What L1 is more valuable?

Lorenzo Valente, a digital asset researcher at ARK Invest, compared Ethereum with Solana (a cryptocurrency) and Hyperliquid (a blockchain), comparing them to three U.S. restaurants on September 3, arguing their differing operating structures required separate valuation frameworks.

It is a good idea to get in touch. essayValente compared Ethereum with McDonald’s and Solana, to Chipotle, while Hyperliquid was compared to In-N Out. Comparing each blockchain’s expansion, control of its infrastructure, revenue and native asset is the goal.

Valente claimed that Ethereum functions like a network of franchises because independent layer-2 teams develop their systems, but rely on Ethereum settlement. Solana shares many similarities with a corporate chain, as all the applications run in a single integrated environment. Hyperliquid is a concentrated trading platform, with a consensus system that allows for fee-funded purchases and a focused structure.

Valente’s framework for analysis is the comparison of restaurants. The comparisons are not ARK’s investment recommendations, or classifications that objectively classify the networks.

Ethereum resembles an exclusive franchise with a fixed rent

Ethereum’s roadmap for scaling allows layer-2 networks like Arbitrum, Base or OP Mainnet (which are layer-two) to handle transactions independently of its main execution layer. These networks submit proofs or data to Ethereum periodically to be able to use its settlement and security infrastructure.

Valente likened this model to McDonald’s franchise system. Ethereum is the platform, which includes standards, a developer ecosystem, and a settlement layer. Layer 2 networks are operated and funded by independent teams, much like franchise restaurants.

This allows Ethereum to grow without needing to fund every new network. Teams can work independently to create specialized products and technologies, gain users’ attention, or experiment with other technologies.

Valente, however, argued that Ethereum captured too little of economic activity generated in those networks. The Layer 2 operators charge users transaction fees, but Ethereum pays them primarily to provide data and settle settlement.

EIP-4844 will introduce a separate space in March 2024 for rollup data. By reducing the costs of layer 2 data submission to Ethereum and lowering transaction fees, blobs have made transactions more affordable for users. The fees paid by rollups to the main Ethereum network were also reduced when the blob capacity was greater than the demand.

Valente described it as Ethereum creating a network of franchises but not collecting enough rent. According to him, Ethereum has a valuable settlement infrastructure that is priced too near its cost of operation.

Analogy has its limits. Ethereum does not enter into commercial franchise agreements. Also, it cannot charge them royalties or control their products. It can’t stop them using alternate data-availability services. To raise the minimum fee, any proposal would need to be reviewed and approved by Ethereum’s governance system.

Ethereum developers have taken into consideration changes to the blob price as demand and capacities change. The higher floor fee could lead to more payments being made to Ethereum. However, it may also result in increased layer 2 transaction fees or even encourage operators to switch to competing systems.

Solana keeps more activities within one environment

Valente made the comparison between Solana and Chipotle as both companies follow what Valente called a vertically-integrated model. Solana handles application activities directly via its base network, instead of relying on external rollups as the primary route to scaling.

Jupiter trades, stablecoin transactions, and token launches all share the same environment of execution. Users will pay base and Priority fees. While validators receive an additional benefit through Jito tips and order transactions, users may also be charged for the transaction.

The Solana Network is able to keep more fees within its network with this structure. The base fee goes to the validators, their delegations and compensation. This is because the relationship between value capture and network use is more direct when it occurs at a layer 2 independent.

Valente said that Chipotle operates and owns its restaurants. It is important that the company retains its store revenues and controls customer experiences, but also finances expansions and takes on operational failures.

Solana also faces similar choices. The unified architecture of Solana allows for direct control over the execution, fees markets, and performance improvements. This means that congestion or disruptions in the network can also affect all applications simultaneously.

Firedancer is one of the additional clients that have been purchased by the network to increase performance. Solana’s Firedancer and Alpenglow upgrades could strengthen performance and validator diversityAlthough their full effect depends on deployment and user adoption.

Valente claimed that Solana’s integrated model provides better fee retention than Ethereum’s rollup structure. The assessment will depend on what revenues and costs you include. Validator rewards include tokens whereas application fees are not distributed equally.

Hyperliquid has the shortest possible fee capture chain

Hyperliquid has been compared with In-N-Out due to its product focus, infrastructure within the company and reliance on external capital. Its initial product focused on trading perpetual futures through an order book onchain.

HyperCore, the trading platform, operates through HyperCore. The platform has built and developed its own consensus algorithm, HyperBFT. Later, HyperEVM was added for smart contracts in general. However, derivatives are still a significant source of revenue and activity.

Valente said that Hyperliquid is the network with the fastest value capture path of the three. Trading fees go into the protocol and most of the eligible income is used to buy HYPE.

Model is not the same as a traditional corporate share buyback. The HYPE token is not equity and does NOT grant legal rights similar to owning stock in a company. Purchases of Assistance Funds can create market demand if trading generates enough fees.

Hyperliquid’s Assistance Fund directs most protocol trading fees into HYPE purchases. Crypto.news published in May the fact that, according to protocol and market statistics available at the time, the fund spent over $1.3 billion since it began.

Latest News research Hyperliquid, Pump.fun and other crypto tokens accounted for 90% of all tracked repurchases in 2026. The figures reflect purchases over the time period studied and are not a guarantee for future demand.

Hyperliquid also has expanded its infrastructure through HIP-3. It allows builders approved by Hyperliquid to create perpetual markets and use the underlying infrastructure. Official documentation According to the report, deployers of HIP-3 and spot assets can keep up to 50 percent of all fees generated.

Valente likened the situation to a restaurant that allows outside contractors to sell products, without sacrificing its customer relationships or infrastructure.

Different models produce different concentration risks

Distribution is Ethereum’s biggest advantage in Valente framework. The independent layer 2 teams can provide access to larger companies, external capital and engineering capabilities. Costs include a weaker level of control over the users, revenue generated by execution and behavior in those networks.

Solana maintains more activity within one system. The network can be used to improve the fee collection and coordination of products, but it must also support a wider technical surface area and take on system-wide risks.

Hyperliquid provides the best direct link between revenue from product sales and purchases of tokens. This model also poses the biggest concentration risk because revenue, activity and leadership are all closely tied to a single trading ecosystem.

Valente cautioned that the builders who control a significant share of HIP-3 trades could seek to improve their fee structure. A prolonged drop in derivatives activities may cause revenue to fall.

It is not possible to determine the token that will perform better. The valuations are also influenced by issuance, liquidity and governance. They depend on competition, regulations, demand, and regulation for products on the networks.

Valente’s article did not directly cause any market movement. ETH, SOL, and HYPE are traded continuously, and they respond to macroeconomic and crypto-prices, as well as leverage and protocol activity.

What comes next

Ethereum’s value capture debate will partly focus on pricing and blob supply. The developer can alter the parameters for capacity or fees, but this requires testing by community members. The higher settlement revenue must be balanced with affordable layer 2 transaction.

Solana’s model is being tested through network upgrades, client-validator diversity and the ability to handle higher levels of activity without experiencing congestion. Its fee structure could be affected by the expansion of consumer and institutional applications.

HIP-3 will demonstrate to Hyperliquid whether it can grow beyond the internal markets that have been developed while maintaining its share of revenue. The trading volumes and purchases of Assistance Funds will continue to be important indicators for the durability of this model.

Valente’s main argument is investors shouldn’t value each layer 1 network with identical metrics. Ethereum emphasizes expansion of the ecosystem externally, Solana emphasizes unification execution and Hyperliquid stresses direct revenue. He said that each model has the potential to succeed but also has a unique path of failure.

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