OKX Ventures' Quarterly Investment Report: Infrastructure Projects Accounted for 60% of the Total.

With the US SEC approving the milestone of BTC spot ETF in January '24, the crypto industry is gradually emerging from the cold winter and entering a boom. We saw the total market capitalization of Crypto reach $2.6 trillion in 1Q24, the total supply of stablecoins exceeded $150 billion, and the market cap of Bitcoin once surpassed that of silver. New narratives such as restaking, the combination of Web3 and AI, Bitcoin programmability, and many more have emerged and performed strongly, spurring further innovation and development in the crypto market.

The capital market gradually recovered, and the total financing volume in the quarter exceeded $1.8 billion, an increase of 50% from the previous quarter. During this period, OKX Ventures continued to increase its investment and deep involvement, continuously exploring high-potential and innovative projects and teams in the crypto industry, actively investing in and empowering entrepreneurs, providing all-round support, and contributing to the development of the crypto industry.

Review of key projects of the season

In the first quarter of 2024, OKX Ventures will invest in infrastructure, Bitcoin ecosystem, AI+Depin, Gamefi, Defi, Socialfi and other tracks, of which infrastructure projects account for 60% of the total investment. We believe that the perfection of infrastructure is still the mainstay of driving the development of the entire industry. A complete infrastructure can effectively improve the efficiency and safety of the entire industry, and provide a solid foundation for the rapid development of the industry.

I. Infra

Infrastructure construction is the top priority of the development of the industry, which includes but is not limited to L1/L2 public chains, development platforms and wallets and other underlying products, which determine the development speed of upper-layer applications, so the infrastructure of blockchain has always been the focus of crypto investment institutions. Recently, with the explosive growth of the Bitcoin ecosystem and the emergence of Ethereum’s Dencun upgrade, OKX Ventures has also invested heavily in this to promote the continuous improvement and upgrading of the infrastructure.

AltLayer is a highly scalable application-specific execution layer system built on top of Optimistic Rollups. It can be extended by connecting with Layer 1 and Layer 2 with Ethereum, Solana, Polkadot, Cosmos, and even Arbitrum, Optimism, etc. To better serve developers, AltLayer created Rollups-as-a-Service (RaaS), a versatile platform for creating custom rollups with no programming experience required. In addition, AltLayer introduces the concept of instantaneous rollups. It’s a highly optimized rollup technology that allows dApp developers to quickly deploy specific rollups and provide security through Layer 1, and then easily settle for them when needed.

Cysic is a zero-knowledge (ZK) hardware company that aims to provide an efficient hardware acceleration solution for the ZK proof protocol to help reduce ZK proof generation time and power consumption. The Cysic team has developed the underlying code base for FPGA and GPU calculations such as Multiscalar Multiplication (MSM), Number Theory Transformation (NTT), Merkle hash, etc., which is an important part of the ZK protocol, and is also developing ASIC solutions. Running calculations such as MSM on CPUs can be power-hungry and time-consuming, which is why Cysic is focused on trying to accelerate these components using FPGAs, GPUs, and ASICs.

DEXTools is the world’s leading DEFI portfolio and cryptocurrency price tracking app. For enthusiasts and traders in the crypto world, DEXTools helps them stay up-to-date with real-time cryptocurrency prices, price alerts, whale movements, blockchain statistics, and DEFI market trends. With an average of 20 million monthly users, DEXTools is an important hub between users and Defi.

Eclipse is an Ethereum Layer 2 solution powered by the Solana Virtual Machine (SVM) to improve the scalability and efficiency of the blockchain. It integrates Ethereum’s secure settlement with the high-performance execution of SVMs, Celestia’s data availability, and RISC Zero’s zero-knowledge proofs, designed to achieve high throughput without sacrificing security.

Lumoz is a decentralized ZK-RaaS network and a PoW network that supports ZKP mining. It employs a mechanism that combines PoS and PoW. Lumoz’s goal is to simplify the use of ZK-Rollup and promote its widespread adoption, thereby facilitating the large-scale deployment of zkEVM-based application chains. Developers can deploy their ZK-Rollup (zkEVM) on multiple chains through Lumoz. For miners, Lumoz is a multi-chain PoW protocol that supports mining on various public chains and generates zero-knowledge proofs for ZK-Rollups.

