OKX Ventures: Layer2 track layout and investment logic
Write: 0x231
Ethereum's explosive user growth was compounded by a slow development schedule, and mass adoption was impossible until the thorny issue of scalability was solved. However, Layer 2's arrival at the right time eased the crunch for Ethereum, transferring on-chain stress to off-chain while sharing Ethereum security and playing a key role in the Ethereum 2.0 relay race.
At the beginning of this year, with the steady progress of Ethereum in accordance with the established road maps such as Shanghai upgrade and Cancun upgrade, Layer2 also experienced a booming development. Especially, after Arbitrum airdropped, the Layer2 plate was directly expected to be filled, and the TVL of the whole track kept climbing and even surpassing some Layer1.
Savvy capital will not miss such a certainty and high growth track. OKX Ventures clearly recognizes the cyclical nature of the market, is committed to investing in long-term structural value, accurately anticipates trends and targets, and is decisive, already betting on the promising Layer2 potential project. Looking back at the high-growth public chains such as Near, Solana, AR and Cosmos, OKX Ventures are all present. But this is just the tip of the iceberg for OKX Ventures' broad portfolio of infrastructure, DeFi, GameFi, Web3, metaverse and NFT. OKX Ventures has successfully invested in over 300 projects worldwide. To become one of the industry's most influential crypto venture capital institutions.
Investment is not buying vegetables, which look fresh and cheap. Only by thoroughly and systematically understanding the internal logic of the investment object can we find Alpha from the vast market. The essence of investing is the realization of cognition, this saying never goes out of style. This paper will have an in-depth dialogue with OKX Ventures to explore the value depression of the Layer 2 circuit from its layout, investment logic, pattern prediction and other aspects.
初识 OKX Ventures
OKX Ventures is the investment arm of OKX, the world's leading crypto trading platform, focusing on exploring the world's best blockchain projects, supporting the most cutting-edge blockchain technology and innovation, promoting the sustainable development of the global blockchain industry, and focusing on long-term structural value investment.
With an initial capital of $100 million, OKX Ventures has invested in more than 300 projects in the crypto space, covering GameFi, DeFi, Web3, NFT and Metaverse, blockchain infrastructure and other tracks. The proportion of investment is infrastructure (40 percent), DeFi (20 percent), Games (15 percent), Web3 (15 percent), NFT and Metacom (10 percent).
OKX Ventures is committed to helping entrepreneurs who contribute to the blockchain industry build great companies. It aims to provide first-class global resources and industry experience for promising blockchain projects. In the future, it will spend $1 billion to continue to support Ethereum, Layer 2 ecology, infrastructure, Web3 and other key tracks
Layer 2 赛道布局及投资逻辑
We are very bullish on Layer 2. Before Ethereum 2.0 arrives, Layer 2, as the most mainstream Ethereum expansion solution, can improve the throughput and transaction speed of Ethereum without affecting the main Ethereum network, so as to carry more and more complex Dapp applications, help Ethereum solve the current expansion problems, and make it more suitable for large-scale applications. In order to maintain the leading position of Ethereum, the two complementary, inseparable, this is also the core logic of OKX Ventures investment Layer 2 track.
At present, we have invested in several star Layer 2 projects including Arbitrum, Scroll, Starkware, zkSync, Taiko and Metis, and will continue to increase in the future.
Take the Scroll of strategic investment of OKX Ventures as an example, which is positioned as zk-Rollup equivalent to EVM, and is also the zkEVM project of Type 2 as an example in Vitalik's introduction of 4 kinds of zkEVM. Provides minimal trust assumptions, high throughput, and fast endgame.
In terms of on-chain data, Scroll is making good progress now. As of 22:00 on March 26, this year, the number of wallet addresses on its Alpha test network is about 1,799,980, 594,361 wallet addresses have been added, and about 7,886,928 user transactions have been processed. 757,543 blocks were generated, with an average block time of about 3 seconds.
From the perspective of development path, the problem of decentralized verification needs to be solved from the very beginning. At present, the first stage is to improve the performance of Prover through hardware acceleration to realize its decentralization, and the next stage is to decentralize Sequencer, where anyone can run the node. We agree with Scroll's development plan and path and are willing to support a common L2 network that is more compatible with EVM to implement more complex functions such as deploying smart contracts and common computing. When zk efficiency is no longer an issue, there must be great opportunities for the entire Ethereum expansion layer infrastructure architecture.
如何看待 Optimism 和 Arbitrum、以及 ZK 和 OP 系竞争？
Compared with the competition relationship, we believe that Optimism and Arbitrum are higher dimensions of motivation relationship, strengthen Layer2 circuit together. Optimism Rollup and Arbitrum both employ Optimistic Rollup technology and are two of the largest Layer2 solutions to date, designed to address Ethereum's scalability issues.
