OKX Ventures investment report (2024 April)

Continued focus on infrastructure construction in Industries such as Bitcoin ecosystem

Following the 2024 Bitcoin halving, macroeconomic conditions and central bank policies are poised to exert a heightened influence on Bitcoin due to its strong correlation with the stock market. The prevailing high interest rate environment, combined with potential future rate cuts, will play a pivotal role in shaping global liquidity and impacting the price of Bitcoin and other risk assets.

Currently, the development of the Bitcoin ecosystem is still in its early stages, but infrastructure construction is developing rapidly. Bitcoin Layer 1 innovation represented by Arch, client verification represented by Nervos RGB++, and infrastructure projects of Layer2 solutions represented by Bitlayer and BounceBit have initially taken shape. Industry insiders generally believe that applications within the Bitcoin ecosystem will experience an explosion in the future, and the market is expected to see a DeFi Summer, NFT Summer, and GameFi Summer belonging to the Bitcoin ecosystem.

In addition, the development of the crypto market infrastructure field presents a diversified trend. Parallel EVM as a narrative hotspot, leading projects such as Monad and Aptos have led dozens of public chains to follow up on the parallel EVM narrative. The modular narrative continues to develop, and Movement, Avail, and StakeStone also completed this round of financing in April. In addition, the entire network created 1 million new tokens in April, 640,000 were created on Solana, and 320,000 were created on Base, and more infrastructure is welcoming development.

With the continuous growth of the application ecosystem, the game ecosystem projects are experiencing remarkable expansion. We can witness the surge of high-quality games like Matr1x and the emergence of all-chain games such as Cellula, poised for significant growth and success. Although the market value of the game field dropped by 30% in April, but the daily active user number (wallet number) reached a record high of 3 million, an increase of 16.9% compared to March, to a certain extent indicating the improvement of user participation and willingness to participate. OKX Ventures continued to maintain its focus on the industry in April, including the development of the Bitcoin ecosystem, updates on Ethereum ecosystem startup projects, and potential developments in Ethereum ETFs in Hong Kong and the United States, and invested in multiple projects.

Source: OKX Ventures

Bitcoin Ecosystem

Arch Protocol

According to the Arch Protocol white paper:

Project Overview

• Arch is a Bitcoin-native application platform that aims to launch decentralized finance (DeFi) on the world's most valuable blockchain without relying on bridging technology. Arch utilizes the characteristic of direct operation on the Bitcoin blockchain, extends the programmability of Bitcoin, and provides a secure, decentralized execution layer, enabling developers to develop complex applications on Bitcoin.

• Arch emphasizes not sacrificing the core value of Bitcoin as a non-sovereign currency, while expanding its functionality and application range as much as possible, enhancing Bitcoin's programmability and expanding application range, marking a new stage in Bitcoin's further development.

Project Highlights

• Bitcoin native integration, supporting DeFi and NFTs: Arch operates directly on Bitcoin's first layer (Layer 1), avoiding the complexity and efficiency problems in traditional second-layer solutions, directly utilizing Bitcoin's own security and liquidity. Developers can create decentralized lending markets, exchanges, and high-end collectibles and NFTs that can be fully on-chain stored on the Bitcoin chain, bringing added value and functionality to the Bitcoin ecosystem.

• Smart contract functionality: Through the Zero-Knowledge Virtual Machine (ZKVM), Arch can execute smart contracts, adding unprecedented flexibility and diversity to Bitcoin. This smart contract functionality supports everything from simple asset exchanges to complex financial products.

• Decentralized verification network: The core of Arch is its decentralized verification node network, these nodes verify Zero-Knowledge Proofs (ZK Proofs), ensuring the correct execution of transactions and applications. This network structure enhances the platform's security and anti-censorship, avoiding centralized risks.

• Fully on-chain operation: All transactions and state changes executed through the Arch platform are finally confirmed and recorded on the Bitcoin blockchain, maintaining the transparency and immutability of the Bitcoin blockchain.

