Comparing ETH, SOL, and HYPE to Fast Food Chains: Ark Invest Analyzes L1 Business Models
Similarities Between L1 Blockchains and Fast Food
On the 2nd, Lorenzo Valente, the Director of Cryptocurrency Research at U.S. investment firm Ark Invest, published a lengthy analysis on X. He focused on the similarities between major Layer 1 (L1) blockchains—Ethereum, Solana, and Hyperliquid—and the fast food industry, pointing out that each has a fundamentally different business model. He argued that rather than comparing the three L1s as different forms of the same business model, they should be evaluated individually based on their business structures and methods of value acquisition.
Valente likened Ethereum (ETH) to McDonald's, Solana (SOL) to Chipotle, and Hyperliquid (HYPE) to In-N-Out. While they share the commonality of being popular fast food chains, their ownership structures, operational methods, and revenue models differ significantly.
Ethereum = McDonald's (Franchise + Landlord Model)
The source of McDonald's revenue is not the sale of hamburgers itself, but rather a business model that provides branding and operational systems (OS) while collecting royalties and rent (real estate income) from franchisees. Franchisees build and operate the stores, returning a percentage of sales to the headquarters.
Ethereum has a similar structure. It provides branding (trust and decentralization), OS (EVM and developer community), and real estate (block space and final settlement functions), while L2 operators like Arbitrum and Base build and operate their own infrastructure on top of it.
The strength of this model lies in Ethereum's ability to expand its ecosystem by leveraging external capital and teams without building all networks itself. In fact, through a roll-up-centric expansion strategy, Ethereum has formed a massive "franchise network" with numerous L2s.
However, Valente raises concerns that the "rent" Ethereum receives in return is extremely small. Particularly after EIP-4844, the fees for blobs used by L2s have dropped to levels close to marginal costs, making it difficult for L2 activities to translate into revenue for Ethereum.
"Even though it built the most successful franchise network, it forgot to charge rent," he said. Most of the value flows to L2s and their application layers (like Robinhood), creating challenges for protocol revenue return to L1.
Solana as a "Fully Owned Model"
Solana = Chipotle (Fully Owned Model)
Chipotle owns and operates all its stores, retaining 100% of the store sales margin. Its unit economics (profitability per transaction) are strong, allowing it to expand its business with its own funds, while also bearing all operational risks.
Solana's design is also close to this fully owned model. All transactions are processed on L1, and the economic value generated from base fees, priority fees, and MEV (Maximum Extractable Value) remains within the network. A portion of this is returned to validators and stakers, while some of the base fees are burned.
However, by completing all processing on a single layer, it faces the "single point of failure risk," which could lead to a complete system shutdown in case of an outage. Additionally, Solana's expansion speed heavily depends on its engineering capabilities and financial resources, as it needs to improve client performance and the network itself, such as through Firedancer.
Hyperliquid = In-N-Out (Private, Limited Focused Model)
In-N-Out does not accept external venture capital (VC) funding, refuses franchising, and maintains high brand strength and profit margins with a carefully selected menu and a limited number of stores.
Hyperliquid operates similarly, relying on a small elite team without VC funding and focusing on its core product, an on-chain order book for perpetual futures.
The majority of trading fees automatically flow into an assistance fund, continuously buying back HYPE tokens from the market, achieving direct value capture through a short route. While it attempts limited expansion with its unique standard "HIP-3," it maintains a design that retains control.
On the other hand, there are limitations in scalability compared to other L1s and risks associated with team concentration and specific killer applications.
The Essence of L1 Competition
Valente argues that it is not about "which L1 will win," but rather "which business model to choose and execute without ambiguity" that determines value. Just as McDonald's and Chipotle have succeeded with different strategies, not all L1s need to adopt the same business model.
However, as the history of the fast food industry shows, if strategic ambiguity arises in the business model, it risks undermining growth, profitability, and ultimately competitiveness. The key lies not just in the choice of model itself, but in clearly defining the adopted structure and setting prices (fees, etc.) commensurate with the value provided, and consistently executing it, Valente concluded.
This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.
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