Taiko is a decentralized ZK-EVM and a universal ZK-Rollup. The aim is to make it available on Taiko to developers and users of dApps developed for Ethereum L1 without any changes. With Taiko, developers can more easily deploy dApps to L2 while inheriting Ethereum’s security while incurring lower transaction fees than L1. Taiko consists of three parts: zkEVM for generating proofs, L2 rollup nodes for management, and Taiko Protocol for rollup validation.

ZeroGravity (0 G) is the first data availability system with a built-in general-purpose storage layer, which is extremely scalable and decentralized. It enables scalability by separating data availability workflows into data publishing channels and data storage channels. Its products include a data availability tier: 0 G DA and a data storage tier: 0 G Storage.

zkMe is a zk Identity Oracle that provides anonymous user verification on-chain for increased security and privacy. zkMe verifies user credentials without revealing any personal information to anyone. When a user (credential holder) creates a DID using zkMe, they are given a unique SBT that is cryptographically bound to their public key and serves as proof of identity, enabling users to verify their identity without revealing any sensitive information.

As the most important track in crypto infrastructure, OKX Ventures has bet on popular projects such as AltLayer and Taiko. The development of the DA layer has supported projects such as ZeroGravity. We also work closely together on other infrastructure projects, such as DEXTool, a leading cryptocurrency price tracking app.

Second, the Bitcoin ecosystem

It can be said that the Bitcoin ecosystem is the starting point of this bull run, and from the end of 2023 to the beginning of 2024, a variety of protocols, infrastructure, token standards, cross-chain bridges, rollups, and other innovative solutions are constantly emerging, activating the prosperity of the Bitcoin ecosystem. OKX Ventures has also followed suit, and has made significant progress in terms of funding, cooperation, and resource grafting.

Babylon is a Bitcoin staking protocol that allows Bitcoin holders to stake their idle Bitcoin to increase the security of the PoS (Proof-of-Stake) chain and earn in the process. It is a PoS Cosmos zone blockchain, which uses extractable one-time signature (EOTS) technology to introduce PoS chain in the form of original chain pledge to achieve a cross-chain, fork-free Bitcoin staking mechanism, and uses Bitcoin PoW as a timestamp and data availability layer to provide BTC-based native security.

• B² Network is an EVM-compatible Bitcoin layer 2 network developed based on ZK-Rollup, which enables EVM ecosystem developers to seamlessly deploy Dapps. B^2 anchors the data merkle tree root hash and proof of the zk-rollup to the Bitcoin network through tap, putting the process and results on the chain for easy verification, and achieving higher legitimacy and availability of BTC layer 2.

• Developed by the Bitmap Tech team, Merlin Chain is a Layer 2 based on the BTC network and using ZK-Rollup. Using ZK technology, transactions are compressed, and then the compressed transaction data and ZK proofs are uploaded to Taproot on Bitcoin L1 via the decentralized Oracle network for use by the entire network to ensure transparency and security.

• UniSat Wallet is a leading BTC and inscription wallet that supports services such as inscription, trading and other services of BTC assets such as BRC 20, and as one of the indexing service providers, it provides infrastructure services for assets such as BRC 20 for the crypto industry. Unisat continues to deepen the BTC ecosystem, such as the recent launch of a proposal to add the ability to self-mint and burn BRC 20 to support the issuance of stablecoins in BRC 20, and the launch of Fractal, a Bitcoin extension solution.

BitSmiley, the BTC ecosystem’s first native stablecoin project, is a comprehensive financial protocol built on the Bitcoin blockchain as part of the Fintegra framework. Its core product, BitUSD, is an overcollateralized stablecoin based on BTC. Users stake BTC to BitSmiley DAO and mint BitUSD. Unlike Maker DAO, bitSmiley auctions off the platform’s future revenue as debt and pays off creditors first. In addition, BitUSD has adopted a new bitRC 20 inscription format that is compatible with BRC-20.

