Bitwise CIO Challenges Commoditization Narrative in Crypto Market

According to Bitwise CIO Matt Hougan, the concept of Layer 1 blockspace commoditization is being oversimplified. In an effort to understand the current landscape, he examined the behavior of institutional capital in the crypto market.

Hougan found that a significant portion of institutional building and development is focused on top-tier chains like Ethereum and Solana. This concentration of activity suggests that these networks are still highly sought after, despite claims that Layer 1 blockspace has become a commodity.

He attributes the current low-fee environment to excess capacity in top-tier L1s, which could potentially change as demand scales with the growth of tokenized assets and on-chain settlement. This shift could have significant implications for the economics of leading networks.