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OKX Ventures 2024 Preview: Key Projects and 7 Major Predictions

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Source: OKX

Over the decades, Bitcoin has demonstrated tremendous creativity and resilience in a challenging market environment, injecting innovative genes into modern currency systems, internet technology, and the financial sector, and ultimately successfully entering the ranks of global mainstream assets.

On January 11th, the US Securities and Exchange Commission (SEC) gave its final approval for 11 Bitcoin ETF spot products. Behind this milestone victory is the profound thinking, innovative practices, and patient perseverance of the builders of the cryptocurrency industry towards the concept of a digital society in the future. Capital played a crucial role in this process, never wavering in faith and pursuit of the future, even during the two-year bear market, using financial strength to turn the tide in times of crisis, and working together to paint a beautiful picture of the digital future, becoming the strongest engine driving continuous innovation in the cryptocurrency industry.

In 2023, the encryption industry is expected to grow rapidly, with a total market value of 1.761 trillion US dollars. Bitcoin's market value has returned to the global top 10 assets with a value of 836.3 billion US dollars. The total number of institutional financing rounds is 1178, with a total amount of 9.13 billion US dollars. OKX Ventures is deeply involved in this.

In this year, OKX Ventures remained steadfast during the difficult period of the primary market, and invested over 50 million US dollars in total annually. On the one hand, it cooperated deeply with ecosystems such as Solana, Near, Polygon, Avalanche, etc., to jointly establish an ecological fund to support developers in building core components on the chain and participate in community co-construction. On the other hand, it held hackathon competitions with Gitcoin and Blockbooster in San Jose and Hong Kong to discover innovative and high-quality projects, and provide comprehensive support with its differentiated capabilities and resources. In addition, OKX Ventures is also gradually expanding its support for the deployment team on X1.

In the year of the dragon, the improvement of macroeconomic situation and the innovation cycle of the encryption industry are resonating, and a new round of bull market is about to begin. With the expectation of the US Federal Reserve's interest rate, the upgrade of the Cancun in the encryption industry, the halving of Bitcoin, and the acceleration of ETF's global adoption of BTC, many favorable factors are expected to usher in a bright 2024. As a top investment institution in the encryption industry, OKX Ventures has a visionary investment vision on many potential projects, and after in-depth research on industry innovation and changes, it has predicted the 7 most explosive tracks in 2024.

2023 Key Project Review

OKX Ventures invests in projects covering core areas such as infrastructure, GameFi, DeFi, Web3.0, Bitcoin ecology, AI, etc. In terms of quantity, 50% are infrastructure and DeFi projects, and 20% are GameFi projects, reflecting the importance placed on infrastructure. The infrastructure of the cryptocurrency industry provides a secure, efficient, and reliable operating environment for cryptocurrency assets and blockchain technology. Its completeness directly affects the development and sustainability of the entire industry. Strong infrastructure will help promote innovation, attract more participants, and lay a solid foundation for the long-term prosperity of the cryptocurrency industry.

In 2023, the cryptocurrency industry gradually emerged from the slump, but due to the two-year bear market, the primary market also encountered a relatively difficult period. During this time, OKX Ventures persisted in investing in high-quality entrepreneurial teams and projects, and with the help of professional knowledge and a thriving exchange ecosystem, provided diversified and comprehensive support for innovative projects with great potential. The total investment amount last year exceeded 50 million US dollars.

Invested in many high-quality projects including Polyhedra, Celestia, Kakarot, MegaRollup, Altlayer, Bitsmiley, Bewater, Babylon, Cetus, Ethena, Flashbots, HUG, Moonbox, Mocaverse, Matr1x, Orbiter, RepubliK, Rage Trade, Sei, Taiko, TRLab, ZKM, and more.

Next, a selection of representative innovative projects will be briefly shared based on different tracks.

