Why are crypto apps transforming into an "invisible infrastructure"?

The “Fat Protocol Theory” by Joel Moneiro in 2016 and the “Fat App Theory” by Westy in 2022— the crypto industry has always been exploring models of value accumulation. However, as of 2025, this industry is at a decisive turning point. Crypto applications themselves are becoming indistinguishable, standardized commodities.

The Diminishing Marginal Utility of Infrastructure Optimization

Until now, the industry has spent enormous resources on advancing infrastructure and technology. Innovations in Automated Market Maker (AMM) algorithms, refinement of settlement mechanisms, reduction of zero-knowledge proof costs—technological achievements are countless.

But reality is harsh. The cost of oracle data decreases by 1 basis point. Lending interest rates increase by 10 basis points. Price accuracy in decentralized exchanges improves. Users are almost unaffected by these improvements.

What users truly seek is the familiar user interface. “Invisible” technological advantages do not lead to improved user experience.

Moving Toward an Era Dominated by Frontends

This phenomenon is becoming clear at the forefront of the industry. Major applications like Polymarket, Kalshi, Hyperliquid, Aave, Morpho, and Fluid are focusing their resources on B2B collaborations.

Their strategy is simple yet effective: instead of adapting new users to complex on-chain processes, they choose to operate as “transparent foundational services” behind other platforms.

Specifically, it is more practical to embed “yield features” into existing platforms like Robinhood, which can install browser plugins for 25 million new users and avoid forcing them to manage private keys. Integration and partnerships are the winners. Distribution channels are the ultimate winners. Frontends will be the winners.

The Future Shown by Coinbase’s Model

The clearest example of this trend is Coinbase. Users borrow USDC using Bitcoin (cbBTC) on the platform as collateral. This transaction flow flows into the Morpho lending market on the Base chain.

Interestingly, Aave and Fluid on the same Base chain offer more favorable interest rates for stablecoin loans collateralized by cbBTC. Yet, Morpho maintains market dominance—Coinbase users are willing to pay the additional cost for the “visible operational convenience.”

Not All Applications Will Sink

However, not all applications will settle for being “invisible foundational layers.” Some companies focus solely on B2C and do not prioritize B2B2C. But they will be forced to undergo fundamental restructuring.

Reprioritizing core objectives. Redesigning revenue models. Rebuilding competitive barriers. Optimizing marketing and development strategies. Deeply understanding how users enter the crypto space—these will all be essential.

Paradigm Shift in Value Distribution

Infrastructure applications are not losing their capacity to create value. Instead, the platforms controlling actual user traffic—front-end platforms—will dominate a larger share of value.

Future competitive barriers will not be built on liquidity or native crypto experiences. They will shift toward a focus on distribution capabilities.