  • This will be amplified as the next cohort of users begins to be onboarded via mobile – already a tough battleground for attention

Thanks to Jai, Alberto, Hactar, Jacob, and others who have shaped my thinking and read over this draft. I’m trying to write more, so drop a follow if you think you’d be interested.