Consumer Applications: The Next Frontier in the Encryption Industry

As infrastructure becomes saturated, consumer applications have become the new focus of the encryption industry. After years of investment in new public chains, scaling solutions, and development tools, technological progress has slowed down, and users have not automatically flocked in due to technical improvements. Currently, the key to creating value lies in attracting attention, rather than in technical architecture.

Market liquidity has stagnated, with retail investors absent. The total market capitalization of stablecoins is only about 25% higher than the peak in 2021, and the recent increase mainly comes from institutions purchasing Bitcoin and Ethereum for their balance sheets, rather than speculative capital circulating within the ecosystem.

Friendly regulatory policies will usher in a new wave of development. Clearer U.S. policies will expand market size and attract Web2 users who focus only on practical applications rather than underlying technologies.

Market rewards projects with real use cases. Applications with considerable income and product-market fit, such as Hyperliquid, Pump.fun, and Polymarket, perform far better than infrastructure projects that have high funding but lack users.

After the deep integration of Web3 and Web2, the market will pay more attention to the attention economy, and consumer-facing applications will expand the overall cake.

The current consumer-level tracks that have reached product-market fit include:

• Trading / Perpetual Contract
• Token Issuance Platform/Meme Coin Factory
• Information Finance and Prediction Markets

The next wave of promising tracks:

• One-stop encryption financial super application, integrating wallet, banking, investment, and trading functions.
• An entertainment/social platform based on on-chain monetization models, optimizing user experience and creator earnings.

The AI and gaming fields are still in their early stages. Consumer-level AI applications require safer account abstraction and infrastructure; Web3 games are plagued by the "welfare fraud" economy, and there is a need for blockbuster games that focus on gameplay.

The activity is positively concentrated on a few consumer-friendly "super chains," such as Solana, Hyperliquid, Monad, and MegaETH. Attention should be paid to the killer applications and their infrastructure within these ecosystems.

When investing in consumer applications, the focus should be on:

• Distribution and execution capabilities surpass pure technology
• User experience, speed, liquidity, and narrative fit are the determining factors.
• Evaluate from a corporate rather than a protocol perspective: focus on actual revenue, scalable models, and industry-leading pathways.

Pure infrastructure projects are difficult to replicate the valuation multiple of 2021. In the next five years, excess returns will come from consumer applications that can transform encryption technology into the daily experiences of millions of Web2 users.