Let’s talk about something you couldn’t have missed in the crypto world – SUI’s meteoric rise to a $50B fully diluted valuation. But something more interesting to answer is: where’s all that money flowing? As someone who’s been tracking L1 ecosystems for a while, I’ve noticed a pattern of how capital flows in L1 and L2 ecosystems.

Classic L1 Wealth Effect

You’ve probably seen this before – when an L1 chain takes off, the ecosystem usually follows a pretty predictable pattern. Think of it like this:

• L1 tokens increase in value → Users holding these tokens see profits.

• As those profits grow, there’s a strong tendency for users to reinvest portion of the gains in other ecosystem assets (e.g., utility tokens, memes, NFTs).

• We’re talking about token launches with tens of millions in market cap in hour one, NFTs selling for small fortunes, and everyone going f