Panteral Partner Unichain Revives the Theory of Fat Applications

Coinjek.com Report:
Author: Mason Nystrom, Junior Partner at Panteral Capital; Translation: 0xjs@
In last month’s Blockchain Letter, we introduced my Solana Breakpoint debate, where I pointed out that every large enough application will eventually launch its own blockchain. This month, the large enough application Uniswap announced the launch of Unichain – its own Ethereum L2 network.
Uniswap, initially a simple decentralized trading protocol allowing users to trade long-tail assets, has now grown into a giant in the cryptocurrency industry, encompassing multiple applications, various protocols, and now its own chain.


The launch of Unichain has several important implications for the cryptocurrency industry, including:
– Unichain introduces a new model for token value accumulation
– DeFi activity migrates from the Ethereum mainnet
– Unichain solidifies the fat application theory and the continued commodification of block space
Let’s discuss further.
UNI Rejuvenated with a New Token Value Accumulation Model
Historically, Uniswap’s token UNI has served as a governance token, granting control over the Uniswap DAO and fees redirection to the DAO treasury. According to the whitepaper, Unichain proposes the introduction of a decentralized sorter to manage transaction ordering on Unichain. As part of this decentralized sorter, validators must stake UNI to prioritize transactions and earn a portion of the fee rewards based on their staked and weighted token value. This means that the UNI token will transform from a relatively useless governance token to one with more direct value accumulation (such as sorter fees). Importantly, demand for UNI tokens may increase as the number of validators is limited, and those with higher UNI staking weights will validate the network and earn fees.
It is worth noting that Uniswap made trade-offs in launching Unichain. By shifting to its own L2 blockchain, Uniswap sacrifices some composability with other parts of the Ethereum DeFi ecosystem in exchange for more control over its block space and improved economic capture for the protocol (and applications). By moving liquidity and trades to Unichain, the protocol can offer higher throughput and capture more overall economic value from its own chain through the sorter. While protocols like Uniswap can earn fees from their applications when running on Ethereum, with Unichain, UNI token holders can capture a portion of all economic activity – lending, non-Uniswap DEX exchanges, stablecoin transfers – happening on their chain, as every transaction is ordered by Unichain validators.


This has proven lucrative for Coinbase and Base, and general Rollups like Arbitrum and Optimism, who have earned millions in sorting fees. Now, Unichain seeks to leverage its influence as a DeFi giant to capture a broader range of transactional economic activity happening within its block space.
Awkward Conversation: Unichain vs. Ethereum Mainnet
Unichain has significant implications for the Ethereum mainnet. Currently, even with the growth of L2 solutions like Arbitrum and Optimism, the Ethereum mainnet still dominates a significant amount of DeFi activity and billions of assets (excluding stablecoins). There is a possibility (perhaps a likelihood) that Ethereum mainnet DeFi activity could migrate to Unichain, as it provides incentives for UNI stakers, fees for LPs, and better pricing for exchange users.
Importantly, Unichain has decided to have Unichain validators stake their UNI on the Ethereum mainnet rather than on Unichain, which may help strengthen Ethereum’s security value proposition.
Ultimately, Ethereum has made directional decisions to move activity away from the mainnet, in stark contrast to chains like Solana that aim to maximize Layer1 scalability. However, Ethereum’s biggest value proposition lies in the strength of its underlying assets, as it continues to serve as the gas token for Layer2s, including Unichain, and represents one of the most liquid assets in the industry as well as a critical tool for collateral across DeFi protocols.
The Fat Application Theory Resurfaces: Verticalizing Until Your Own Chain
The launch of Unichain reinforces the fat application theory – that crypto applications will capture the majority of value by being able to verticalize other parts of the stack.
I believe this will be an ongoing trend for modern crypto applications – to verticalize once they reach a critical mass of users or block space demand. Uniswap isn’t the only company moving in this direction. Human identity verification network Worldcoin accounted for 50% of Optimism mainnet activity, prompting them to launch their own application chain. Even in high-performance chains like Solana, oracle provider Pyth captures 20% of Solana trades and has decided to pivot to its own SVM-L1. In other realms of consumer crypto, top-tier NFT projects with strong branding, such as Pudgy Penguins, have chosen to build their own chains. As CEO Luca Netz explains, controlling block space benefits the value accumulation of the Pudgy brand.
My current view on the fat application theory is that we will see the majority of value accrue to the application layer of the stack, where control over users and order flow puts applications in privileged positions. These applications may combine with on-chain protocols and primitives, similar to how Uniswap’s applications leverage its on-chain DEX protocol and soon Unichain. Ultimately, these protocols can still accrue significant value, but considering the proximity to users and the off-chain components that provide more defensible moats for applications, they may capture more value.


Finally, I still believe that Layer1 blockchains like Bitcoin, Ethereum, and Solana have a path to significant value capture as non-sovereign reserve assets, where underlying assets like ETH gain enormous value due to their use as commodities (e.g., gas) and capital assets (e.g., yield), as well as being highly liquid collateral assets within their L1 DeFi ecosystems. These monetary attributes constitute the lion’s share of L1 asset value.
It is possible that, given enough time, applications will attempt to build their own L1s, similar to how they have built their own L2s. However, establishing a commodity L2 block space is fundamentally different from launching an L1 and turning tokens into commodities and collateral assets, so this may be a discussion for a distant future.
The key is that as more crypto applications launch their own block spaces to control liquidity, users, and order flow, the crypto world will reevaluate applications as it logically concludes – fat applications are coming.