The two teams have always maintained such initial intention to improve their technical performance and expand their ecological influence. Both sides have been very mature in the strategy of ecological accumulation and air-drop user acquisition, which is reflected in the market share of Layer2 ecology, which is worthy of reference for all unissued Layer2 projects. The impact of Arbitrum airdrop on Layer2 and the entire industry is also gradually emerging. As of this writing, Arbitrum's TVL is $1.79 billion, and the number of transactions processed daily is also in the range of 2~3million.
The differentiation competition between ZK and OP is becoming more and more apparent. Compared with the first OP system, the project progress of ZK Rollups system is also fast, which can be obviously seen. zkSync Era, Scroll Network, Taiko Network, Starknet, Polygon zkEVM, and Consensys Linea are all progressing well.
For example, Scroll's Alpha test network has been launched on Goerli, which supports smart contract deployment and is committed to iterating and improving the performance of zkEVM. Starkware launched on the StarkNet main network in November 2021. Currently, 50+ projects have been launched on the main network. zkSync has launched the zkSync Era main network. There are more than 240+ ecological applications in DeFi, Gamefi, infrastructure, social, public goods and other tracks. Taiko has launched Alpha-2 test network "Askja", which is open to deploying smart contracts. And deploy Uniswap forks and so on.
However, in view of the fact that OP series has occupied more than 95% of the TVL market, ZK series needs faster online schedule of the main network and ecological construction to participate in the competition of user growth, and the time window for ZK series is getting shorter and shorter. As the Layer2 ecosystem matures, if Rollup costs can be significantly reduced after the Cancun upgrade, user growth and ecosystem development are likely to be the most critical winning factors in the competition between ZK and OP. We are looking forward to Layer2 blossoming and truly bringing the Next Billion Users to the industry.
以太坊 2.0 进展对 Layer 2 影响
We are concerned about the impact of the Cancun upgrade and Danksharding progress on Layer2. According to the latest Ethereum developer conference, we expect the core element of the next Cancun upgrade to be IP-4844, now renamed Deneb. Ip-4844 introduces new types of blo-Carrying Transactions. This is the first time Ethereum is building a separate data layer for L2. It is also the first step to achieve Full Danksharding. Will introduce a new type of transaction to Ethereum that can carry ephemeral data known as blobs. The availability of data previously stored as Calldata can be replaced by bloBs, which are much cheaper to store than calldata.
Danksharding can help Ethereum realize the combination of centralized block extraction, decentralized verification and censorship resistance, and build Ethereum into a settlement layer and data availability layer, leaving room for the improvement of Layer2's computing performance. The impact of Danksharding on Ethereum is to improve the performance and scalability of Ethereum, so that Ethereum can better support more application scenarios and more users.
Of course we're also looking in the direction of the Ethereum Foundation and v God's proposed "enshrined zk-rollup", which is part of Vitalik's published visual roadmap "Generating ZK-SNARK Proof for everything". OKX Ventures will be looking at the long-term technical planning of Ethereum and its impact on Layer2.
未来两年 Layer 2 生态发展预期
In the next year or two, the Cancun upgrade could benefit Layer 2 diversification, DA layer development and Raas track.
In terms of the diversification of L2 tracks, the expansion and low fees of EIP-4844 will benefit all L2 ecosystems, the OP ecosystem will be more diversified, and the ZK ecosystem will be more available due to the enhanced availability of data, allowing the high cost and difficult to operate independent layer 2 to grow rapidly. In addition, in addition to the two major rollups, IP-4844 may bring opportunities to other Layer 2 projects, such as Metis, Boba, Aztec, zkswap, zkspace, which are still in development and will benefit from reduced on-chain costs, The ecology will become richer and the number of users will increase.
In terms of the development of DA Layer, Blob data can only be stored for a short period of time, so there is a problem in calling historical data. Therefore, there will be a new development channel for decentralized storage protocols, etc. At the same time, the Layer 2 expansion scheme also needs to use the data availability layer. In addition, the Cancun upgrade will benefit L1 storage expansion network, such as Eth storage, Arweave, Filecoin and other projects in the Ethereum DA layer layout.
In terms of Raas, customized Raas are likely to benefit the most. After EIP4844, all kinds of services of Rollup will expand a certain market. In RaaS ecosystem, we may see full competition between ZK-based multi-layer network and OP ecological construction. At present, the advantage of OP-based RaaS lies in the rapid establishment of ecology, which is ahead of the development of ZK ecology, especially op stack The bedrock upgrade +4844 was launched, but the small increase in cost and efficiency alone was not compelling enough before EIP4844. The design of Raas multilayer network based on ZK can combine the advantages of low cost and customization, and become more competitive in the long run. At the specific landing level, Gaming projects may need to remove layer 3, defi projects will remain at layer 2, while social projects may have daily behaviors under l3 or chain, and finally core data and relationships will be placed on l2.
