The Great Crypto Value Extraction: Why TradFi Will Win Using Your Own Infrastructure

He who controls the user controls the universe.

It's an uncomfortable truth that the crypto industry needs to hear, even if it doesn't want to listen. Because right now, crypto doesn't control users. JPMorgan does. BlackRock does. Stripe does.

And they're about to eat your lunch.

The Silent Takeover Is Already Happening

Look around. Pay attention to what's actually happening, not what Twitter influencers are celebrating. JPMorgan is deploying on Base. BlackRock is tokenizing funds. Stripe is building payment rails on blockchain infrastructure.

But here's the part nobody wants to acknowledge: they're not buying your tokens. They're not joining your community. They're not adopting your vision of decentralized finance.

They're using your infrastructure like it's AWS—commoditized, invisible, and completely irrelevant to the end user.

Think about that for a second. These institutions are treating the technology that crypto evangelists have been breathlessly hyping for fifteen years as just another utility. Like electricity. Like cloud computing. Like any other input cost that gets minimized and optimized away.

History Doesn't Repeat, But It Sure As Hell Rhymes

The internet didn't make ISPs rich. It made Amazon rich.

Same playbook, different decade. When the internet was being built out in the 1990s, telecom companies thought they'd won the lottery. They owned the networks. They controlled access. Surely they'd capture all the value from this revolutionary new technology.

They were wrong. Spectacularly wrong.

The companies that owned customer relationships captured all the value. The infrastructure they ran on became just another cost center—a race to the bottom where "dumb pipes" competed on price while the actual applications printed money.

AT&T laid fiber. Google printed billions. Comcast built networks. Netflix captured the value. The infrastructure providers became invisible, interchangeable, and ultimately irrelevant to conversations about value creation.

We're watching the exact same movie play out in crypto, just with different actors.

The Uncomfortable Arithmetic of Users vs. Infrastructure

Here's what keeps me up at night: Crypto spent fifteen years building elaborate infrastructure for users who don't exist.

Sure, there are crypto users. Die-hards who manage seed phrases and understand gas fees and debate the merits of different L2 scaling solutions. But these aren't mass market users. These are hobbyists and speculators.

Meanwhile, traditional finance has millions—scratch that, billions—of users who actually pay for things. Real people with real problems who need real solutions. People who trust their banks, who understand how Stripe works, who have BlackRock funds in their 401(k)s.

So guess who wins when TradFi decides to use your rails?

The math isn't complicated. When JPMorgan launches a blockchain-based product, they're not acquiring users. They already have the users. They're just changing the backend infrastructure—the part users never see and don't care about.

Celebrating Your Own Obsolescence

The real tragedy? L1s are celebrating enterprise adoption like it's validation. Like it proves they were right all along.

It doesn't.

Every bank that deploys on your chain makes you more invisible. Every payment company that uses your infrastructure commoditizes what you built. Every enterprise integration is another step toward you becoming the telecom companies of the 2020s.

You built the pipes. They own the water.

And water is what people pay for. Nobody pays for pipes. Pipes are just costs to be minimized.

The Decentralization Delusion

Want to know another uncomfortable truth? Users don't care about decentralization.

I know, I know. That's heresy in crypto circles. Decentralization is supposed to be the whole point. It's the feature, not the bug. It's the revolution.

Except users care about their problems being solved. Full stop.

And JPMorgan solves problems. BlackRock solves problems. Stripe solves problems. They solve them with familiar interfaces, regulatory compliance, customer service departments, and insurance. They solve them with trust built over decades.

Your consensus mechanism? The average user doesn't even know what problem that solves. They don't know what Byzantine fault tolerance is. They don't care about censorship resistance when they're trying to send money to their cousin or invest for retirement.

Infrastructure without users is just expensive electricity.

And crypto has burned through staggering amounts of capital building infrastructure that serves almost no one outside its own echo chamber.

The Value Capture Playbook

Let's be brutally honest about what happens next.

The winners in this space already have users. They already have trust. They already have distribution channels, marketing budgets, and regulatory relationships. They already have brand recognition and customer support and legal teams.

Now they'll use your infrastructure—pay you commodity prices for blockspace—while capturing 100% of the value that sits on top.

Think about AWS for a moment. Amazon provides incredible infrastructure. But who captures more value: AWS, or the companies building billion-dollar businesses on top of it? Both can be valuable, sure. But the application layer—the layer closest to the user—that's where the real money is made.

Except AWS started with a massive user base from Amazon's retail business. Blockchains are trying to become AWS without first being Amazon.

The House Always Wins

You built the casino. They own the house.

And the house always wins. Not because the house cheats, but because the house controls the customer relationship. The house sets the rules. The house has the trust. The house has the license to operate.

The casino infrastructure—the tables, the cards, the chips—that's all commoditized. You can buy that stuff from vendors. What you can't buy is the customer walking through the door.

TradFi has the customers. They're now buying the infrastructure from crypto at commodity prices.

So What Now?

This isn't an argument that blockchain technology doesn't matter. It clearly does—otherwise, these massive institutions wouldn't be adopting it.

This is an argument about where value accrues. And if crypto projects think value will flow to infrastructure simply because the infrastructure is novel or technically sophisticated, they're delusional.

Value flows to whoever owns the user relationship. It always has. It always will.

The question crypto needs to answer isn't "how do we build better infrastructure?" It's "how do we win users that TradFi can't just take from us?"

Because right now, there's no good answer to that question.

And until there is, crypto is just building pipes for other people's water.