Building Web3 Super Applications: The Evolution from Fat Protocols to Fat Applications

The concept of the fat protocol proposed by Joel Monegro in 2016 is a good investment theme, but in the long run, it seems insufficient for the protocols that create most of the value. We propose a new concept - fat application (FAPP), whose core assumption is:

Applications that offer a wide range of products will accumulate the greatest value.

Web2's dominant applications usually start from a specific professional field. Once they gain a dominant position, they will offer a range of different products to leverage network effects and fully utilize user advantages. This can be summarized as:

"Use tools to attract users, use the network to lock in users."

In the cryptocurrency field, certain trading platforms are typical representatives of this model, as they do not miss any user and gradually provide all crypto-related products on their platform.

From the beginning, the main Web2.1 applications were exchanges that provided a multitude of services, and they seemed to form a gateway to Web3. We believe that the same logic also applies to pure Web3 on-chain products.

This is a new "paradigm shift"; value accumulators are transitioning from protocol to application. Ironically, exchanges are not Web3 applications. They are typical Web2 products, requiring permission and being centralized, yet they extract a significant amount of value from the entire ecosystem.

In the future, on the battlefield for value, we believe that protocols may lose to Web3 native applications, and there are two possible paths:

1. Application Chain

2. All-encompassing super application

We define super applications as "WeChat of the crypto space." This may sound a bit daunting, but this vision is indeed hopeful to come true. The internet follows a long-tail model: at the front are one or two dominators, while a massive number of small players compete for the remaining market share.

Historical Perspective

Many people compare blockchain to a city and Ethereum to modern Manhattan. We have different views. The current construction is still quite primitive; we would compare blockchain to a religion and applications to cities.

We believe that today's applications are like medieval cities; compared to modern Manhattan, their historical status remains relatively weak. In our analogy, blockchain is religion, and Ethereum is the medieval Catholic Church.

Medieval cities were established on the foundation of papal protocols, enjoying only half of their autonomy, with the pope's authority being supreme. The pope participated in the formulation of tax policies and guidelines, with the Bible being the main basis for tax law, and various fees flowing to Rome.

In simple terms, later a developer named Martin appeared, who nailed a white paper on the church door, which contained 95 lines of code. A few years later, a hard fork occurred. Some validators joined the newly forked protocol, while others decided to stay.

As a result, the application ( cities and principalities ) became more independent, and for centuries, the influence of the papacy on the flow of fees 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.

What we want to say is that the concept of the fat protocol has not become obsolete, because we are still in the early stages of the blockchain era (, namely Web3 ). And as applications of cities can organize themselves, they can become powerful value accumulation entities like nation-states, weakening the ability of the clergy ( to charge on the blockchain ).

In other words, over time, applications, mainly super applications or application chains, will accumulate more value.

Application Chain and Super Applications

The concept of application chains is not new, having first appeared in a blockchain project white paper in 2016. It proposed the idea of heterogeneous chains sharing security through a common set of validators. Another project proposed another heterogeneous chain approach: each chain is self-contained and only unified through an SDK.

After that, most people accepted the concept of shared security. The conclusion drawn was that assembling a high-quality set of validators from scratch is not easy, and doing so before the product finds its market may also be pointless. It is clear that low-quality block space is like a parasite; it wastes validator resources, and often there are no real use cases.

Application chains are tailor-made: the core chain will be optimized for existing and future use cases built on top of it. For example, a liquidity chain can support decentralized finance applications through various specific designs. Such application chains do not compete with others for block space and can promote the execution and fee logic best suited for their use cases.

We believe that ( the best ) application chain is to become a candidate for super applications. The development trajectory is probably as follows:

1. Launch applications on the mainnet of a general-purpose blockchain to conduct proof of concept and demonstrate whether the product is market fit. Target an existing user base.

2. After achieving success, expand to multiple chains and even launch your own execution environment application chain ( to exert greater control and gain more value. Some projects are currently exemplary of this step.

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 people to invest more time and money in the product.