Bitlayer

According to the Bitlayer white paper:

Project Overview

• Bitlayer is a Bitcoin second layer network based on BitVM technology, aimed at introducing scalability to the Bitcoin ecosystem. Bitlayer provides the same level of security as Bitcoin's first layer and achieves Turing completeness, enabling developers to execute any computation on Bitcoin.

• Bitlayer aims to transform Bitcoin from pure value storage into a more active and productive asset, while providing a fast transaction experience and low transaction fees.

Project Highlights

• Security: Bitlayer uses a fraud proof protocol based on BitVM to verify state transitions, ensuring security equivalent to the Bitcoin base layer. It adopts DLC/BitVM technology to provide a more secure bridge model for asset cross-chain transfer than MPC-TSS or multi-signature.

• Scalability: Bitlayer supports flexible expansion schemes and is committed to expanding Bitcoin's internet and cryptocurrency user base. Through modular design, Bitlayer can achieve unlimited scalability, while ensuring fast transaction confirmation speed and low transaction cost.

• Developer and user-friendly: Bitlayer will initially be compatible with EVM, allowing existing Ethereum ecosystem applications and developers to migrate to Bitlayer at low cost and without in-depth modifications. It will support more virtual machines in the future, such as CairoVM, SolVM, and MoveVM, to provide users with a richer choice of on-chain applications.

BounceBit

According to the BounceBit white paper:

Project Overview

• BounceBit is a Restaking infrastructure built on BTC, protected by regulated custody of Mainnet Digital and Ceffu.

• BounceBit chain is a PoS layer 1 chain based on Bitcoin Restaking, through validators pledging BTC and the native token of BounceBit at the same time, it has implemented the integration with Bitcoin's native security and full Ethereum Virtual Machine (EVM) compatibility with a dual token system.

• The BounceBit ecosystem has rich infrastructure, such as bridges and Oracles, and also protects security through BTC re-pledging. Under an innovative framework of centralized finance (CeFi) and decentralized finance (DeFi), BounceBit empowers Bitcoin holders to earn revenue on multiple networks.

Project Highlights

• PoS Layer1: Different from Layer2 which is attached to the Bitcoin main chain, BounceBit is self-contained, requiring validators to pledge the platform's native tokens and BTC, creating a dual token security system. This method not only enhances the security of the network but also increases the intrinsic value of Bitcoin by enabling BTC to play an active role in network verification.

• Cross-chain interoperability: BounceBit supports interoperability with EVM-compatible chains, achieving diversification of staked assets like BTCB (Bitcoin on BNB chain) and WBTC (Wrapped Bitcoin), enriching the use cases of staked BTC.

• Transparent centralized finance provides real returns: BounceBit uses Mainnet Digital's custody services and Ceffu's MirrorX technology to keep Bitcoin in on-chain status while ensuring liquidity and transparency of transactions through T+1 settlement cycle from profits on centralized exchanges.

UTXO stack

According to the UTXO stack white paper:

Project Overview

• UTXO Stack will be committed to expanding the Bitcoin ecosystem, helping project developers to start BTC Layer2 based on UTXO architecture with one click, and natively integrating RGB++ protocol capabilities, so that BTC and Stack parallel Layer2 can achieve seamless interoperability without cross-chain bridges, and can guarantee Layer2 security through pledging BTC, CKB and BTC L1 assets.

• By providing a one-click start UTXO BTC Layer2 service, UTXO Stack aims to simplify the creation process of application-specific chains, while ensuring interoperability with BTC, CKB, and other assets, without relying on traditional cross-chain bridging technology. The emergence of UTXO Stack responds to the market's demand for higher performance, greater scalability, and lower-cost blockchain solutions.

