The biggest misunderstanding in crypto investing is how blockchain protocols actually work. Most people throw money into tokens based on market cap rankings, influencer hype, or cool-sounding tech—without asking the most critical question:

“Will this protocol actually get adopted?”

Most of them won’t.

We’ve already seen dozens of hyped-up Layer 1s fade into irrelevance (remember EOS? IOTA? NEO?). They had massive valuations at their peak—and they may see a comeback—yet they failed because they didn’t attract developers, dApps, or real users.

This is the phase of the cycle where fundamentals start to matter. 

If you don’t understand the real drivers of protocol dominance, you’re just gambling. The next wave of crypto winners will be determined by utility, not speculation.

But here’s the real twist: The “killer dApps” that will define Web3 haven’t even emerged yet.

Protocols vs. Platforms: The #1 Rookie Analyst Mistake

Most investors treat blockchain protocols like Web2 platforms—but that’s a huge mistake.

  • Protocols are infrastructure. They provide the rules for how decentralized applications (dApps) function—like HTTP does for websites or TCP/IP does for the internet.
  • Platforms are built on top of protocols. Facebook, Amazon, and Google are platforms. They capture users and revenue directly—protocols don’t.
  • Protocols don’t win by hype—they win by adoption. The ones that attract developers, and dApps that attract users become the standard. The rest die.

For crypto protocols, the question isn’t “How cool is the technology?”—it’s “Which one is getting actual traction?”

And the answer?

Watch where the dApps are being built.

The First Wave: Market Cap ≠ Utility

In the early days, protocols were valued purely on speculation.

  • Bitcoin (BTC) became the digital gold standard because it was first.
  • Ethereum (ETH) pioneered smart contracts, but was still highly speculative in its early years.
  • Other Layer 1s like EOS, Cardano, and NEO were valued in the billions before they had real adoption.

Most investors in these early protocols weren’t buying fundamental value—they were buying hype.

But now that crypto is maturing, the real value drivers are shifting.

The Next Wave: The Utility-Driven Era

Now, the real question for protocols is:

“Which blockchain is actually attracting the best dApps, developers, and liquidity?”

The next Ethereum killer won’t win purely because it’s faster or cheaper. It will win if it becomes the default standard for building decentralized applications.

Just like how HTTP won over Gopher because it powered more useful applications, the winning crypto protocol(s) will be determined by which one gets the best dApps.

The problem?

The real “killer dApps” of Web3 haven’t arrived yet.

In Web2, the internet wasn’t truly revolutionary until we got Facebook, Amazon, Apple, Netflix, and Google (FAANG).

Right now, crypto is still in its pre-FAANG phase. We have DeFi, NFTs, and GameFi—but these are rails on which the next (first?) killer dApps will be built.

So the biggest opportunity isn’t just in picking the right protocols—it’s in tracking the dApps that will eventually become the Google or Amazon of Web3.

Leading Indicator: dApp Adoption & Developer Migration

If you want to predict which protocol will dominate, stop looking at market caps and start watching:

✅ Where the best developers are building (GitHub repos, hackathons, VC funding).
✅ Where liquidity is flowing (Total Value Locked in DeFi).
✅ Which dApps are seeing real user growth (active wallets, smart contract interactions).
✅ Whether dApps are migrating from one chain to another (signaling shifting dominance).

If a protocol can’t attract dApps, it doesn’t matter—no matter how hyped it is.

The Old Guard vs. The Next Generation

Here’s a breakdown of protocols that are actually seeing dApp adoption today—and the next-gen challengers trying to replace them.

🔥 The Established Players (Old Guard)

These protocols already have dApp traction but face scalability, cost, and decentralization challenges.

