The debate over the value of Layer-1 blockchains flared up this week. Alliance DAO co-founder Qiao Wang said most L1 tokens don’t have lasting strengths. Meanwhile, Dragonfly’s Haseeb Qureshi released a long essay arguing that smart-contract chains will hold long-term value.
Their exchange shows a divide between investors bullish on crypto’s growth and those who think the hype exceeds the fundamentals.
L1s Have “No Moat” and Are Becoming Commodities
Qiao Wang responded to Qureshi’s essay by explaining why he finds it hard to hold L1 tokens for the long run. His issue is not traditional valuation metrics but rather his belief that L1s lack strong “moats.”
Wang argues that users can easily switch between chains, developers can redeploy their apps without much trouble, and creating a new blockchain is now fairly simple. Because of this, he sees L1s as mostly interchangeable, not defensible platforms.
He compared this to something like Amazon Web Services, where high switching costs and deep integration create a strong moat that’s hard for competitors to copy. Blockchains, on the other hand, don’t have that kind of lock-in.
Wang’s takeaway is not that L1s are bad investments, just that they’re “7/10s” in a market that has “9/10s”. He wouldn’t short them, but he doesn’t see them as top long-term picks.
He believes the best way for chains to build a real moat is to “verticalize” — to own both the blockchain and the application layer. Solana, Base, Hyperliquid, and newer corporate chains like Tempo are, in his view, already heading in that direction.
“Crypto Is an Exponential, Not a Linear Market”
Notably, Qureshi’s post highlighted a growing split in how people think about L1 blockchains. In his essay, “In Defense of Exponentials,” he argued that the market has become cynical about L1 valuations at the exact moment it should be thinking long-term.
He said Crypto Twitter has moved from financial nihilism (“none of this is worth anything”) to financial cynicism (“everything is massively overvalued”), especially when it comes to new chains like Monad, MegaETH, Hyperliquid L1, and Tempo. He noted that the pushback against new L1s is stronger than ever.
Qureshi argued that this attitude ignores the bigger picture: general-purpose blockchains tend to grow exponentially, much like early e-commerce. He compared today’s doubts about ETH and SOL to the skepticism Amazon faced for years before proving itself.
He said that using valuation metrics like P/E ratios shows a lack of imagination. L1 revenue looks small today only because the space is still early and volatile. If crypto rails eventually handle even a small share of global capital flows, sheer scale would justify large valuations.
One Market: Quality vs. Exponential
Even though Wang and Qureshi disagreed, they were really highlighting two sides of the same issue. Wang looks at things from an investor-first perspective: he wants tokens with strong moats, clear value capture, and stable long-term economics. From that angle, many L1s seem crowded, fragile, and easy to disrupt.
Meanwhile, Qureshi looks at the system as a whole: crypto is still early, and L1s are the foundation of a global financial shift. Short-term weakness doesn’t change their long-term potential.
Related: Google to Launch Its Own Layer 1 Blockchain for Payments; Takes Aim At Ripple, Stripe, and Circle
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