一、Layer2 Scaling Solutions

Layer2 has brought significant improvements to the Ethereum network, enhancing its scalability, transaction efficiency, cost-effectiveness, and alleviating main chain pressure, among other benefits. Currently, there are many solutions such as ZK Rollup, Optimistic rollup, Validium, and Plasma, which play an increasingly important role in enhancing privacy protection and reducing transaction costs. Here, we will focus on two projects, Scroll and Taiko.

1) Scroll: is the native zkEVM Layer2 solution for Ethereum, representing Type 2 zkEVM. It enables native compatibility with existing Ethereum applications and tools. Scroll processes off-chain transactions and publishes concise correctness proofs on-chain. Compared to the Ethereum base layer, this will bring higher throughput and lower costs.

2) Taiko: is a decentralized Ethereum equivalent ZK-EVM and general ZK-Rollup. Its goal is to allow developers and users of dApps developed for Ethereum L1 to use them on Taiko without any changes. Therefore, dApps can be easily deployed to L2, inheriting Ethereum's security while generating lower transaction fees than L1.

二、MEV Track

MEV (Maximum Extractable Value) refers to the maximum profit that miners or block producers may obtain during the transaction execution process on the blockchain due to different transaction orders, packaging, and confirmation methods. Although optimizing the order of transactions can maximize the participants' profits, it has also sparked discussions on a series of security and network effect issues. Currently, developers, communities, and others are working together to find more fair, efficient, and secure MEV solutions.

1) Flashbots: A mainstream MEV solution aimed at mitigating the negative externalities and risks that MEV poses to smart contract blockchains. It provides a permissionless, transparent, and fair ecosystem, including three goals: democratizing the acquisition of MEV revenue, bringing transparency to MEV activities, and redistributing MEV revenue.

Three, Cross-Chain Track

The cross-chain bridge solves the interoperability problem between different public chains, promotes the flow of encrypted assets and applications, provides users with greater choice and flexibility, and helps to build a more powerful, diverse, and interconnected blockchain ecosystem.

1) LayerZero: is a cross-chain interoperability protocol designed for lightweight message transmission, providing trusted and secure message delivery, and configurable trustlessness.

2) Orbiter Finance: It is currently the most widely used Rollup bridge on Ethereum, used to transfer native assets of Ethereum. It has proposed an inter-chain message transmission protocol, which provides an aggregation intermediate layer for zk-rollups, improving Layer2 and reducing gas consumption.

Four, Cosmos Ecosystem

Celestia, Sei Network and other high-quality projects are increasingly built on Cosmos, an open platform and ecosystem aimed at solving blockchain interoperability issues, allowing secure and reliable cross-chain communication between different blockchains. By providing efficient cross-chain communication and interoperability tools, Cosmos offers developers and users a wider range of choices, and its ecosystem is constantly growing and expanding.

1) BeraChain: is a Cosmos Layer1 based on EVM architecture, using PoL (Proof of Liquidity) consensus, introducing a three-generation token system on the Bera network, with network Gas token BERA, ecological stablecoin HONEY, and non-transferable Bera governance token BGT.

2) Sei Network: is a high-performance Layer1 designed for digital asset trading, with the industry's shortest transaction latency, as low as 300 milliseconds. It has a built-in Order Matching Engine (OME) that can help trading applications expand and prevent front-running mechanisms to resist MEV. Recently, its parallel EVM narrative has sparked market interest.

Five, AI+Web3 Gaming Track

Web3 games return data ownership to players, which means players can fully own and freely trade the encrypted assets they acquire in the game. They can also participate in improving the game, developing new features, adjusting the economic model, and receiving rewards through voting rights, thus participating more deeply in the game's ecosystem. The development of Web3 games is driving the gaming industry towards a more open, transparent, and user-friendly direction.

Matr1x: is a metaverse brand that includes self-developed high-quality games or collaborations with third parties, game IP development partnerships, and global esports events. Matr1x will showcase its game trilogy (Cyber Earth - Mars Immigration - Interstellar Exploration) through three unified world-view games: Matr1x FIRE (first-person shooter game), Matr1x WAR (shooter + MMORPG), and Matr1x EVOLUTION (SOC).