4. Congratulations on becoming a super application.

For example, some projects seem to be trying to build a super app that integrates social and financial elements. This integration is expected to form a strong moat ) think about credit/social scoring for unsecured loans (. Other projects also seem to be moving in this direction, customizing 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.

Some decentralized exchanges and NFT trading platforms are currently the largest applications by fee. They all started with a single use case in which they excelled, accumulating a critical number of users ) and bots (, who were willing to pay ETH to use these applications. They later also acquired NFT aggregators to solidify their core products or achieve horizontal expansion of their products.

Whether the chicken or the egg came first, 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 your own product wallet to the user base and improve the user experience ), which not only includes better UI/UX but also wallet features tailored to the products (. Successfully launching product suites ), platforms (, and seamlessly integrating consumer-facing applications will stand out.

If we consider that not only various financial use cases, liquidity is not the key to the rise of all super applications, but even so, it must rely on other things. Taking games as an example, engaging gameplay and a vibrant player economy are needed.

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Trojan Middleware

The above describes a user-centered approach to super application development. Simple DeFi applications with outstanding user experience can capture market share and improve profitability by horizontally integrating with traditional financial products and/or other on-chain products, while also establishing a moat. On the technical level, these applications will evolve from simple smart contract interfaces to mature super applications with their own application chains.

Trojan middleware is another option that can pass through the front door of applications amidst welcoming sounds, bringing a better developer experience and various advanced features such as account abstraction, front-running protection, and MEV cashback. Trojan middleware is the top-tier trading memory pool )mempool(, which can dominate block construction by accessing order flows from applications.

Through blockchain construction, Trojan middleware can provide functionalities that applications themselves cannot easily replicate, such as on-chain abstract transaction execution. Ultimately, by creating an outstanding wallet/app store experience, control over touchpoints can be achieved. Some blockchain builders have already demonstrated the ability to access exclusive order flows, which can serve as the foundation for building the things we talk about.

But aside from being deceived by the Trojan horse, there is another option. We believe that the ultimate state of any ambitious super application is to become a major block builder. This can provide the best experience for super application users and offer the best guarantee for transaction execution in a manner deemed appropriate by the super application.

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

Super applications are expected to ultimately become enablers for Ethereum and other blockchains, while hosting terminals for all other future "applications", which will serve as individual features of the super applications. Even now, exchanges can be seen as applications that encapsulate blockchains to provide a better user experience. Most users can access a wide variety of content without having to leave the platform.

If native applications can span all reasonable base layers and achieve seamless bridging, it can effectively realize extreme homogenization of block space, that is, commoditization. The best path for optimal execution will naturally emerge, and users may not even be aware of the specific execution trajectory. Of course, there are also limitations. It relies on the quality of the deployed blockchain's security level being high enough.

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

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

1. Lower trading fees

2. A smoother application development process

3. Better user experience

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

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The Blockchain Space War of the 2020s

The power struggle between applications and the infrastructure layer is inevitable. The infrastructure layer gains value through transaction fees ), even as the fees themselves are dissipating, making it increasingly difficult to maintain currency premiums (, and provides security and user base in return.

Successful applications with a loyal user base will also seek their own ways to obtain value and exert greater control over how to best serve users. In other words, applications want to share the foundational success of blockchain: reflected in the monetary premium found in the demand for native tokens.

There are several key elements in this puzzle: Where does the transaction occur ) starting point (? Who controls the block construction process ) to convert externalities into value capture (? What is the user's intention? And who is setting the monetary rules?

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

This provides a broader ability to obtain value, allowing for better trade-offs in design, thereby better meeting user needs than the standardized layer. The base layer currently only has an advantage in the last factor, which is monetary rules. And this advantage is also temporary. Please look at another segment of history:

In many ways, we can compare the base layer to the British Empire and the pound. In the late 18th century, the American colonies rose up against British rulers due to harsh taxes and levies. This led to the Boston Tea Party and the American Revolutionary War, giving birth to the greatest "super application" in world history.

Nearly 200 years later, the British Empire collapsed after World War II, and the pound lost its status as a reserve currency, replaced by the dollar. This also led many countries to flee the empire, with India becoming the next most prominent candidate for a super app. This is the true model.