Alliance DAO Co-creation: Using the transaction fee/revenue ratio to assess the L1 moat, the Application Layer may be more worthy of betting.

[Coin World] QwQiao, the co-founder of Alliance DAO, recently shared an interesting observation angle—whether L1 projects have a moat can actually be monitored through a hard metric: the ratio of transaction fees to revenue.

His logic is as follows: if a project truly has barriers and happens to be in a growing sector, then the income should logically continue to grow. But what if there are no moats? Either the market share is eroded, or it has to rely on price wars to hold on, and the end result is the same—transaction fees either drop or simply stagnate.

However, QwQiao also added: not having a moat does not mean there is no value. Some projects may give profits to users, keeping little for themselves. This kind of gameplay is not impossible, but the investment logic must be explained differently.

He had mentioned before that he felt the L1 track is essentially too easy to be “commoditized” — everyone is quite similar, making it hard to capture value in the long term. So now he is more optimistic about the application layer, believing that there is stronger certainty there. It is said that the projects he holds must meet two criteria: have long-term competitiveness and be in areas of exponential growth.

This idea is actually quite practical – instead of looking at superficial hype, we should see if it can continuously make money. After all, in this industry, no matter how good the story sounds, it has to translate into income.