OKX Ventures bi-monthly investment report (May-June 2024): steady progress in multiple fields, optimistic outlook on market prospects

The U.S. economy continues to show resilience in growth, but a high interest rate environment continues to impact the economy, with many countries and regions experiencing economic stagnation or mild recession. Although inflation shows signs of cooling, according to the Federal Reserve’s plan, an uncertain macroeconomic environment has further exacerbated volatility in the cryptocurrency market.

However, factors such as the Ethereum spot ETF, on-chain data, the innovative native applications of major public chain ecosystems, and advancements within the TON ecosystem, all provide continuous growth momentum for the industry. OKX Ventures remains optimistic about the market’s prospects.

Continuous efforts in multiple fields

According to OKX Ventures’ observations and development research, multiple fields in the current crypto industry are exhibiting a “steady and positive” development trend.

On the policy front, the industry has finally seen major progress with the Ethereum spot ETF, as the U.S. Securities and Exchange Commission (SEC) approved all 19b-4 filings on May 23, 2024. If the Ethereum spot ETF starts trading in July 2024 — considering that the asset management scale of Bitcoin ETFs has reached $50 billion — the scale and buy-in volume of the ETH spot ETF will reach the tens of billions of dollars.

At the on-chain data level, there’s slight stability with a minor decline, and Meme has become a hotspot on the chain. In May and June 2024, on-chain transaction volumes of Ethereum and Bitcoin were $390 billion and $338 billion, respectively — still in a declining channel compared to March and April 2024. The supply of stablecoins increased to $142.6 billion, and Ethereum burned 26.7k and 26.3k tokens in May and June of this year respectively, with the lowest gas fee on Ethereum touching 1 gwei. Meme-type assets maintained high popularity in May and June 2024, with the total market value at one point exceeding $60 billion, especially on the Solana chain, where Meme transaction volume accounted for more than 50% of the total transaction volume. On-chain data indicates that the industry has reached a temporary bottom, and we remain optimistic about on-chain innovation in the second half of the year.

Looking broadly, the industry’s infrastructure is improving, and ecological projects are becoming more diverse. The number and total value locked (TVL) of Bitcoin Layer-2s are growing, driving the modular development of the Bitcoin ecosystem. For example, Nubit inherits the security of Bitcoin as a data availability layer, and Solv aggregates liquidity yields. OKX Ventures believes that the richness of native infrastructure will be a significant focus for the market in the near future, including various ecological applications such as artificial intelligence (AI), GameFi, and social networks.

The TON ecosystem continues to grow, with applications and data booming. Backed by Telegram’s 900 million active users, TON is rapidly developing with TVL surpassing 700 million dollars, and multiple applications attracting over ten million users. Therefore, we see a new entry point for further mass adoption in the industry, and OKX Ventures will continue to support inventive new TON applications.

Meanwhile, the topic of security deserves ample attention. In Q2 2024, losses from on-chain security incidents reached $688 million — a 37% increase compared to Q1. DeFi and public blockchains are the main targets of hacker attacks. There’s still a lot of work to be done on the user side for on-chain security, while security tools, represented by GoPlus, still have a long way to go.

Latest investment updates from OKX Ventures

OKX Ventures, as a long-term value investor, works to identify and invest in innovative projects across different sectors. These investments aim to enhance the project’s success through funding, technology, and ecosystem development.

Bedrock

Bedrock is the world’s first multi-asset liquid restaking protocol, securing users’ digital assets with non-custodial solutions. Bedrock has partnered with RockX, a longstanding blockchain infrastructure company with strong roots in crypto staking.

Bedrock introduced multiple restaking assets, such as uniBTC, uniETH, and uniIOTX, in collaboration with Babylon, EigenLayer, and IoTeX, respectively. This move fortifies the project’s commitment to security excellence and boosting rewards.

When you deposit a Wrapped Bitcoin (wBTC) token into Bedrock, the protocol stakes an actual Bitcoin (BTC) token to the Babylon network. You’ll receive uniBTC tokens as rewards for securing the Babylon network with your staked wBTC. For uniETH, Bedrock offers a staking service for retail and institutional traders, and grants rewards from EigenLayer and Bedrock points. Meanwhile, UniIOTX represents staked IOTX, and stakers can gain rewards from the IOTX ecosystem, such as IOTX decentralized applications. Being on the IoTeX blockchain, Bedrock addresses several drawbacks of Delegated Proof of Stake on IOTX, including the no minimum deposit requirement, allowing everyone to earn rewards on IOTX.

Bedrock is considered to be particularly strong in product design and aims to meet high standards in functionality and security. Features like oracle-less choices rely more on on-chain data to compute estimated validator balances and staking rewards, mitigating the risks of inaccurate off-chain calculations and potential compromises to the oracle service. Additionally, there are no minimum asset requirements for users, allowing for flexible deposits and withdrawals.

Bedrock offers competitive rewards across multiple assets. For example, when uniTokens like uniETH and uniBTC are exchanged, Bedrock provides additional benefits to users, such as rewards from staking ETH, points from Eigen, and airdrops of AVSs (Actively Validated Services) alongside other incentives such as $ARB for uniETH holders. Similarly, uniBTC holders earn from Babylon and BTC Layer-2s.

Bedrock is dedicated to fostering a robust ecosystem and improving compatibility. UniTokens have been integrated with various Layer-2s to provide a high-quality user experience for staking and restaking across different blockchain networks. Currently, it’s simple to restake with Bedrock on Arbitrum, Linea, Scroll, zkLink, Manta network, and other platforms.

