OKX Ventures Investment Monthly Report: Continuing to be optimistic about the ZK ecosystem, LSD track, multi-chain interconnection, and storage track

Author: OKX Ventures

In the past two months, the crypto industry has been rapidly evolving, and we have witnessed many achievements in the sector:

· The Ethereum Shanghai upgrade is proceeding smoothly, completing preparations for the testnet upgrade;

· Layer2 development has exceeded expectations, with Arbitrum's daily transaction count briefly surpassing that of the mainnet in January, and significant version updates for zk rollups represented by Scroll are moving closer to the mainnet;

· On-chain data remains stable, with on-chain transaction data hovering between 160~170 billion in January and February;

· The BTC ecosystem has seen rapid growth, with the adoption rate of Taproot rising from 1.7% to around 10% recently due to Ordinals NFTs;

· The multi-chain ecosystem Cosmos has also experienced rapid growth, with the Lamada 9 upgrade set to pass and multi-chain infrastructure growing quickly.

OKX Ventures has also maintained a focus on the industry over the past two months, continuing to be optimistic about the zk ecosystem, LSD track, multi-chain interconnectivity, and storage track, investing in projects such as Scroll, Diva, LayerZero, zkPass, and Permaweb.

Scroll Investment Logic:

Scroll is positioned as an EVM-equivalent zk-Rollup and is an example of Type 2 zkEVM projects mentioned by Vitalik in his introduction of four types of zkEVM. OKX Ventures strategically invested in Scroll, which has recently made significant progress, with the PreAlpha testnet receiving over 300,000 unique addresses in the first week and over 600,000 unique addresses by the end of January, with more than 400,000 transactions daily.

From a developer's perspective, Scroll is an EVM-equivalent zk-Rollup that can achieve compatibility at the bytecode level with Ethereum. Additionally, Scroll uses Ethereum as its native data availability layer.

Scroll is compatible with many applications and tools, and from a technical standpoint, Scroll is providing minimal trust assumptions, high throughput, and fast finality with their solutions. Scroll demonstrates the core fundamental values of Web3: decentralization and community ownership.

From the beginning, Scroll needed to address the issue of decentralized verification. Currently, the first phase is to improve prover performance through hardware acceleration, achieving decentralization of the prover. The next step is the decentralization of the sequencer, at which point anyone can run a node.

We agree with Scroll's development plan and path and are willing to support a universal L2 network that can better accommodate EVM to achieve more complex functions such as deploying smart contracts and general computing. When the efficiency of zk is no longer an issue, there will be significant opportunities in the entire Ethereum scaling layer infrastructure.

LayerZero Investment Logic:

LayerZero is an interoperability protocol for messaging that allows any cross-chain contract call containing a valid payload.

At the asset cross-chain level, LayerZero achieves asset transfer through full-chain communication, ensuring complete asset liquidity, and has made significant improvements in shared security across chains. LayerZero is built in a way that can execute an absolutely secure mode, allowing for the initiation of immutable contracts and possessing a complete set of security parameters, including immutable verification libraries, relayer sets, and super parameters.

By combining the low cost of third-party verification networks with the high security of light nodes, LayerZero's proposed ultra-light nodes provide high security at a lower cost. This cost-effective solution will save developers a significant amount in learning and operational costs, which will greatly reduce user fees, giving cross-chain applications built on LayerZero a strong cost advantage.

At the same time, Stargate, built on LayerZero, also demonstrates the product's usability and growth potential. Stargate breaks the impossible triangle with the Delta Algorithm and soft partitioning mechanism. Liquidity providers enjoy better capital efficiency and scalability, allowing the same funds to be utilized more efficiently, resulting in higher returns; while users can enjoy a safer and zero-slippage asset cross-chain experience at a lower cost.

