I’ve been thinking a lot about something that doesn’t get enough attention in the current alt-L1 mania — and it’s pretty fundamental.
Everyone’s piling into Solana, Cardano, and a dozen other layer-1 tokens right now. The price action has been incredible. ADA’s been on a tear, SOL has had an absolutely monster run, and the excitement is real. But here’s the thing that’s been bugging me — and I think it’s worth actually working through the logic on this one.
What Do These Tokens Actually Do?
Strip away the speculation for a minute and ask a basic question: what is the function of SOL or ADA or MATIC?
The answer is pretty simple. They pay transaction fees on their respective networks. That’s it. That’s what they’re FOR. When you use the Solana network to transfer value, you pay a tiny amount of SOL as a gas fee. Same with ADA on Cardano. Same with MATIC on Polygon.
And here’s where it gets interesting — the whole VALUE PROPOSITION of these networks is that transactions are extremely cheap. Solana’s pitch is basically “we’re faster and cheaper than Ethereum.” Cardano’s pitch involves similar efficiency claims. These networks are competing on low cost.
So you’ve got tokens whose primary utility is paying for very cheap transactions. And the market is.. bidding them up to astronomical prices.
Does anyone else see the contradiction here?
The MATIC Lesson
I think MATIC is actually the most instructive example right now. Polygon had a massive price run-up earlier this year. People were buying MATIC hand over fist. Then something interesting happened — the people who were actually USING the Polygon network realised that owning even five MATIC was enough to cover every transaction they’d ever need to make in their entire lives.
Read that again. Five tokens. A lifetime of transactions.
Once that reality set in, the speculative premium started to deflate. Because the actual demand for the token — the utility demand — is tiny. You just don’t need very much of it.
The Currency Confusion
I think part of what’s happening is a category error. People are treating these layer-1 tokens like they’re currencies — like they’re the thing you’ll spend at a restaurant or use to buy goods. But that’s not how this is going to work.
Here’s how I see it playing out: you’ll pay for your meal with USDT or USDC or whatever stablecoin wins the payments race. But you’ll process that payment over the Solana network instead of Visa. The network is the infrastructure. SOL is the grease that keeps the infrastructure running. You won’t be PAYING in SOL — you’ll be paying a fraction of a cent in SOL to facilitate a transaction denominated in something else.
That’s a massive difference from an investment thesis perspective.
When you buy BTC, you’re buying something with a fixed supply that’s positioned as a store of value — digital gold, whatever you want to call it. When you buy SOL, you’re buying.. transaction fee credits on a specific network. Credits that are supposed to be worth fractions of a penny per use.
So Is It All Speculation?
Look, I’m not saying these tokens can’t go up. They clearly CAN — they have been. Markets can stay irrational, and there’s a legitimate argument that we’re in the emerging-market phase of crypto where big players are operating in small, illiquid markets. That creates massive price moves in both directions.
And there IS a hybrid thesis for some of these. SOL in particular has developed this odd position where it’s part infrastructure bet, part store-of-value play. The burning mechanism means supply decreases over time, which gives it a slightly different dynamic.
But I keep coming back to the fundamental question: can you imagine wanting to use a network to pay for a video game or settle a restaurant bill when the cost of transferring value is MORE than the cost of the meal itself? If the whole point is cheap transactions, bidding the transaction token up to hundreds of dollars is kind of.. working against the thesis.
What I’m Actually Watching
ETH is in a different position here because it has ten times the market cap and a much more established ecosystem. The gas fee problem on Ethereum is REAL and well-documented, but at least the market is deep and liquid enough to absorb speculation without completely breaking the utility argument.
For the smaller L1s, I think the key question is this: what’s the sustainable demand for a token whose utility requires only a tiny amount per user? Speculative demand can carry prices for a while — maybe a long while. But at some point, the market has to reckon with the fact that a token designed to be cheap to use probably shouldn’t cost a fortune to acquire.
I’m not telling anyone to sell. But if you’re buying ADA at these prices or chasing SOL after its run, it’s worth asking yourself — am I buying this because I think the network will be widely used, or because I think someone else will pay more for it later? Those are very different bets, and only one of them needs the token price to keep going up.
The networks might be the future. The tokens might just be gas.