Bounce Finance is a multi-chain decentralized auction protocol. Focusing on Auction as a service, it offers a variety of auction products, including token and NFT auctions, real-world collectibles auctions, ad space auctions, and SDKs and plugins. In addition, Bounce Finance offers the Private Launchpad service, an on-chain solution designed to simplify IDOs for new projects. Currently, Bounce Finance is focusing on the BTC ecosystem, focusing on providing incubation and auction support.

• DLC.Link offers a range of applications through the Prudential Journal Contract (DLC) that allows app developers to easily integrate native Bitcoin. The platform locks Bitcoin in on-chain escrow, from where it can be leveraged by Ethereum and other smart contract blockchains. This “trustless bridge” enables lending, trading, derivatives, and more. At the same time, dlcBTC’s non-custodial wrapping method allows users to manage their own bitcoins without worrying about third-party risks, such as poor asset management or theft.

It can be seen that OKX Ventures has invested in a wide range of Bitcoin ecosystems in the past few months, from Bitmap, a technical facility for L2, to Bounce Finance, a defi protocol, to Unisat, an inscription wallet, and we have provided good support for the development of the entire ecosystem and even the crypto industry through an all-round layout of the Bitcoin ecosystem. At the same time, we are also actively engaged in cooperation related to the Bitcoin ecosystem, such as Babylon, to promote the accelerated development of the industry by encouraging more and more participants to join.

3. Gamefi

In the second half of 2023, Gamefi will also gradually begin to regain its vitality in line with the development of megatrends. Full-chain games, card games, and Web3 game-related marketplaces and infrastructure have all received a lot of attention from the capital market. During this period, OKX Ventures has also been deployed in advance and has become one of our investment priorities.

**• Carv.io is a Web3 identity company & game aggregation platform that develops solutions that combine web2 and web3 data to create unique user web3 IDs. On this basis, Carv has also established a series of on-chain data infrastructure for the game, with the mission of establishing a player-owned game identity and realizing the value of data through game data sharing. Its main products include: CARV Protocol, the underlying data solution of CARV Protocol, and the first Dapp on its Protocol, CARV Play, which provides basic functions such as game publishing, game activities, and on-chain activities.

The Mocaverse Platform is a decentralized version of Animoca Brands’ web3 gaming & entertainment app store built by integrating its 450+ portfolios. Its users can apply for a Moca ID, which will become their Web3 login (similar to an Apple ID) that will allow users to interact with Dapps on the platform.

Lumiterra is a multiplayer, open-world survival game in which players can freely choose to develop combat talents, farm talents, and gathering talents. No longer limited to traditional classes, players can create unique characters based on their interests. At the same time, the Sodium wallet built by Lumiterra uses ERC-4337, ZK, and MPC technologies to enable users to easily log in and manage their assets with extreme security.

BLOCKLORDS is a triple-A SLG multiplayer strategy game (MMO) based on a multi-chain network from game studio MetaKing Studios. Players can take on the role of different medieval characters, running their own farm, recruiting squads, gathering resources, assigning heroes to squads, and upgrading buildings in the process. Create your own unique epic in the medieval universe.

• L3 E 7 is a pure 3D LBS (Location Based Service) game. Through map graphics rendering technology, players are immersed in a 3D metaverse world. L3 E 7’s metaverse is based on cities on the real Earth, where players can experience what the real world looks like and bring it to life through a cyberpunk art style.

It can be seen that OKX Ventures supports all aspects from basic settings to upper-level applications in the Gamefi field, from Carv, a game identity solution, to L3 E 7, a large-scale 3D game. At the same time, we are also actively working on related collaborations, such as Mocaverse, to get more users involved through events and promote the development of the Gamefi space. In the future, the combination between gaming projects and DeFi projects will surely continue to improve, creating more attractive games and more sustainable business models.

