

BITCOIN SEASON 2: Why tokens don't work (except for Bitcoin)
6 snips Jul 9, 2025
Gwart, an influential internet personality in crypto commentary, dives into the collapse of the fat protocol thesis and the rise of revenue-focused business models in crypto. He critiques the dysfunction within DAOs and highlights Bitcoin's unique position amid the chaos. The discussion includes Solana's pragmatic approach and contrasts Bitcoin's foundational principles with the broader altcoin landscape. Gwart's insights emphasize a shift from public goods delusion to sustainable practices, sparking thoughts on the future of cryptocurrency investments.
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The Fat Protocol Thesis Critique
- The fat protocol thesis posited that blockchain protocols would capture most value because tokens embed financial value.
- However, value is now seen as being captured more in applications built atop protocols, not the protocols themselves.
Challenges in Token Investment Value
- Crypto protocols often lack intermediaries, making fee extraction and defensibility harder than traditional businesses.
- Open-source and forkability compress profit margins, posing weak investment cases for token projects.
DAOs’ Dysfunction and Governance Limits
- DAOs were often dysfunctional and used as VC piggy banks rather than community governance tools.
- Users aren’t necessarily suited to govern protocols, similar to how iPhone users don’t control Apple’s decisions.