The War of Aggregators in Decentralized Finance: Liquidity, Distribution, and Platform Competition

In November 2023, Blackstone Group acquired the pet care app Rover. Rover integrates decentralized pet care services into a searchable marketplace, becoming the default platform in the field. ZipRecruiter has done something similar in the recruitment space, becoming a one-stop distribution channel for job postings. These platforms "own the shelf," consolidating chaotic, decentralized supplies, controlling how they are displayed, and charging for access.

The Amazon flywheel is a classic interpretation of this concept: more choices lead to a better customer experience, attracting more traffic, which in turn attracts more sellers, reduces costs, offers lower prices, and ultimately brings more choices. This model, once it takes effect, can be considered perfect. However, it only holds true under two conditions: the aggregated content has value, and the suppliers find it difficult to exit easily.

In the cryptocurrency industry, liquidity has become the hardest moat to shake. Hyperliquid not only builds a deep order book for perpetual contract exchanges but also allows other applications to directly access its liquidity. Protocols like Aave have large-scale lending pools, making them the preferred choice for borrowers and lenders seeking scale and security. Jupiter has evolved from a routing tool to the default entry point for trading on the Solana network.

Aggregation can be divided into three levels: price discovery, execution, and distribution control. Jupiter has reached the distribution control level on Solana, with a large number of transactions being Jupiter transactions, even if users have never directly accessed its website. To continue growing, Jupiter has adopted a merger and acquisition strategy, acquiring projects that have already captured new user flows.

Two dominant models are emerging in DeFi: Jupiter and Hyperliquid. Jupiter focuses on distribution and aims to become the default interface; Hyperliquid offers liquidity as a service, allowing others to build the front-end experience. This is a showdown between distributors and providers, with one side believing that distribution is the moat, while the other firmly believes it's liquidity.

Applications are gradually revealing platform characteristics, having user relationships, embedding into daily habits, and strengthening their positions through acquisitions or integrations with other applications. We are witnessing a real platform war unfolding between applications, rather than between public chains. This raises a bigger question: if Layer 2 does not control distribution, where will the value flow when the applications on it take control? What will happen to the Fat Protocol? There are still many unsolved mysteries for us to explore in the future.