ARK Invest Digital Asset Research Director Lorenzo Valente: Public Chain Business Models Like Three Fast Food Chains
ARK Invest Digital Asset Research Director Lorenzo Valente compared Ethereum, Solana, and Hyperliquid to McDonald's, Chipotle, and In-N-Out, respectively, stating that the three are not different versions of the same business but capture completely different business models.
He described Ethereum as a franchise plus landlord: expanding with zero capital through the Rollup roadmap but not charging enough settlement rent to Layer 2; after EIP-4844, blob fees approach marginal costs, meaning Layer 1 has hardly recaptured value from Layer 2 activities, akin to building the most successful franchise system but forgetting to send the bill. Solana is like a fully-owned operation: transactions are executed on Layer 1, with base fees, priority fees, and Jito tips remaining within the system, using inflation to pay for security, vertically integrated and bearing single points of failure. Hyperliquid resembles a private family store: less external capital, a single core product, with many fees going into a support fund to repurchase HYPE; HIP-3 allows others to deploy markets while the platform retains control and about half of the fee sharing. He noted that the market will price models with clear execution, and the most fatal flaw is ambiguity.
The analogy serves as an analytical framework, not a financial report breakdown. Blob pricing and Layer 2 policies can still change. Direct operation and repurchase each sacrifice scalability or decentralization. The support fund buying coins is not traditional dividends.
A clear model reduces narrative discounting. The vague "wanting both ecology and rent" will be punished from both sides.
In market mechanisms, buyers are institutions and token holders valuing based on capture structure, while sellers are the block space and fee rights on the three chains. The driving force is the research report framework, belonging to the pricing narrative. Funds switch between assets with "clear rent rights" and those with the "largest expansion story." Beneficiaries are tokens with short fee retention paths, while pressured assets are those with large ecosystems and thin Layer 1 settlement bills.
Source: Public Information
ABAB AI Insight
Lorenzo Valente rewrote L1 valuation from "who is more decentralized" to "who will send the bill." The key point of the McDonald's model is that franchisees increase traffic, and landlords must collect rent; Ethereum has succeeded in franchising, but rent is close to zero after 4844. Chipotle keeps all counters in its own store, with fees and MEV not leaking out, thus concentrating failures. In-N-Out does not open franchises, using buybacks to return profits to equity, while HIP-3 is limited counter leasing with a 50-50 revenue split. ARK teaches the investment committee using fast food companies: do not apply the same price-to-sales ratio to three types of stores. Ambiguity is marked as the largest discount factor because the investment committee cannot fit assets into existing industry templates.
The capital path is fee rights. Ethereum outsources expansion to Layer 2 equity, Solana spreads security costs through inflation, and Hyperliquid converts fees into token buybacks. The motivation is to provide institutions with a comparison table; the strategy is to let "capture" replace "ecological television." If Layer 2 starts paying higher rents to Layer 1, the analogy will be rewritten. Until then, the story is unfavorable for ETH and favorable for fee-retaining chains.
The analogies are like Visa charging merchants, Apple taking a cut from the app store, and the difficulty of capitalizing open-source foundational layers. The three fast food chains correspond to three capital market preferences: scale, control, buyback. The phase is shifting from public chain belief to business model auditing.
This is a transfer of pricing power. The denominator of valuation shifts from total locked value to predictable fees. The mechanism is: assets that can fit into existing dining or franchise models gain higher institutional positions; those that cannot continue to be priced according to thematic funds. Infrastructure with unclear bills will be treated as public goods rather than companies.
ABAB News · Law of Cognition
- The person who opens the most franchises may also be the one who collects the least rent.
- Where fees are retained, valuations should be applied at that layer.
- The market punishes ambiguity because the investment committee lacks a template for "wanting both ecology and rent."