In early August 2017, Joel Monegro , as a full-time employee of the Union Square Ventures investment fund (about $ 1 billion under management), outlined his thoughts on the profitability of levels in the stack of technologies created on blockchains. Even the term for them came up with - fat protocols . About two days later he founded his own investment fund in cryptotechnology and disappeared from the "about" section on the site, in general, he invented the term and invented it, and he or so genius - time will tell.
It is important that the term caught on in the financial cryptotuska. It seems to us deserved. Let's take a closer look at the cryptomemasic fat protocols .
1. The concept of "skinny" and "fat"
The reasoning for Joel were approximately as follows. Bitcoin blockchain is an example of the “common protocols” of the Internet (such as TCP / IP, http, SMTP, etc.). The common protocols and the blockchain protocol are similar in that they became the foundation of the so-called. overlay networks - that is, on their basis new logical networks appear, with other functions and features. Unlike Internet overlay networks, where FAANG (Facebook, Apple, Amazon, Netflix and Google, the term of the Swedish economist Kjell Nordstrom ) owns them, on the blockchain data ownership is decentralized - a shared data layer appears in the picture below, of course, like everything in finance, the most important is written in the smallest font).
So Joel saw the architecture of the Internet in 2027:
What else is important in this picture
The most important aspect of Joel’s forecast is this: today the Internet protocol stack is in place of the Bitcoin blockchain, but over time it will receive a new foundation and move to the shared data layer. Why? Yes, it is difficult to say, he sees it.
But let's move on. If you look at the cost structure circulating through the stacks of the Internet and the Bitcoin blockchain, then the scale will be the opposite. Something like that:
That is, the bulk of the money passes directly through the Bitcoin blockchain itself, whereas on the same Internet stack, on the contrary, all the money is earned in the application layer.
Internet protocols make almost no money, so Joel called them thin (lean) protocols . However, with Bitcoin, everything happens exactly the opposite, which means that the protocols are " fat ".
Upd .: Below is a picture from Pantera Capital, where everything is clearer. Look: the left column is shaded dark (companies do business on their applications), and below is a thin orange bar - protocols (about 0% of the total turnover in the industry flows through them). And vice versa: protocols on the right are protocols in orange, and applications are at the top. This fundamental difference in business focus is concentrated in the term “fat protocols”.
Of course, the author connected this matter with the youth of the blockchain technology, saying that with age, the blockchain protocols will “run out” (it was in 2014). But only if blockchains become popular enough to become global data layers. Tokens and speculators will help them in this - he realized by the summer of 2017.
2. How tokens promote blockchains
The token itself is economically very similar to the company's share, that is, it is a debt security, the price of which is based on the buyer's faith in the prospects for the success of the issuer's enterprise. In the case of successful placement of tokens (and maintaining spec ... investors), the company receives resources to create a blockchain (or overlay network), which launches a chain of innovations to the upper layers of the blockchain stack — directly to the application layer.
Naturally, it is necessary to appear a popular application and it will bring [users] money, the capitalization of the blockchain, on which the application is based, will immediately increase.
This statement is based on the fact that blockchains allow storing data (for example, in Bitcoin this is an OP_RETURN transaction). Since the data is now inside the blockchain, and not somewhere in the top layer of applications, the overall data level , which FAANG is currently capitalizing on as efficiently as possible, moves to the area of decentralized placement (and drags capitalization). By the way, the total capitalization of applications at the top is always less than the capitalization of the blockchain protocol by the difference in the form of speculative expectations. Well, this is the second important conclusion in small print.
Tokens not only allow the blockchain to be born. If you notice, all projects on the primary placement of tokens are satisfied with their synthetic shortage. So, on the one hand, there is provided a starting speculative interest, and on the other hand, when data from end users are poured into the blockchain, the blockchain users get a specific meaning to add this data inside the blockchain. After all, transactions in one way or another bring an economic effect - in tokens. And tokens can be sold. Stimulating transactional activity inside the data layer is the very trick for which tokens were invented.
3. The current state of the issue
In general, this whole story with skinny and obese protocols had the effect of shifting perspective on the market and technological development in it. Everyone immediately started talking about:
- you should not mix applications and protocols [ 1 ], like Twitter, because hell you will understand now what's the value there;
- the blockchain protocols are actually skinny [ 2 ], because blockchains tend to survive the fork, and each new chain splits the total capitalization of the parent blockchain protocol and all that;
- Taleb's anti- fragility manifests itself very well in the application layer (previously, few people understood why Nassim Taleb coined this term and where its roof flies);
- each layer of the technological stack - an application for the lower layers and a protocol - for the upper ones, and therefore it is necessary to take a closer look at the value distribution in the entire stack that was used in the final product;
In general, began to clever. That only confirms the subtlety of observation Monegro.