L1 is dead, Appchain should rise

By: rootdata|2026/04/20 12:12:49
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Author: iwillpat

Compiled by: Jiahua, ChainCatcher

Since the era of "Rollup as a Service" (RaaS) began, the outcome has already been determined. This is a precursor to the execution layer falling into a death spiral and commoditization.

What I mean is that general-purpose L1 tokens will continue to trend towards zero, and possibly without exception. I will try to explain the reasons, and how I would pivot if I were an L1 operator.

The main drivers of L1 failure are as follows: linear token release, failed value propositions, poor management, and the industry's "leadership."

I will briefly elaborate on these points—these are just personal opinions, not conclusions.

The current form of linear staking release has some benefits, namely distribution through liquid staking ("My 7% annualized!"), but it has failed in several key areas.

Delegated Proof of Stake (DPoS) makes it easy for the "decentralization purists" who talk a big game to participate in network security, but it does not properly incentivize insiders, users, and developers. At best, it only incentivizes people to hold tokens, which does nothing to create any actual value.

I have heard the classic argument about PoS: large validators have economic incentives not to dump on you. But that hasn't stopped them from selling every possible unlock amount and block reward.

This leads to my next point: they sell because L1 tokens have no long-term value proposition.

A "Tissue" That Breaks with a Poke

The arguments about "Gas tokens" and "governance" are old and unconvincing—like two Bounty tissues that fall apart with a single poke. The value of network tokens depends on what you can buy with them.

Therefore, the goal of all blockchain teams should be to promote their tokens as widely as possible for circulation as currency. In the pursuit of higher TPS and lower block times, the industry's vision of "peer-to-peer electronic cash" seems to have been lost.

To put it bluntly: throughput, TVL, and low latency do not give tokens any value. Liquidity and usage do.

The next point is the most practical and painful: blockchain "labs." (And various foundations.)

Dumping tokens after the lock-up period, off-market trades at huge discounts, jaw-dropping operational expenses, incentive programs to attract hot money, hiring "KOLs"... we can all name a few.

Ultimately, every penny spent by Labs is a tax levied on token holders. Unless the Labs generate revenue through some service, first-party wallet, or application, they are surviving by selling tokens.

This is not necessarily a bad thing—they provide valuable services through engineering resources, browsers, and APIs. But if Labs do not bring net new buying pressure to the tokens, and spending continues to rise unsustainably, they will slowly bleed to death.

One of the primary goals

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