OKX Ventures May 2023 Monthly Report: Investment in Prisma, Rage Trade, Shutter Network, covering LSD, decentralized derivatives, and MEV tracks

Author: OKX Ventures

In the past month, the crypto industry has been rapidly evolving, and OKX Ventures has witnessed this swift development:

The BTC ecosystem continues to grow rapidly, with OKX introducing the concept of BRC-30. BRC-30 adopts the design principles of BRC-20 and introduces staking-related operational features such as deposits, minting, and withdrawals. BRC-20 experienced a surge in May, with the Total Market Cap reaching $475 million and over 24k BRC-20 tokens. The increased demand for block space driven by BRC-30 allows miners to earn higher revenues and brings new communities to Bitcoin, enhancing the vitality of the Bitcoin community. OKX Ventures remains optimistic and will continue to focus on the development of the Bitcoin ecosystem, collaborating with partners like Unisat to lead the industry and explore continuously.

The ZK Layer2 ecosystem is rapidly developing. Leading the way, zkSync Era's TVL has surpassed $440 million, showing a significant upward trend, and it ranks third in the entire Layer 2 ecosystem. In just three months, the number of cumulative depositors has surged from 10k to 770k, achieving nearly 80 times user expansion. Approximately 20k accounts contributed over 27 million transactions within three months. Although there is still a significant gap compared to the TVL of Arbitrum and Optimism, zkSync's daily user payments have gradually surpassed the latter two.

The multi-chain project LayerZero's leading project, Stargate, has grown over 300% since March, with active users increasing 30 times, maintaining around 150k users, providing users with more convenient trading methods, lower transfer fees, and safer cross-chain solutions. The MEV sector also maintains good momentum, with the current MEV TAM accumulating to around $450 million, and Flashbots has launched new features like SUAVE.

OKX Ventures has continued to pay attention to the industry over the past May, remaining optimistic about the ZK ecosystem, infrastructure, DeFi, Web3.0, and other sectors, investing in projects like Prisma, Rage Trade, and Shutter.

Prisma

Project Overview

Prisma Finance is an LSD stablecoin protocol focused on realizing the full potential of Ethereum liquid staking tokens.

Prisma allows users to mint a stablecoin (acUSD) fully collateralized by liquid staking tokens. This stablecoin will be incentivized on Curve and Convex Finance, creating an efficient capital flywheel where users can earn trading fees, CRV, CVX, and PRISMA in addition to Ethereum staking rewards.

Prisma's codebase is entirely immutable, based on Liquity, to create a robust protocol and a truly decentralized stablecoin with favorable and flexible collateral parameters, making it attractive for those looking to fully leverage LST without the risks of other stablecoins. The Prisma DAO will be responsible for parameters, emissions, and protocol fees.

Project Highlights

Prisma allows users to mint Prisma's native over-collateralized stablecoin (acUSD) using any of the following LSTs, providing unparalleled capital efficiency for holders of liquid staking ETH tokens. With the help of Ethereum staking rewards, loans collateralized by LSTs will be automatically repaid.

Prisma's code is based on Liquity, with complete immutability, aimed at creating a robust protocol and a truly decentralized stablecoin, whose flexible collateral parameters attract users looking to maximize the potential of their liquid staking tokens. The Prisma DAO will manage parameters, issuance, and protocol fees. The project has received support from several top founders in the industry, including those from Curve Finance, Convex Finance, and FRAX Finance.

OKX Ventures believes that the Ethereum liquid staking token (LST) market has grown rapidly in recent years, currently valued at $18 billion, accounting for about 10% of Ethereum's total market value, making it the largest DeFi category by TVL and one of the most promising markets. Prisma Finance may represent one of the most promising directions in the LST sector.

Rage Trade

Project Overview

Rage Trade is a cross-chain perpetual futures protocol based on the Arbitrum ecosystem, which recycles underutilized LPs through innovative UNI v3 vault strategies to create deep liquidity. The project officially launched on the Arbitrum network on December 13, 2022.

Rage Trade's core products include the Delta Neutral Vault and the 80-20 Vault. The Delta Neutral Vault allows users to earn ETH rewards on GMX in a delta-neutral manner through fully cross-chain recyclable liquidity; the 80-20 Vault ensures that at least 80% of LP tokens continue to generate returns on the original protocol, with the remaining 20% used as Rage Trade's virtual liquidity.

Project Highlights

Cross-chain recyclable liquidity: Through LayerZero, liquidity funds from all existing other protocols, including AMMs (like Curve), money markets (like Aave), and derivatives protocols (like GMX), can be brought in, expanding the depth of the liquidity pool.

80-20 Vaults strategy: This helps the protocol balance risk, improving capital efficiency while maintaining the safety of funds.

Delta Neutral Vault: Provides liquidity on GMX in a delta-neutral manner (by shorting through Risk-Off Vault and Risk-On Vault on Aave, reducing exposure to ETH and BTC) while earning ETH rewards on GMX, with the advantage of ensuring returns for GLP stakers by reducing market risk.

Using the vAMM model facilitates arbitrage: The vAMM model does not tie prices to asset prices through oracles; the vAMM is an independent market, allowing arbitrageurs to hedge their positions on CEX and profit from price discrepancies.

OKX Ventures believes that Rage Trade can provide users with higher capital efficiency, more abundant liquidity, smoother trading experiences, and more substantial LP returns through these features.

Shutter

Project Overview

Shutter Network is an anti-front-running/anti-malicious MEV protocol using threshold encryption. Their main work is to collaborate with L2 and sidechains to integrate this mechanism, adding an encrypted or shielded mempool that protects the entire rollup/sidechain's MEV while improving anti-censorship features.

Project Highlights

The current MEV situation remains a significant obstacle and barrier to mainstream adoption of DeFi, and the way today's ecosystem addresses this issue heavily relies on centralization and trust assumptions, such as solving this problem in relayers or orderers. Shutter can improve this situation by providing lower trust assumptions for MEV issues, enhancing user experience and the robustness of decentralized markets.

The Shutter team's product rollout is progressing rapidly, with the first instance of this type of front-running and censorship protection expected to be implemented on the Gnosis chain. Additionally, they have received funding from Optimism DAO as the first step in integrating the encrypted mempool into the OP stack. Shutter's product has received recognition and demand from multiple ecosystems.

OKX Ventures is optimistic about the MEV sector, believing that Shutter can effectively prevent the malicious aspects of MEV (front-running, sandwich attacks) while retaining "benign" MEV (arbitrage, liquidation), and based on its technical architecture, can provide more use cases, such as using the same threshold encryption DKG to provide shielded/encrypted voting in Snapshots.

About OKX Ventures

OKX Ventures has long firmly embraced 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; it not only "provides funds" but is also willing to "provide services" and has the capability to "provide resources." We are committed to accompanying all "entrepreneurial partners" in mutual growth. We aim to be not only discoverers of excellent teams, outstanding products, and innovative technologies but also enablers of excellent entrepreneurial projects. At the same time, OKX Ventures serves as a connector between projects and OKX. The OKX ecosystem supports OKX Wallet, NFT Marketplace, OKX Chain, and more. OKX Ventures leverages OKX's years of deep industry experience 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 so-called bull or 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 scale. We are optimistic about the development in the Ethereum ecosystem, multi-chain ecosystem, Bitcoin ecosystem, infrastructure construction, and innovative applications in the coming months.