Project Highlights

• UTXO Stack aims to leverage Bitcoin's security and reputation to promote wider asset issuance and financial innovation on the Bitcoin blockchain. By creating application chains that can easily interoperate with BTC and other UTXO assets, UTXO Stack provides developers with a powerful tool to facilitate the rapid development and deployment of their financial applications. Also, by using the PoS (Proof of Stake) mechanism to provide security for these application chains, UTXO Stack is trying to address the challenges of Bitcoin's PoW (Proof of Work) mechanism in terms of energy consumption and efficiency.

Zeus network

According to the Zeus Network white paper:

Project Overview

• Zeus Network is committed to bringing the next billion users into the Web3 ecosystem. Zeus Network is building cross-chain infrastructure by leveraging Solana. This is achieved by developing Zeus Layer, a pluggable and programmable node network on the Solana Virtual Machine (SVM). Zeus Network envisions a future where developers can build decentralized applications (dApps) on a permissionless cross-chain infrastructure without bridges.

• Zeus Network's primary mission is to bring Bitcoin liquidity into Solana through its first dApp APOLLO. Zeus Network is bridgeless because the liquidity provider on each chain does not receive backflow liquidity on another chain, and the assets provided on each chain are protected by their respective protocols.

Project Highlights

• Bridgeless cross-chain technology: By innovatively designing cross-chain solutions without the need for traditional blockchain bridges, it avoids the security risks of bridges, making cross-chain asset liquidity more secure. Apollo is a cross-chain bridge between BTC and Solana, bringing Bitcoin liquidity into Solana.

• Leveraging Solana's high performance: By building cross-chain infrastructure on Solana, the fastest, most economical, and best-performing blockchain in the world, it can achieve fast, low-cost cross-chain transactions.

• Pluggable and programmable node network: The pluggable and programmable framework provided by Zeus Layer allows developers to easily integrate and create dApps that can seamlessly interoperate with Bitcoin and multiple blockchains in the future.

• Security and decentralization: By using advanced encryption technology and fraud proof, and decentralized operation of the distributed node network, it ensures the security of transactions and ensures the transparency and fairness of the system.

Infrastructure

Monad

According to the Monad white paper:

Project Overview

• Monad is a high-performance first layer (L1) blockchain compatible with Ethereum, aiming to advance the effective boundaries of decentralization and scalability by optimizing key areas.

• By introducing four core technological optimizations: MonadBFT, Deferred Execution, Parallel Execution, and MonadDb, Monad significantly improves the system's throughput, achieving a processing speed of 10,000 transactions per second.

• Its comprehensive EVM bytecode compatibility and Ethereum RPC API compatibility ensure that application developers and users can seamlessly migrate their existing Ethereum ecosystem tools and DApps to the Monad platform, enjoying more efficient blockchain performance.

Project Highlights

• Ultra-high performance and processing speed: For a blockchain ecosystem that requires large-scale daily active users and high-interaction applications, Monad provides the highest level of performance required to date, capable of processing 10,000 transactions per second, with a one-second block time and finality.

• Ethereum ecosystem compatibility: Fully compatible with EVM bytecode, allowing applications developed by Ethereum to migrate to Monad without any code modifications; compatible with Ethereum RPC API, allowing users to seamlessly access Monad using familiar tools (such as MetaMask, Etherscan).

• MonadBFT**: **An improved version based on the HotStuff consensus algorithm, implementing efficient pipeline consensus mechanism.

• Deferred Execution: By setting a pipeline between consensus and execution, the execution budget is significantly improved.

• Parallel Execution: Utilizing multi-core processing capabilities to execute work, thus increasing execution speed while maintaining the consistency of transaction results.

• MonadDb: A high-performance state backend storage system optimized for SSDs, achieving efficient state updates and caching.

• Low hardware entry threshold and accessibility: Monad keeps the hardware requirements for running nodes within a reasonable range, ensuring a low entry threshold and wide accessibility.

