If you asked me this question a year ago I would say, without a question, DEXs. My reasoning was simple — switching costs are much higher across DEXs. If I switch from Uniswap to some longer-tail DEX, I am guaranteed to experience more slippage and worse net execution.
Conversely, I will get the same execution on 0x versus some other long-tail front-end. Both front-ends are just different lenses through which the same DEXs are viewed on the back-end.
Therefore, given their liquidity network effects, DEXs have historically been valued at a premium relative to front-ends. And intuitively, this makes sense. DEXs are a much more defensible business model at scale.
However, this may be changing.
Jupiter – Solana’s leading DEX aggregator – is now valued at 8.7 times Raydium, despite capturing a fraction of the value.
In A New Framework For Understanding Moats In Crypto Markets, I laid out the bull case for why front-ends are positioned to increasingly capturing value. The front-end thesis can be decomposed to three sub-theses:
(1) – Liquidity is more of a commodity than you think: While liquidity is “unforkable” by nature, it is no
