QwQiao Critiques Layer 1 Tokens, Highlights Application Layer Potential

On November 29th, QwQiao, Alliance DAO co-founder, declared on X that he won’t short L1 tokens, but questioned their investment potential due to commoditization issues.

His remarks underscore a strategic pivot towards the application layer, highlighting its potential for stronger growth and competitive advantages within the evolving crypto landscape.

QwQiao Shifts Focus to High-Growth Potential Applications

QwQiao’s public evaluation draws from prior concerns over L1 token market values. Despite declining to short these assets, he emphasizes the lack of a competitive “moat,” citing ease of commoditization. He suggests looking toward application layers as a potential area for value capture. Application projects like Solana (track price movements for Solana cryptocurrency) and Base are noted for their vertical development focus.

This analysis encourages investors to consider assets like Hyperliquid and Tempo. By emphasizing application competitiveness, QwQiao aligns with broader industry trends. Market sentiment reflects investor wariness toward L1 commoditization, looking instead to growth prospects at higher layers. QwQiao’s statements echo industry-wide shifts toward app-driven ecosystem investments.

I will not short L1 tokens, but I cannot convince myself that they are great investments… L1 tokens lack a moat, are easily commoditized, and it is difficult to capture meaningful value… betting on the application layer is the best way to express this view. – QwQiao, Co-founder, Alliance DAO

Historical Context, Price Data, and Expert Analysis

Did you know? Historically, the tech sector has seen value shift from infrastructure to application layers, mirroring current cryptocurrency trends toward Layer 2 ecosystems.

Ethereum (ETH) trades at $2,986.06 with a market cap of $360.40 billion, dominating 11.68% of the market, notes CoinMarketCap. The last 24 hours saw a 1.40% price decline, amidst a weekly 8.20% rise. Trading volume decreased 37.95% over this period. Data reflects ongoing market volatility.

Analysts from Coincu suggest a focus on competitive application layers may mitigate risks linked to L1 commoditization. The shift potentially realigns market strategies towards vertical ecosystem value. Industry stakeholders are urged to observe this transition closely for strategic positioning.