Crypto set for a new era of apps over infrastructure

Today is day three of Permissionless III — have fun staying richly informed and entertained to all the attendees headed to the event this morning.

Keep reading for the inside scoop on where the crypto vibes are headed from Katherine, reporting from Salt Lake City. Catch you next week!

App revolution

It’s looking like crypto is ready to transcend to its next major phase. 

Apps, not infrastructure.

There have been calls to renew focus on funding and building apps for a while now. Not “crypto apps,” like perps DEXs and lending protocols, but more genpop apps that regular people really want to use at scale — that would just so happen to run on blockchain rails.

With good reason. Infrastructure plays dominate the market. I spent the morning cataloging the top-200 cryptocurrencies by capitalization — which represents 96% of the entire market — per CoinGecko into three top-level categories: infrastructure, currency and apps.

Within each of those headline items were subcategories. Under infrastructure there’s layer-1 tokens like ether, SOL and TON, layer-2s arbitrum, mantle and optimism and pure-play infra assets including chainlink, PYTH and EIGEN. 

Under currency there are stablecoins, memecoins and tokens derived from wrapping, staking or bridging other assets, like wrapped bitcoin and lido staked ETH. 

App categories include exchange tokens — both DEX and CEX — as well as ones for metaverses, wallets and compute marketplaces like Akash, and DeFi platforms such as sky (formerly maker), pendle and aave.

It obviously took some value judgments: Are liquid staking platforms Jupiter and Lido “apps” or “DeFi”? Probably the former. You use your crypto through the platform and immediately receive something else in return — in those cases a liquid staking token. DeFi apps would otherwise generate potential rewards over time.

Bitcoin was labeled a “currency,” and not a layer-1 under infrastructure. Those are mostly smart contract-native platforms on which apps can be deployed: coins that aim to offer ownership, exposure and utility to the underlying architecture of Web3.

All told, infrastructure coins, when sorted this way, represent $660.5 billion out of the $973.2 billion that remains of crypto after excluding bitcoin — 68% of the whole.

Appcoins are worth just $45.3 billion, or less than 5% of the total. Currencies other than bitcoin meanwhile make up over 27%.

Of course, the next wave of consumer apps, like the ones crypto-forward TradFi titan VanEck is looking to back with its new fund, might not even have their own token. The blockchain and crypto elements could be buried underneath slick UX, so that users are none-the-wiser that they’ve landed in Web3. 

Polymarket, for instance, doesn’t have its own coin but is one of this cycle’s most successful apps within the broader zeitgeist.

Still, there’s obviously room for growth within the app space. It’s difficult to say how big the explosion in adoption could be. 

Despite the example of Polymarket, I suspect that token launches — specifically ones that prioritize access to the general public — will need to be central to those projects. Perhaps the shift to the applayer will bring about the return of initial coin offerings. 

After all, it could be that infrastructure tokens are only so dominant because they offer exposure to potential growth within those ecosystems, through their native coins.

App projects may do well in following that formula — as long as they can stomach a potential visit from a trigger-happy SEC. 

With that in mind, whatever success is destined for the applayer rests on how well Coinbase, Uniswap Labs and now Cumberland DRW fairs against the regulator in court. Joy.

— David Canellis

IYKYK

We’re bringing you something a little different this week.

Instead of just sitting down and absorbing what Blockworks co-founder — and Empire host — Jason Yanowitz said on the podcast this week, I tracked him down at Permissionless.

“The biggest takeaway from me is that the energy online is very different online from the energy in person,” Yanowitz told me. 

“There [are] like three stages of companies from 2017-2020, which was the CeFi infrastructure people (like Fireblocks, BitGo, Anchorage), 2020 to 2024 was infrastructure and now I think we’re entering this application era,” Yanowitz said. “Every panel ends up talking about applications in some way, which we’ve never seen at a conference before.”

“I think all signs are actually pointing to 2025 being [the year that all applications] are funded,” he explained. 

So the bullish vibes really are real.For Yanowitz, the energy felt “rejuvenating.” He thinks bitcoin could carve out fresh all-time highs in November or December, setting the stage for a (potentially) bullish start to 2025.

And now you know.

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“Despite (SEC) Chairman (Gary) Gensler’s call to just ‘come in and register,’ Cumberland has for years been expressly prohibited from using its now-dormant registered broker-dealer for crypto asset activity. We cannot comply with rules that do not exist or a framework that regulators are interpreting to prohibit trading in natively issued crypto assets,” Cumberland said.

While it may look like next year is potentially bullish, the Securities and Exchange Commission continues to target companies in the crypto space. 

Yesterday, it was Cumberland. 

“We are not making any changes to our business operations or the assets in which we provide liquidity as a result of this action by the SEC,” Cumberland said in a statement.

“Despite frequent protestations by the industry that sales of crypto assets are all akin to sales of commodities, our complaint alleges that Cumberland, the respective issuers, and objective investors treated the offer and sale of the crypto assets at issue in this case as investments in securities, and Cumberland profited from its dealer activity in these assets without providing investors and the market with the important protections afforded by registration,” Jorge G. Tenreiro, acting chief of the agency’s crypto assets and cyber unit, alleged.

It’s one of those cases that could have lasting effects on the crypto space, but first, we need to see how it plays out.

— Katherine Ross

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