LayerZero addresses the issues of security, heterogeneity, and liquidity isolation in the cross-chain domain. OKX Ventures is optimistic about and supports the innovations and contributions LayerZero is making to cross-chain infrastructure.

zkPass Investment Logic:

zkPass enables users to selectively prove their verifiable data in Web2 and Web3 to third parties through zkSBTs, including legal identity, financial, social, experience, education, skills, etc., without disclosing any personal privacy details. It accurately addresses the identity issues in the Web3 world while providing secure and verifiable interactions while protecting privacy.

OKX Ventures believes there is still much privacy to protect in the crypto market, especially in the realm of personal identity, where zkps serve as an excellent technical means. zkPass utilizes zkp to solve the identity information leakage problem in KYC verification. Any project requiring KYC can use zkPass to publish their KYC verification activity information, while users can generate identity information through zkPass to obtain corresponding permissions. Utilizing zkp, zkPass provides sufficient privacy protection and identity verification services for both project parties and users.

Diva Investment Logic:

The Ethereum LSD track is an important narrative line for 2023, with significant market potential. Compared to multiple POS public chains with staking rates of 60%~80%, Ethereum's staking rate is still below 20%, indicating substantial room for improvement. In contrast to other public chains with high staking rates leading to high inflation, such as Cosmos with a staking rate of 60% and an inflation rate of 15.4%, Ethereum has effectively entered a deflationary phase, enhancing the attractiveness of Ethereum staking.

Diva improves redundancy and reduces single-point risk compared to the mainstream single-operator solutions in the current LSD track, representing a long-term superior technical route. In terms of decentralization, Diva introduces Liquidity Pooling, lowering the staking threshold to 1 ETH, further reducing the participation barrier and making staking more decentralized; in terms of liquidity, Diva offers the staking token DivEth, which can meet the innovative needs of more financial scenarios.

The Ethereum Shapella upgrade will open up channels for staking unlocking and exchanges, providing another significant one-time opportunity for new entrants. We are optimistic about the LSD track and are eager to bet on innovative projects and teams like Diva that are committed to decentralization.

Permaweb Investment Logic:

Permaweb DAO is a native application within the Arweave ecosystem, representing infrastructure innovation for its content and creator ecosystems;

By building WordPress-like products, Permaweb lowers the barriers for content creators, allowing them to create content platforms without needing to write frontend code, and provides podcasting and integration with arweave.news, enriching the content ecosystem;

At the economic model level, Permaweb DAO is also committed to creating a new incentive mechanism for the content ecosystem, not limited to PST, proposing PSC Token to incentivize content ecosystem development; PST Token grants governance rights, instant liquidity, and interest generated from using applications, with more PSC projects visible on the profit-sharing community hub communityXYZ.

OKX Ventures is optimistic about Permaweb DAO's efforts and contributions to increasing Arweave's C-end user numbers, introducing a creator ecosystem, expanding influence, and attracting developers.

Conclusion:

OKX Ventures firmly embraces the future of decentralized development, betting on decentralization and consistently adhering to the philosophy of serving the crypto innovation industry. OKX Ventures is not a traditional financial investor; we not only "provide funds" but also are willing to "provide services" and have the capability to "provide resources." We are committed to accompanying all "entrepreneurial partners" in mutual growth. We aim not only to discover excellent teams, outstanding products, and innovative technologies but also to empower exceptional entrepreneurial projects. At the same time, OKX Ventures serves as a connector between projects and the OK group. The OKX ecosystem supports includes: OKX Wallet, NFT Marketplace, OKX Chain, etc. OKX Ventures leverages the years of deep industry experience of OKX to provide multi-dimensional platforms and support for project development.

Despite the less-than-optimistic global macroeconomic environment and ongoing black swan events, OKX Ventures focuses on the development of the industry itself rather than the so-called bull and bear markets; we are more concerned with genuine theoretical innovations, truly operable new applications, real user inflows, and the actual growth of the entire industry. We are optimistic about the development in the Ethereum ecosystem, multi-chain ecosystem, Bitcoin ecosystem, infrastructure construction, and innovative applications in the coming months.