Aptos

According to the Aptos white paper:

Project Overview

• The leading Layer1 in the non-EVM series public chain, using Move language as the development language. Smart contract execution has always been a bottleneck restricting blockchain throughput, and single-line execution severely limits its throughput ceiling. Aptos has developed a Block-STM smart contract parallel execution engine to improve the efficiency of transaction execution. The core team includes Mo Shaik and Avery Ching, etc., all from the former Meta team, with rich experience in the traditional Internet field. Historical investors include A16Z, DragonFly, Brevan Howard, Franklin Templton, Tiger, Hashed, Multicoin, etc.

• Recently, Aptos Labs has established new partnerships with Microsoft, Brevan Howard, SK Telecom, and Boston Consulting Group to develop Aptos Ascend, a platform aimed at providing institutional clients with an on-chain digital asset management platform, supporting the increase in RWA type asset liquidity worldwide.

Project Highlights

• Technological innovation and performance: Aptos is known for the novelty of its tech stack, including the AptosBFTv4 consensus mechanism, Quorum Store mempool protocol, Block-STM parallel execution engine, and its programming language Aptos Move. The combination of these technologies provides Aptos with high throughput and low latency, particularly its achievement of 30,000 transactions per second in testing environments and the ability to handle over 9 billion transactions during specific activities demonstrating its excellent performance.

• Security and upgradability: Aptos places particular emphasis on security and upgradability, using the Aptos Move language to enhance the security of smart contracts and allowing frequent network upgrades to quickly deploy new technologies and fixes.

• Ecosystem growth and partnerships: Since its launch, Aptos has rapidly developed its ecosystem through establishing key partnerships (including with Microsoft, Google Cloud, Alibaba Cloud, and other well-known companies), funding programs, and hackathons. The project particularly focuses on expanding its influence in the Asia-Pacific region, has established partnerships with several famous gaming companies and corporate groups, promoting the development of DeFi, social media, and gaming and NFT applications.

• Market adoption and network activity: Aptos drives network activity through things like the Chingari social media platform, Pyth Oracle integration, and the Graffio One Day Public Art Creation activity, showing strong market adoption. The average daily transaction volume exceeds 475,000, and the daily active addresses exceed 72,000, demonstrating its strong user participation and network utility.

• Future-oriented Technology Roadmap: Aptos' future technology roadmap, including plans for storage sharding, a commitment to achieving a target of 100,000 to 1 million transactions per second, and the development of the new Aptos Move compiler, demonstrates its commitment as an innovative platform, constantly advancing to meet the needs of the future Web3.

Movement

According to the Movement white paper:

Project Overview

• Movement Labs aims to solve the pervasive smart contract vulnerabilities in the Ethereum ecosystem, while introducing a new execution environment that allows the system to process over 30,000 transactions per second. Movement aims to combine smart contract security and parallelization with EVM liquidity and user base, introducing MoveVM to Ethereum through its flagship L2 and Rollup connected to Move Stack. By utilizing a bytecode interpreter fully compatible with EVM and Ethereum as a means of settlement, Movement, as a ZK Layer 2, will enhance parallelization capabilities and smart contract security for the Ethereum ecosystem.

Project Highlights

• Friendly development experience: The introduction of MoveVM into Layer2, the provision of a powerful Fractal translator, converting Solidity smart contracts into Move bytecode, enhances the functionality and security of smart contracts, and provides high interoperability with other blockchain systems.

• Flexibility and scalability: The modular design of M2 abstracts the consensus layer from the execution layer, allowing each protocol layer to work independently and stay synchronized.

• High speed and low cost: Achieve sub-second Finality through parallel Move-EVM and decentralized Sequencer, reportedly reaching <$0.01 Gas fees, theoretical TPS 160,000+.

• High compatibility: EVM compatible, supporting both aptos and sui move. Also deeply connected with Cosmos, supporting native USDC and Cosmos wallet.

