Layer1 Valuation Crisis and the Reversal of Stablecoins: How Public Blockchains Shift from Subsidies to Real Revenue

【Crypto World】The era of Layer1 premiums is coming to an end. Delphi Digital recently pointed out that the transition from “Fat Protocols” to “Fat Applications” has been underway for some time, but the market has only recently caught on.

In simple terms, investors are no longer willing to pay for general infrastructure. The days of public blockchains relying on subsidies to attract users are over; they must demonstrate real, sustainable recurring revenue. The era of subsidizing user growth is over.

Here’s an interesting phenomenon: currently, over $30 billion in USDC and USDT are dispersed across various Layer2 and other Layer1 networks. This money generates over $1 billion annually in revenue for Circle and Tether. Meanwhile, the blockchain ecosystems that truly drive demand for these stablecoins only earn about $800 million in transaction fees combined.

Do you see the problem? The value is entirely captured by the stablecoin issuers.

Smart public chains have already seen the pattern. They are beginning to explore how to internalize the economic benefits of stablecoins instead of continuing to work as obedient third-party service providers. Whoever can seize a position in this transition has the potential to reverse the downward trend.