Codatta

Codatta is the first decentralized data protocol that builds infrastructure for developers, protocols, and artificial intelligence. It adopts a scientific approach to generate confidence in data. More specifically, the platform enhances data transparency and integrity in the crypto ecosystem by providing metadata annotation capabilities for blockchain addresses. Codatta uses advanced AI techniques and economic incentives to leverage community engagement, ensuring data accuracy and trustworthiness. This provides a solid and reliable foundation of data services for developers and applications of all types.

Regarding flexible scalability, Codatta delivers high-performance and trust through collaboration and automation mechanisms by integrating and managing data from various sources. The protocol’s infrastructure is highly flexible and adaptable to new data categories.

For data reliability and security, Codatta uses a decentralized approach to annotating metadata, relying on community contributions to verify and validate metadata tags. It also uses AI, algorithms, and economic mechanisms to ensure high confidence and accuracy of data, and improves platform security by guaranteeing data invariance and integrity using blockchain technology.

Looking at public accessibility and privacy protection, Codatta is a license-free platform that allows developers, individuals, and protocols to freely access data. At the same time, to prevent malicious use, access restrictions with minimum conditions are set for certain risky datasets, to protect user information and prevent unauthorized access.

GoPlus

GoPlus is an open, permissionless, and user-driven modular security layer for Web3. It integrates seamlessly with any blockchain platform, enhancing user security by providing comprehensive protection for every stage of the transaction lifecycle. GoPlus uses a decentralized user security network and advanced AI-driven solutions for thorough risk analysis and efficient security services. It aims to fill the gap in the user security layer within existing blockchain architecture, offering effective on-chain security protections and creating a safer, more user-friendly Web3 interaction environment.

GoPlus provides all-around protection from the initial transaction to final settlement, securing every step of user interactions and transactions within the blockchain environment.

To address the fragmentation of security services, GoPlus has created a unified security center for cross-chain security strategy management. This allows users to manage and monitor the security of multiple blockchains on a single platform. Currently, the network has 11 million interactive wallets, over 60k paying users, and 2 million daily active users.

GoPlus introduces an innovative on-chain firewall directly integrated into the blockchain, capable of blocking risky transactions in real-time to ensure uninterrupted transaction security for users.

The security services provided by GoPlus are entirely decentralized, guaranteeing openness, permissionlessness, and user-driven characteristics, consistent with the core values of Web3.

Nubit

Nubit is a secure and scalable Bitcoin data availability layer designed to expand Bitcoin’s data capacity to support applications like ordinal numbers, Layer-2 solutions, and oracles. This enhances the scope and efficiency of the Bitcoin network. Put simply, Nubit aims to address bottlenecks in the Bitcoin ecosystem due to data throughput constraints. Its four core components are a validation node, a full storage node, a light client, and a consensus mechanism between nodes.

Nubit implements a secure and efficient data validation and storage mechanism that allows participants to verify the authenticity and availability of data without downloading all the data.

Nubit’s security is directly derived from Bitcoin and the platform uses a consensus mechanism, providing enhanced economic security, tamper resistance, and censorship resistance.

For Data Availability Sampling (DAS), Nubit ensures data integrity and availability through DAS technology. This technique allows nodes to verify the existence of data by randomly sampling data blocks, eliminating the need to download the entire block.For efficiency improvements, compared to traditional Merkle proofs, the combination of KZG commitment and Reed-Solomon error correction coding dramatically increases data retrieval speeds by up to 100 times, especially in complex or data-heavy scenarios.

Meanwhile, regarding testnets and community engagement, Nubit has launched the Alpha testnet and encourages community members to participate and test different features to drive refinement and optimization of the technology.

For adaptation to Bitcoin’s native environment and scalability, the Nubit project and the Nubit DA chain built on the Cosmos SDK are specifically optimized for the Bitcoin ecosystem. They support the native pledging of Bitcoin, enhance economic security, and have the potential to be rolled out to a wider range of Bitcoin applications and services.

The market outlook remains optimistic

Positive momentum is growing in the cryptocurrency industry, fueled by technological innovation, increased institutional investment, the macroeconomic environment, growing adoption, and advancements in the regulatory environment.

Currently, more and more enterprises and institutions are beginning to adopt blockchain technology, developing decentralized applications, smart contracts, decentralized finance, and other technologies. These advancements not only enhance efficiency and transparency but also provide new business models and opportunities. For example, Ethereum’s upgrade and expansion plans (such as the Dencun upgrade) have significantly reduced data fees, improved network performance, and attracted more developers and users.

In particular, the decentralized, secure, and transparent characteristics of blockchain make it a powerful tool for addressing issues present in traditional financial systems. They include trust issues, high transaction fees, and slow transaction processing. Additionally, blockchain technology can help to enhance financial inclusion, enabling people worldwide to access financial services more easily — especially those who can’t access traditional banking systems. This has the potential to encourage innovation and reform in social and economic systems.

Overall, the crypto industry can continue to grow through further technological innovation and the push for financial inclusion, driven by investment opportunities and the potential for decentralization. As technology and the market further develop, the crypto industry is likely to continue playing an important role, influencing the evolution of the global economy and financial system. Through multiple cycles of bull and bear markets, OKX Ventures is more determined to support, invest in, and foster innovation, and remains optimistic about the prospects for the crypto market.