What happens next? Total profit actually drops. The artificially high prices reduce aggregate demand, meaning everyone. Users, developers, and even the base layers and middleware providers, eventually loses as activity dries up.
Economists have a name for this problem: "double marginalization," or what we call "compound marginalization" in crypto. It happens when multiple monopolistic entities in a supply chain each add their own markup to maximize profit.
Because each middleware provider prices their services independently, without considering the health of the overall system, these markups stack up and massively distort the final price for the end user.
The result? Developer margins shrink, forcing them to raise user fees to stay afloat. This invisible toll severely constrains what builders can create and destroys onchain business models.
When devs complain that crypto apps are too expensive to run, they often blame gas fees. But the real villain is the compounding cost of "middleware" like oracles, keepers, and bridges.
These offchain services started out as helpful tools, but they have evolved into a structural tax. Because many middleware providers hold near-monopolies, they can independently hike their fees while consumer apps remain locked in.
What a fun night!
It was a pleasure hosting the Who Am I event with @rzstwnn_ and @OnatEth . I was genuinely impressed by how fast and sharp the Rialo community was some of the answers came in instantly.
Congratulations to our three winners: @notkiws , @Wisnu100802 , and @0xrizann You all are amazing. Thanks to everyone who joined and made the event such a success. See you at the next one! ๐