StakeStone

According to the StakeStone white paper introduction:

Project Overview

• StakeStone is a full-chain LST (Liquid Stake Token) liquidity protocol, aiming to bring native staking returns and liquidity to Layer 2 in a decentralized manner. StakeStone is highly scalable, supporting various types of staking pools, and is compatible with the upcoming Restaking. At the same time, it has established a multi-chain liquidity market based on the native LST STONE of StakeStone, providing more use cases and income opportunities for STONE users.

Project Highlights

• LST Liquidity Cross-Chain Market: StakeStone is committed to building a cross-chain market specifically for LST (Liquid Stake Token) liquidity, connecting Ethereum and other blockchains. This provides a basis for seamless transfer of assets between different blockchains, while solving the liquidity fragmentation problem between the main network and Layer 2 networks.

• OPAP Mechanism: StakeStone's pioneering Optimized Portfolio and Allocation Proposal (OPAP) mechanism provides a decentralized solution for liquid staking. This allows users to deposit ETH, obtain STONE tokens whose value increases over time, and thus achieve strategic asset allocation and optimize staking returns.

• Diversified Applications and Efficiency: STONE is not just a token representing ETH staking, it can also be used as an equivalent asset of ETH in various DeFi, GameFi or NFTfi platforms. This diversified usage scenario greatly enhances the practicality and appeal of STONE.

• LayerZero Integration and Cross-Chain Support: With the help of LayerZero technology, STONE supports seamless transfer and price alignment across multiple blockchains, making it applicable to a wide range of networks and ecosystems, such as Ethereum, Manta, Base, BNB Chain, Mantle, Linea, etc.

• Rapid Growth of Capital and Market: Since its launch, the total locked value (TVL) of StakeStone has achieved rapid growth, reaching a high of $1.38 billion, showing strong market demand and trust in such solutions.

• Through these highlights, StakeStone not only provides users with robust staking returns, but also attempts to solve the fragmentation and efficiency issues existing in the current blockchain ecosystem, making it a forward-looking and innovative staking solution.

Games and applications

Cellula

According to the Cellula whitepaper:

Project Overview

• Cellula is a full-chain artificial life simulation strategy game that allows users to play the "Conway's Game of Life" through on-chain cellular automata. In the game, NFTs can reproduce, grow, evolve, or die on the blockchain, creating an "NFT Arena" by turning each NFT into an autonomous life form.

Project Highlights

• A full-chain game with a unique gameplay, Cellula is a Conway's game of life on the full chain using the MUD engine, simulating the game of life in a way similar to actual evolution programming; In the future, ERC6551 will give NFT the possible gameplay combined with various smart contracts.

• Character growth: giving NFT autonomous evolution. Traditional NFTs are empowered from top to bottom (creators grant value and send airdrops), while Cellula empowers creators through building games and giving NFTs growth and combinability.

• Combinability: game metadata can be combined with other NFTs as raw materials. Similar to LEGO, it can be combined with traditional NFTs or other items and give them a special identity through genes.

UXLink

According to the UXLink white paper:

Project Overview

• UXLINK is the largest Web3 social platform and infrastructure, supporting users and developers to discover, distribute, and trade crypto assets in a social and group manner.

• UXLINK has been online for one year, with over 5.7 million registered users, more than 100,000 groups, over 1.2 million daily active DAPP users, and over 300,000 daily active users on the chain. Currently, the daily active number on the chain is steadily in the top three.

Project Highlights

• Link To Earn. Different from other social products, UXLINK focuses on familiar relationships, which is a simulation of the real-world social status. Through the "Link To Earn" acquaintance recommendation trust mechanism and the disruptive "Web3 group", it brings a new way of user connection and organizational form, forming a unique protocol and data layer, which can give unique value to developers in the Web3 field.

• High Growth. It is currently the product with the largest traffic in the social track, with users evenly distributed in Southeast Asia, the Middle East, Europe, Japan and South Korea, South Asia, South America, and other parts of Africa, and has accumulated a wealth of connected user data.

