The fat protocol thesis proposes that base layer protocols like Ethereum would capture more value than the applications built on top of them. Originally, this thesis appeared valid, with Ethereum's market cap (~$20B) exceeding ERC-20 tokens (~$10B) in 2018. This relationship has now reversed, with ERC-20 tokens collectively worth more than ETH itself. This shift suggests a maturing ecosystem where value is increasingly captured at the application layer rather than the protocol layer.

This reversal raises questions about Ethereum's long-term value proposition. While some interpret this as undermining the fat protocol thesis, others might view it as demonstrating Ethereum's success in creating a thriving ecosystem. Rather than invalidating Ethereum's value, this development may represent a natural evolution of blockchain ecosystems where application-layer growth eventually outpaces but remains dependent on the underlying protocol.

seems like a naive thought

then what? Microsoft should be as valueable as the entire economy because everything is built on Windows?

What if enabling an ecosystem of unstoppable, censorship resistant, programmable networks is more valuable to the world then its underlying token price?