  1. Ethereum (ETH) – The Smart Contract King
    • Notable dApps: Uniswap (DEX), OpenSea (NFTs), Aave (DeFi lending).
    • Threats: High gas fees, slower transactions, competition from newer chains.
  2. Binance Smart Chain (BSC) – The Centralized Ethereum Alternative
    • Notable dApps: PancakeSwap (DEX), Venus (lending).
    • Threats: Centralization concerns, fewer high-end DeFi projects.
  3. Solana (SOL) – High-Speed DeFi & NFTs
    • Notable dApps: Serum (DEX), Magic Eden (NFTs), Star Atlas (GameFi).
    • Threats: Network outages, concerns about decentralization.
  4. Avalanche (AVAX) – The Ethereum Competitor with Subnets
    • Notable dApps: Trader Joe (DEX), Benqi (lending).
    • Threats: Still struggles to attract top-tier projects.
  5. Polygon (MATIC) – Ethereum’s Scaling Solution
    • Notable dApps: QuickSwap (DEX), The Sandbox (Metaverse).
    • Threats: Competing Layer 2 solutions like Arbitrum & Optimism.

🚀 The Emerging Disruptors (Next-Gen Protocols)

These microcaps are technologically superior and are starting to gain real dApp adoption.

  1. Injective Protocol (INJ) – The DeFi Disruptor
    • Why It’s Interesting: A decentralized, cross-chain derivatives exchange protocol.
    • Notable dApps: Helix (DEX), Astroport (AMM).
  2. Radix (XRD) – The Ethereum Alternative with Better Smart Contracts
    • Why It’s Interesting: Uses Scrypto, a safer language for smart contracts.
    • Notable dApps: Radix DeFi ecosystem is growing.
  3. Velas (VLX) – Faster Than Solana?
    • Why It’s Interesting: Claims to be the fastest blockchain with 75,000 TPS.
    • Notable dApps: WagyuSwap (DEX), BitOrbit (social dApp).
  4. Aleph Zero (AZERO) – Privacy + Speed
    • Why It’s Interesting: Combines scalability with private smart contracts.
    • Notable dApps: Liminal (private DeFi layer).
  5. Secret Network (SCRT) – The Privacy-Focused Ethereum Alternative
  • Why It’s Interesting: First blockchain with private smart contracts.
  • Notable dApps: Sienna Network (DeFi), SecretSwap (DEX).

A Broader View: The AI & LLM Parallels

This same logic applies beyond crypto into other areas of web3 and the spatial web—especially to AI and large language models (LLMs).

  • Just like crypto protocols, AI infrastructure layers (LLMs, foundational models, etc.) are currently being valued purely on hype and speculation.
  • But the real action will be in the AI-powered applications—the dApps of AI—built on top of these foundational models.
  • Eventually, one or two AI models will become the dominant infrastructure, but the most value will be created at the application layer.

This means that just like in crypto, the key to long-term AI investing is not just picking the best LLM—but tracking which AI applications are getting real adoption.

The Final Play: How to Stay Ahead

The game has changed. It’s no longer just about which blockchain has the best narrative or highest market cap. That’s a major part for sure, but more and more it will become about which protocol can attract the best applications, developers, and liquidity.

Want to predict the future of crypto? Stop watching the price charts and start tracking the dApps.

  • Protocols are infrastructure—they only matter if people use them.
  • dApps are the real drivers of adoption—they determine which protocol wins.
  • Market cap rankings are misleading—focus on real utility metrics.

The Takeaway: Web3 Is Waiting for Its FAANG Moment

The next phase of crypto investing isn’t about throwing money at random Layer 1s. Most protocols will fail—only those with real dApp adoption will survive. The real money will be made on the killer dApps of Web3—the ones that haven’t even launched yet.

If you want to pick the winner, don’t just follow the hype.

Follow the builders. Follow the dApps.

Because protocols are the ignored layer in the technology value chain for retail investors. Applications are the darling of the show.And THAT is what will drive the next wave of moonshot projects. 🚀

MichaelHeadshot
Michael Hearne

I’m a serial entrepreneur, and I’ve spent the last 15 years taking companies to new levels, breaking the boundaries of innovation, and triumphing over adversity. My wife, Victoria, and I started our first business in a 2-bed/1-bath apartment with 4 kids, next to a crackhouse. We pushed through setbacks and failures to lift our family out of poverty. Along the way, I’ve learned that my struggles make me stronger. And that being the best version of me is the greatest contribution I can give to the world. It makes me a better husband, and father. It improves my health, energy, and my capacity to serve others. And it has allowed me to build businesses that make the world a better place. Today, I work for passion, to make a difference, and solve real problems in the real world through my business ventures. This little site is where I share the things I’ve learned, and am still learning, on my journey.