Fourth, DeFi

DeFi is an important innovation in the crypto market, which provides financial services to a wide range of users in a decentralized way through smart contracts. Since the Defi Summer, OKX Ventures has seen new projects in this space continue to innovate, providing Web3 users with a variety of high-potential use cases, especially the liquidity staking boom since Ethereum moved to the PoS chain, providing Web3 users with an option that can bring yield and increase asset utilization, and the resulting re-staking that brings both revenue to users and security to the project. The two have become the two most concerned directions in the Defi field, stimulating continuous project innovation and ecological improvement.

• Navi is one of the DEFI protocols with the highest TVL in the SUI ecosystem, with about $150 million in TVL at present. Navi provides users with lending services for long-tail assets on the chain, and cooperates with multiple protocols such as HeroSwap, Ondo Finance, and Cetus to unlock and improve various Defi use cases, and provides users with fully decentralized liquid staking services through the acquisition of LSD protocol Volo, and further builds a one-stop Defi platform.

• Ether.fi provides a fully decentralized liquid staking service, on which the staking tokens have grown rapidly since the beginning of '24 and now have a total value of over $2.9 billion. Ether.fi supports stakers to maintain control of the keys when staking brokers, and the ETH pledged to Etherfi will naturally be put into EigenLayer for re-staking, so as to ensure a higher degree of decentralization while bringing users multiple rewards including staking, re-staking and platform rewards, and promoting the rapid growth of the protocol.

Renzo is also a leading project focusing on the field of liquid new staking, in addition to allowing users to stake native Ethereum for liquid staking and re-staking rewards, it also supports the use of more LSD tokens for re-staking. At present, Renzo has more than $1.25 billion in assets pledged on it.

OKX Ventures focuses on innovative and high-potential projects in the DEFI space, and is optimistic about the vitality that emerging narratives can bring to the DEFI space, helping its projects to provide comprehensive and high-quality products and services for Web3 users.

5. AI

We have seen the explosive growth of the AI track, and the crypto industry has been exploring the combination of AI. Both Web3 and AI are developing rapidly, and new points of convergence are constantly emerging, and OKX Ventures focuses on projects and teams that can bring innovation to the crypto space in the process, and can bring potential use cases and opportunities.

• io.net is a decentralized GPU network based on Solana, which aims to build a distributed computing network by aggregating idle GPU resources from around the world, providing low-cost and efficient computing resources for artificial intelligence (AI) and machine learning (ML). Through a simple UI interface, integration platform, data management program and architecture, etc., in order to provide a computing platform with higher performance and more complete infrastructure.

• Myshell focuses on building an interactive AI robot creation platform, which can generate an interactive AI with users through the information entered by users, add voice templates, and can shape AI based on user settings, unique ‘personality’, interaction methods and voices, in addition to chatting with users, it can also cover use cases such as translation and text generation.

• 0x Scope aims to build an open data layer for Web3 data analysis, and provides a series of tools and services to help users understand and leverage Web3 data

• FLock is an AI co-creation platform that promotes the generation of community-oriented AI models by building a decentralized platform that incentivizes users to contribute computing power, AI models, and private data. Promote innovation in AI through collaboration between all parties.

• Meson Network aims to build a decentralized bandwidth network, using user-friendly nodes, through an incentive model, to gather and redistribute the loans contributed by users around the world, link the supply ends, and form a sustainable economic cycle. Meson Network currently has more than 250,000 nodes around the world, supporting bandwidth needs around the world.

AI and Web3 can work together in many ways to complement each other. OKX Ventures believes that with the further development and integration of Web3 and AI, the relevant integration points will be more perfect, which will also stimulate the further development of Web3 and AI.

Conclusion

OKX Ventures believes that with the innovation and breakthrough of the Bitcoin ecosystem, L2 will enter an acceleration period, high-quality game content from the testing stage to the official release, and DeFi will continue to innovate with the development of infrastructure, and 2024 will be very exciting. At the same time, OKX Ventures also looks forward to actively cooperating with high-quality project parties, providing in-depth support, providing users with high-quality services, and contributing to the industry.