Matt Hougan, chief investment officer at Bitwise Asset Management, is pushing back on one of crypto’s most accepted assumptions: that base-layer blockspace is a commodity.
He thinks today’s low fees reflect excess supply, not a permanent structural reality and that if stablecoins, tokenization and DeFi scale into the trillions, the chains that survive could look less like utilities and more like oligopolies.
“There’s an increasing view in crypto that L1 blockspace is a commodity. I wonder if that’s wrong,” — Matt Hougan, CIO, Bitwise Asset Management.
For crypto investors and institutional allocators, the debate over L1 blockspace cuts to the heart of long-term valuation models for major networks.
L1 blockspace and institutional concentration
Despite dozens of layer-one networks competing for relevance, institutional development remains concentrated on a handful of chains.
Hougan pushed back against the idea that base-layer infrastructure is interchangeable.
“Infrastructure will be commoditized if it’s a commodity. But that’s not actually the behavior we’re seeing with Layer 1s right now. Instead, we’re seeing the vast majority of institutional building taking place on very few chains (Ethereum, Solana, etc.) with basically zero interest in building on the twentieth largest L1,” — Matt Hougan, CIO, Bitwise Asset Management.
By most independent measures, Ethereum controls roughly 60% to 70% of non-stablecoin real-world asset (RWA) tokenization, including tokenized U.S. Treasuries and private credit.
Solana and BNB Chain hold smaller but meaningful shares, while smaller networks capture minimal institutional flows.
This clustering effect suggests that L1 blockspace demand is not evenly distributed.
Liquidity, security track records, developer tooling and regulatory familiarity continue to reinforce network effects on leading chains.
For investors, that dynamic complicates the assumption that L1 blockspace is structurally abundant and interchangeable.
Why L1 blockspace remains cheap today
Transaction costs across major chains remain relatively low. Ethereum base-layer fees frequently range from cents to around a dollar depending on network activity, while Solana and BNB Chain often process transactions for fractions of a cent.
Hougan suggested that this pricing environment may reflect overbuilt capacity rather than permanent commoditization of L1 blockspace.
“The real question is what happens when demand scales as stablecoins/tokenization/DeFi grow into the trillions. I’m not sure we know the answer yet,” — Matt Hougan, CIO, Bitwise Asset Management.
Major networks have expanded throughput significantly over the past several years.
Ethereum’s rollup-centric roadmap has pushed substantial activity onto layer-two networks, compressing transactions before settlement on the base chain. Solana has focused on increasing raw throughput and execution efficiency.
In economic terms, the supply of L1 blockspace currently exceeds demand. But that balance could shift if digital asset markets grow materially.
Stablecoins, DeFi and future demand for L1 blockspace
Stablecoins now represent hundreds of billions of dollars in market capitalization, while decentralized finance (DeFi) platforms collectively manage tens of billions in total value locked.
Tokenized RWAs including government securities and private funds are increasingly integrated into traditional financial infrastructure.
If stablecoins, tokenization and DeFi expand into the trillions over the coming decade, settlement volume, compliance tooling and on-chain financial activity could increase substantially.
Under that scenario, demand for L1 blockspace could rise faster than supply, potentially altering fee dynamics.
One camp argues that network effects could grant leading chains some degree of pricing power if congestion intensifies.
Developers build where liquidity resides, and institutions prioritize security and composability. In that environment, Ethereum and a small group of peers might retain structural advantages.
Another camp maintains that L1 blockspace is inherently forkable and competitive.
If fees increase significantly on one chain, applications can migrate or deploy alternative scaling solutions. Rollups and interoperability layers further reduce the risk of sustained base-layer scarcity.
Interoperability and the Chainlink factor
Some market participants argue that the L1 blockspace debate may ultimately be secondary to interoperability infrastructure.
In response to Hougan’s comments, one participant suggested that users may not care which base layer powers an application as much like consumers rarely consider which cloud provider supports a streaming platform.
Hougan acknowledged that possibility and highlighted Chainlink as a potential beneficiary in multiple scenarios.
“I think this is definitely possible. As mentioned, I’m not sure we know yet. FWIW, I think Chainlink wins in either world in the commoditized world with thousands of chains linked through CCIP or the world with an oligopoly of select L1s with some element of pricing power. It just wins in different ways,” — Matt Hougan, CIO, Bitwise Asset Management.
For crypto investors, the unresolved question remains whether L1 blockspace will behave like a commodity as adoption scales or whether concentration and network effects will create differentiated value among leading chains.
As stablecoins, RWAs and DeFi evolve, the pricing and scarcity dynamics of L1 blockspace could become one of the defining themes of the next market cycle.
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