Bitwise CIO: Layer 1s Not Commoditized, Prediction Markets Level Field

Bitwise CIO Matt Hougan rejects the idea that Layer 1 blockspace has become a commodity, noting institutional capital and development remain clustered on a very small number of chains such as Ethereum and Solana. If infrastructure were truly commoditized, he argues, capital and building would be spread more evenly; instead, there is “basically, zero interest in building on the twentieth largest L1.” He says networks like Ethereum and Solana still dominate mindshare, liquidity and developer activity even as newer Layer 1s compete on fees and throughput.

The current low-fee environment, Hougan suggests, reflects top-tier L1s having built more bandwidth than the market uses now, leaving fees rock-bottom — but that balance could change as stablecoins, tokenization and DeFi scale into the trillions. On prediction markets, Hougan counters insider-trading worries, calling them “basically backwards.” He frames prediction markets as a markets-based extension of Reg FD that publicly prices probabilities and creates a more even playing field.

layer 1, blockspace, institutional capital, ethereum, solana, fees, throughput, stablecoins, tokenization, prediction markets