• UXLINK migrates and deepens real social relationships and scenarios, and innovates them based on the nature of Web3, integrating assets and social interactions. Because of its unique traffic and data, it has also attracted a large number of partners willing to pay, forming a positive cycle between users and partners.

Matr1x

According to the Matr1x White Paper:

Project Overview

• Matr1x is a Web3 gaming platform. It executes high-quality strategies, develops, and co-publishes game products. It has independently developed a middleware protocol for Web3 games, helping more Web2 game products to enter Web3.

• The first game, Matr1x Fire, is an FPS mobile game. Since its launch, it has accumulated 1.05 million registered users, over 1.19 million downloads, 490k UAW, 1.26 million transfers, currently ranking first on Polygon.

Project Highlights

• Incorporating esports elements naturally attracts a young user base. Currently, Matr1x has already conducted 40+ online and offline events worldwide, covering over 50 gaming communities in more than 20 countries and regions, with over 100k participants, making it the top esports brand in the entire Web3 industry.

• The value of in-game assets is emphasized, which is an asset trait proven in Web2. The core focus of the shooting category is on game ornament transactions. For instance, the classic Web2 game CS:GO has an annual transaction volume of over 38 billion USD, showing great potential. Matr1x has already successfully issued three sets of equity-class NFTs, currently with over 800k holding addresses, and the total transaction volume exceeds 150 million USD.

• The team members all come from top-tier companies worldwide and have many years of experience in gaming and blockchain. They have successfully developed and published several games, with a total turnover of over 300 billion RMB and over 300 million users.

Debox

According to the Debox white paper:

Project Overview

• DeBox is a Web3 community management tool based on DID. Users who hold ERC-20 tokens and NFT users can join corresponding groups without permission, and can use the product's features such as lottery, proposal, voting, etc.

Project Highlights

• Debox connects the user side and the community side, serving as a bridge to meet the needs of both parties. On the community side, it is a community-driven management tool, including elections, voting, finance, activities, lottery, airdrops, activity evaluation, etc.; on the user side, it provides all users with equal, permissionless, and simple information portal access. Therefore, Debox has a strong user base. Currently, it has DAU11K+, holder 90K+, 24,241 communities, and most of the users are cryptocurrency novices from apps.

• AI and intent-centric, more than 100 large model-driven AI robots, including GC, trading, search, etc., provide users with a seamless experience.

• Debox's ecosystem currently shows organic growth. The current transaction volume of Debox is over 120 million from its internal Dex, 59.1 million from innovative social assets, with a monthly net profit exceeding 80,000 USD.

Privasea.io

According to the Privasea White Paper:

Project Overview

• The Privasea AI network is an artificial intelligence processing system that focuses on data privacy and security. It uses Fully Homomorphic Encryption (FHE) technology to perform computations on encrypted data, ensuring the confidentiality and security of sensitive information.

• Through its advanced FHE technology and multi-level architecture design, the Privasea AI network effectively solves the privacy protection and data security issues faced in AI data processing. It also offers efficient, easy-to-use solutions to meet the needs of different users and scenarios.

Project Highlights

• Privacy Protection: Through FHE technology, Privasea AI can analyze and process data without decrypting it. This means that even if the data is processed in a cloud environment or untrusted computing environment, the user's sensitive information is still effectively protected. It provides a privacy-protecting AI solution that complies with strict data protection regulations such as the EU's General Data Protection Regulation (GDPR).

• Distributed AI Computing: Privasea AI uses blockchain technology to incentivize and manage a distributed network composed of multiple computing nodes, providing the necessary AI processing capabilities. This not only increases the availability of computing resources but also enhances the transparency and security of the system through decentralization.

• Rich Application Scenarios: By combining FHE and AI, Privasea AI has paved a new path for privacy-protected machine learning and artificial intelligence applications. The application scenarios cover multiple fields such as finance, healthcare, and security regulation, providing a comprehensive solution that protects data privacy while fully utilizing the value of the data.

Source: Information gathered and researched by OKX Ventures from mentioned projects.