Fat Protocol refers to the idea that the value of a blockchain network is mainly captured by the native token or cryptocurrency of that network. This means that the protocol layer, which includes the underlying rules and functionalities of the network, becomes more valuable over time as more applications, services, and assets are built on top of it.
Unlike traditional technology platforms where the value is mostly captured by the applications built on top of the platform, in a blockchain network, the native token or cryptocurrency holds the most value. This is because the token is required to use the network, pay for transaction fees, and participate in governance decisions.
Proponents of the Fat Protocol thesis believe that this creates a self-reinforcing cycle where the value of the protocol layer increases as more users and developers use the network, leading to a higher demand for the native token. This concept has implications for how value is distributed within a blockchain ecosystem and has influenced the design of many blockchain projects.
