Institutional Capital Flows into Top-Tier Chains Despite Commodity Debate

A growing trend in the cryptocurrency space suggests that Layer 1 blockspace may be more than just a commodity.

According to Bitwise CIO Matt Hougan, institutional capital is not evenly distributed across chains as one would expect if infrastructure were truly commoditized. Instead, a small number of top-tier chains, including Ethereum and Solana, continue to dominate in terms of mindshare, liquidity, and developer activity.

This phenomenon has led some to question whether the current low-fee environment is sustainable. Hougan notes that while excess capacity may currently be plentiful, it could quickly tighten if demand scales as tokenized assets and on-chain settlement grow into the trillions.

Hougan also defends prediction markets, which have been criticized for enabling insider trading and creating unfair advantages. He argues that these platforms provide a more level playing field by publicly pricing probabilities around major events, similar to Regulation Fair Disclosure (Reg FD).