in "The Fat Protocol" concept: Joel Monegro (USV) , highlights the difference between protocol ( infrastructure ) tokens and application layer tokens. His argument is that value will accrue to the protocol layer tokens rather than the application layer tokens.

https://www.usv.com/blog/fat-protocols

This is the opposite of applications on the Web that extract rent by centralising and monetizing data ( viz: Google, FB etc) . But are built protocol like HTTP and TCP/IP that have never been easily monetized.

The Blockchain ( Ethereum ) provides a de-centralised, data layer and protocols built on the BC will provide a useful set of infrastructure components that can be used further up the stack by applications. This protocol infrastructure that is being built on Ethereum.

The token model provides initial capital to build the protocol and future monetization through taken appreciation based on usage demand and speculation.

So for the first time, - monetary value can accrue to the protocol layer. At the expense of application tokens.

So the obvious conclusion is to invest in protocol tokens rather than application tokens.

However, underlying the whole stack is Ethereum.

So the question is: Will the value of ETH tokens exceed the combined market cap value of the protocol tokens and application tokens?

Anyone have a view on this?

Here is Joel Monegro's take

"What’s significant about this dynamic is the effect it has on how value is distributed along the stack: the market cap of the protocol always grows faster than the combined value of the applications built on top, since the success of the application layer drives further speculation at the protocol layer. And again, increasing value at the protocol layer attracts and incentivises competition at the application layer. Together with a shared data layer, which dramatically lowers the barriers to entry, the end result is a vibrant and competitive ecosystem of applications and the bulk value distributed to a widespread pool of shareholders. This is how tokenized protocols become “fat” and its applications “thin”.

This is a big shift. The combination of shared open data with an incentive system that prevents “winner-take-all” markets changes the game at the application layer and creates an entire new category of companies with fundamentally different business models at the protocol layer. Many of the established rules about building businesses and investing in innovation don't apply to this new model and today we probably have more questions than answers."