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

In 2016, Joel Monegro proposed the concept of the fat protocol. Although this concept has achieved some success as an investment theme, it seems to be insufficiently comprehensive in the long run for protocols that create the majority of value.

This article proposes the concept of the fat application (FAPP) and makes the following assumptions:

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

The dominant applications of the Web2 era typically start from a specific professional field. Once they gain a dominant position, they offer a series of different products to leverage network effects and fully utilize user advantages. This strategy can be summarized as:

"Use tools to attract users, use the internet to retain users."

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

From the very beginning, Web 2.1 applications have primarily been exchanges providing a large number of services, which seem to form a gateway to Web 3. We believe the same logic applies to pure Web 3 on-chain products.

This represents a new "paradigm shift"; value accumulators are transitioning from protocol to application. Ironically, exchanges are not truly Web3 applications. They are essentially still products of Web2, 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, Web3 native applications may surpass protocols, primarily through two paths:

1. Application Chain ( Appchains )
2. All-encompassing super application

We define a super application as a "social platform in the crypto space." This may sound a bit unsettling, but this vision could indeed become a reality. The internet follows a long-tail model: at the front are one or two dominant players, while behind them are a vast number of small players competing for the remaining market share.

Historical Perspective

Many people compare blockchain to a city, and certain public chains to modern metropolises. However, we have a different view. The current construction is still quite primitive, and we would compare blockchain to a religion, and applications to cities.

Today's applications are like medieval cities; compared to modern metropolises, their historical status remains relatively fragile. In our analogy, blockchain is religion, and certain public chains are the medieval papacy.

Medieval cities were established on the basis of the papal protocol, enjoying only half of their autonomy, with papal power being supreme. The pope participated in the formulation of tax policies and guidelines, and the Bible served as the main basis for tax law, with various fees flowing to the location of the papacy.

In simple terms, later a developer named Martin appeared, who published 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 duchies ) 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, which gave rise to new economic models.

What we want to say is that the concept of the fat protocol is still valid, as we are still in the early stages of the blockchain era (, that is, Web3). As applications of cities can be organized, they can become powerful value accumulation entities like nation-states, weakening the charging capacity of blockchain.

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

Application Chain and Super Application

The concept of application chains is not new; it first appeared in a cross-chain project white paper in 2016. It proposed a heterogeneous chain approach that shares security through a common set of validators. Another project proposed a different heterogeneous chain approach: each chain is self-contained and only unified through an SDK.

Since then, most people have accepted the concept of shared security. The conclusion drawn is that it is not easy to build a quality set of validators from scratch, and doing so before the product finds its market may also be pointless. Clearly, low-quality block space acts like a parasite, wasting validator resources, and many times there are no real use cases.

Application chains are tailored: the core chain will be optimized for existing and future use cases built upon it. For example, a liquidity chain can support decentralized finance applications through various specific designs. Such application chains will not compete with other applications for block space and can advance execution and fee logic that is best suited to their use cases.

We believe that ( is the best candidate for becoming a super application on the ) application chain. The development trajectory is roughly as follows:

1. Launch an application on the mainnet of a universal chain to conduct proof of concept, demonstrating whether the product matches the market. Tap into an existing user base.

2. After achieving success, expand to multi-chain, or even launch your own execution environment ( application chain ), to exert greater control and gain more value. Some projects have already reached this step.

3. Eliminate all on-chain traces and execution environments, providing a seamless super app experience. Attract users progressively by adding features that encourage people to invest more time and money in the product.

4. Ultimately become a super application.

For example, some DeFi projects seem to be trying to build a super application that integrates social and financial aspects. This integration is expected to create a strong moat (. Think about credit/social scoring for unsecured loans ). There are also some projects that seem to be developing in this direction, as they have customized 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 DEX and NFT platforms are currently the largest applications measured by fees. They all started with a single use case in which they excelled, accumulating a critical number of users ( and bots ), all willing to pay gas 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 is irrelevant; as long as there is liquidity, users can be acquired, and as long as there are users, more products and customized experiences can be provided to them. One approach is to offer your own product wallet to the user base and improve the user experience. ( This not only includes better UI/UX but also wallet features tailored to the products. ) Successfully launching a product suite ( platform ) and seamlessly absorbing 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, it needs engaging gameplay and a vibrant player economy.

Trojan Middleware

The above text describes a user-centered approach to developing super applications. Simple DeFi applications with outstanding user experiences can capture market share and improve profit methods by horizontally integrating with traditional financial products and/or other on-chain products, while also building a moat. On the technical level, these applications will transition 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 with a welcoming sound, bringing a better developer experience and various advanced features, such as account abstraction, front-running protection, and MEV cashback. Trojan middleware is a top-tier trading mempool (mempool) that can dominate block construction by accessing order flows from applications.

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

But apart 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 blockchain builder. This can provide the best experience for super application users and offer the best assurance for transaction execution in a manner deemed appropriate by the super application.

In the Web2 space, major consumer enterprises often 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 apps are expected to ultimately become encapsulators of public chains and L2s, while hosting all other future "apps" terminals, which will become functions of the super app. Even now, exchanges can be seen as applications that encapsulate blockchain to provide a better user experience. Most users do not need to leave the platform to access a wide variety of content.

If native cryptocurrency applications can span all reasonable base layers and achieve seamless bridging, it can effectively realize extreme homogeneity 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 and whether the security level is high enough.

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

Users and developers can directly access the blockchain, but super applications, as blockchain abstractions, excel in many ways.

1. Lower trading fees
2. Smoother application development process
3. Better user experience

Super apps will become the tech giants in the crypto space. In addition, users can still directly use a large number of blockchains, just like vendors and buyers use other e-commerce platforms.

The Blockchain Space War of the 2020s

The power struggle between applications and the underlying layer is inevitable. The underlying layer derives value from transaction fees ( even as the fees themselves are diminishing, making it increasingly difficult to maintain currency premiums ), and it offers security and a user base in return.

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

This puzzle has several key parts: Where does the transaction occur ( starting point )? Who controls the block construction process ( that transforms externalities into value capture )? What are the user's intentions? And who is setting the currency rules?

The transactions that create value for blockchain start at the application ( or wallet ) level. What users need is the application, not the blockchain, because they are not idealists, but mainly pragmatists. This force will surely lead to a situation where blockchains specifically targeting applications become an execution option.

This provides a broader ability to acquire 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.

It is worth noting that even after losing dominance in the base layer, all parties will continue to trade. Driving a paradigm shift does not mean abandoning the original base layer, but rather siphoning its capabilities to gain value for themselves. The demand for block space is the driving force behind the acquisition of protocol value, while user terminal ( super application ) will determine the sources and directions of demand.

This will drive the price of the application.