是否看好比特币的 Layer 2 项目
As the pioneer of decentralized narratives, Bitcoin remains the bedrock of credit in the crypto industry, and OKX ventures is bullish on Bitcoin-based innovation. Recently, Ordinals has also catalyze the development of the entire bitcoin ecosystem. Taproot adoption rate has reached an average of about 10%. Ordinals has accumulated more than 500,000 coins, accumulated revenue has exceeded 100 BTC, and daily transaction fee has reached a record high of 9.28 BTC. In addition, Bitcoin Layer2 projects such as Lightning Network, Liquid, RSK, and Stacks are steadily growing.
The Bitcoin Layer2 project is important for the further development of its ecosystem, helping to increase the scalability and speed of bitcoin transactions, reduce transaction costs, and help improve Bitcoin privacy and security by enabling off-chain transactions that don't need to be broadcast across the network. While the Bitcoin Layer2 project is progressing more slowly than the Ethereum Layer2 project, we have been extremely patient with its development.
投资项目的评估纬度
OKX Ventures' long-term commitment to the future of decentralized development is not purely for financial returns, so we are not traditional financial investors, not only "give money", but also willing to "give services", have the ability to "give resources", and are willing to accompany all the "start-up partners" to grow together. Not only do we do excellent team, excellent products and innovative technology, but also do excellent entrepreneurial project enabler, so as to serve decentralized innovation for a long time.
When it comes to investing in projects, OKX Ventures uses different models and evaluation methods for different projects. Here we briefly discuss a few important dimensions, including product and technology innovation, token economy, and team background and company profile.
看好的细分赛道
Investing is future-oriented, looking for greater opportunities in a rapidly changing market. OKX Ventures is bullish on Ethereum ecology, multi-chain ecology, Onboarding innovation for new users, and DeFi revitalization.
In terms of Ethereum ecology, OKX ventures is a long-term investor in Ethereum and its Layer2s, We have invested in Ethereum donation platform Gitcoin, Layer 2 ecosystem projects such as Arbitrum, Scroll, Zksync and Starkware, and will continue to increase various innovations based on Ethereum ecosystem in the future.
In terms of multi-chain ecology, we have laid out multi-chain ecology, cross-chain ecology and corresponding ecological projects. Ecology and projects such as Near, Polkadot, Solana, AR, Cosmos, Layerzero, Aurora, Astar Network, Permaweb, Taki, Acala, Zenlink, etc.;
In terms of Onboarding, new users are of vital importance to the industry. We will pay attention to continuously generating new and innovative applications with low thresholds for the industry in the long term. Therefore, we are optimistic about the innovative projects with "onboarding" capability.
Regarding DeFi's rejuvenation, we remain optimistic and cautious about DeFi. Efficient decentralized trading mechanisms, compliance and corresponding infrastructure are all areas of our investment. In addition, we continue to keep an eye on DeFi's innovative programs and mechanisms such as unmanaged DApps, derivatives and options, DeFi extension solutions such as L2 rollups and Cosmos app chain, and real world assets (RWA).
如何理解加密行业周期
The industry cycle has no direct impact on OKX Ventures investment projects. We devote our energy to the development of the industry itself and the progress of technology. We pay attention to the Danksharding, EOF and Layer1 zkization of Ethereum, and the application innovation that lowers the user threshold. Focus on AI production tools for increased productivity, etc. From the perspective of technology development, the crypto industry is still in the early stages. There are a lot of innovative technologies and ideas worth paying attention to, and the scale of the entire industry is constantly expanding.
As the macro environment accelerates the deleveraging of the crypto industry, moves the industry toward more healthy compliance, and paves the way for new innovations in the asset class, the next three years will be the most productive time to build and invest in the crypto industry. OKX Ventures is continuing to add quality assets. In the future, $1 billion will be spent to continue to support Ethereum and Layer2 ecology, infrastructure, Web3 and other key tracks.
结语
Institutional investors not only have capital and information advantages, but also have a more acute sense of smell, more accurate judgment, and a more thorough and profound understanding of the industry, which provides references for the outside world. Through our in-depth dialogue with OKX Ventures, we have deepened our understanding of Layer2 and given our users new insights when choosing and investing in projects.
Layer 2 as a bridge of Ethereum 2.0 transition, its importance and necessity is self-evident. With the arrival of Arbitrum airdrop, the whole Layer 2 plate is pushed to the climax. Different Layer 2 schemes are different in security, decentralization, and scalability. Therefore, it has evolved into a diversified development pattern of side chains, Plasma, state channels, Rollups, Validium, and hybrid schemes. However, the TVL of Rollups is far ahead.
Ethereum 2.0 is a complex and long process. It can be predicted that with the continuous expansion of the industry scale and the optimization and iteration of Layer 2 scheme, more and more Dapp applications will be built on Layer 2, leading to further migration of users and funds to Layer 2, and its ecology will be more prosperous.
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