Panteral Partner The Revival of Unichain The Renaissance of Fat Application Theory

CoinJie 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 sufficiently large application will eventually launch its own blockchain. This month, a sizable application, Uniswap, announced the launch of Unichain – its own Ethereum L2 network.
Uniswap, originally a simple decentralized exchange protocol that allows users to trade long-tail assets, has now grown into a behemoth in the cryptocurrency world, encompassing multiple applications, 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 away from the Ethereum mainnet
– Unichain solidifies the fat application theory and the continued commodification of block space
Let’s discuss these points.
UNI Rejuvenated with a New Token Value Accumulation Model
Throughout its history, the UNI token of Uniswap has served as a governance token, granting control over the Uniswap DAO and redirecting protocol fees to the DAO’s treasury. According to the whitepaper, Unichain proposes the introduction of a decentralized sequencer to manage transaction sequencing on Unichain. As part of the decentralized sequencer, validators must stake UNI to sequence transactions and will receive partial fee rewards based on the weighted token value of their stake. This means that the UNI token will transition from a mostly useless governance token to a token with more direct value accumulation (such as sequencer fees). Importantly, demand for the UNI token may increase as there is a limited number of validators, and those with the highest UNI staking weight will validate the network and earn fees.
It is worth noting that Uniswap made a trade-off in launching Unichain. By turning 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 trading to Unichain, the protocol can offer higher throughput and capture more overall economic value from its own chain through the sequencer. While protocols like Uniswap could extract 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 (decentralized exchange) swaps, stablecoin transfers – happening on their chain, as every transaction is sequenced by Unichain validators.


This has proven lucrative for Coinbase and Base, and general Rollups like Arbitrum and Optimism have earned millions in sequencing fees. Now, Unichain seeks to leverage its influence as a DeFi giant to capture a broader range of transactional economic activity within its block space.
An Awkward Conversation: Unichain vs. Ethereum Mainnet
Unichain has significant implications for the Ethereum mainnet. Currently, even with the growth of L2s like Arbitrum and Base, the Ethereum mainnet still dominates a significant portion of DeFi activity and billions of assets (excluding stablecoins). DeFi activity on the Ethereum mainnet may (very likely) migrate to Unichain because it provides incentives for UNI stakers, fees for liquidity providers (LPs), and better pricing for exchange users.
Most 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 value proposition in terms of security.
Ultimately, Ethereum has made directional decisions to offload activity from the mainnet, in stark contrast to chains like Solana that aim to maximize Layer 1 scalability. However, Ethereum’s biggest value proposition lies in the strength of its underlying assets, serving as gas tokens (e.g., ETH) for Layer 2s, and representing one of the most liquid assets in the industry and a critical tool for collateral across DeFi protocols.
The Fat Application Theory Resurfaces: Verticalizing Until One’s Own Chain
The launch of Unichain reinforces the fat application theory – that crypto applications capture the majority of value as they are able to vertically integrate other parts of the stack.
I believe this will be an ongoing trend for modern crypto applications – once they achieve sufficient user scale or block space demand, they will verticalize. Uniswap is not the only company moving in this direction. Human identity verification network Worldcoin once accounted for 50% of Optimism mainnet activity, prompting them to launch their own app chain. Even on high-performance chains like Solana, oracle providers like Pyth, which accounted for 20% of Solana trades, have decided to turn to their own SVM-L1. In other realms of consumer crypto, top-tier NFT projects with strong brands like 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 of the fat application theory is that we will see the majority of value accumulating at the application layer of the stack, where control over users and order flow puts applications in a privileged position. 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 capture significant value, but considering the proximity of applications to users and the off-chain components that provide more defensible moats to applications, applications may capture more value.


Lastly, I still believe that Layer 1 blockchains (such as Bitcoin, Ethereum, Solana) have a path to capturing significant value as non-sovereign reserve assets, where underlying assets (such as ETH) gain substantial value through their use as commodities (e.g., gas) and capital assets (e.g., yield), and as highly liquid collateral assets within their respective L1 DeFi ecosystems. These monetary properties constitute the largest share of L1 asset value.
It is possible that if given enough time, applications will attempt to build their own L1s just as they have with L2s. However, establishing commodity L2 block space is vastly different from launching an L1 and transitioning tokens to commodities and collateral assets, so this may be a discussion for the distant future.
The key takeaway 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 the logical conclusion is drawn – fat applications are on the horizon.