Six, Bitcoin Ecology

Solana charges state rent to DApp teams and collects voting fees from validators, creating additional value for SOL coins beyond transaction fees and providing a token value mechanism different from Ethereum. This shifts costs from users to DApp teams and infrastructure providers for better scalability. This not only benefits user experience (by reducing user transaction costs), but also provides value drive for the Solana network. Compared to Ethereum, Solana offers better performance metrics at the cost of higher hardware requirements. This does not directly lead to centralization, but helps achieve high throughput and fast transaction confirmation times. Solana's smart contracts operate through standardized structures such as Metaplex, reducing due diligence burdens for users and developers and promoting entrepreneurship, innovation, and contract standardization that may bring lower costs to developers and users.

Solana's ecosystem provides more possibilities. Teleport, Helium, and Render Network use Solana's scalability and efficiency to redefine traditional models in ride-sharing, IoT communication, and GPU rendering. Solana's role as a speed catalyst, reducing transaction costs, and network scale architecture makes it the preferred choice for entrepreneurs to navigate the decentralized future. As these projects seamlessly integrate with Solana, they not only solve the limitations of centralized systems but also point the way to building more inclusive, resilient, and dynamic decentralized physical networks.

Four, AI Narrative and Web3 Technology are closely integrated, and new applications emerge

2022 to 2023 is known as the first year of AI explosion. In October 2022, OpenAI released ChatGPT and accumulated 1 million users in just five days. According to Delphi's statistics, ChatGPT continues to break records and becomes the fastest application to accumulate 100 million users. Against this backdrop, artificial intelligence is gradually integrating into the cryptocurrency market. According to CMC's data, the market value of the Generative AI sector has exceeded 67 billion US dollars, with a trading volume of over 600 million US dollars.

The AI projects in the encryption industry are mainly applied in decentralized computing power, decentralized AI public chain, AI model trading market, AI applications, ZKML and other directions. Among them, OKX Ventures believes that decentralized computing power, AI Agent, and AI+Web3 applications are worth continuous attention.

Regarding decentralized computing power, the decentralization feature of blockchain is advantageous in reducing costs. The higher the degree of decentralization of computing power nodes, the lower the price of unit computing power. There is great potential for introducing Web3's unique token economic governance model, model training and inference, or optimization and allocation of computing power.

AI Agent is an intelligent agent program with autonomous decision-making and execution capabilities. By simulating and playing human roles, it can enhance the communication capabilities between blockchain and the outside world, and intelligently select the most suitable cross-chain solution for user needs, thereby breaking the "information island" problem caused by the prosperity of the public chain ecosystem and providing users with a better cross-chain experience.

Image: OKG Research

In terms of AI + Web3 applications, the more reasonable application of AI is to enhance user experience and improve development efficiency, or as an important part of the blockchain market, combined with existing blockchain applications, such as AI combined with DeFi, Game, NFT, etc. The integration of AI and Web3 technology, with the support of compliance environment, is expected to change the user behavior habits of Web3 in the current stage, accelerate large-scale adoption, and jointly build a trusted digital society.

AI is also one of the key areas that OKX Ventures focuses on. Currently, it has invested in projects such as Flock and MyShell. Taking MyShell as an example, MyShell leads in multimodal voice models, with over 12k+ stars on Github, 420k+ registered users, 50k+ creators, 70k+ private robots, and 900 public robots, becoming a model for the combination of AI Agent applications and Web3.

Five, the new paradigm of chain games is exploding, FOCG breakthrough

The blockchain gaming industry has not yet exploded in 2023, but due to its good data and the property of carrying a large number of users, chain games still have huge potential as a high-quality track. In the past year, the gaming industry has disclosed a total of 133 transactions, raising $1.18 billion in funds, and the total number of gaming projects has reached about 2,500 to 3,500. In addition, according to Footprint's data, the total number of users in the GameFi field reached 340 million in 2023, with a total transaction volume of over $3.2 billion and a total transfer frequency of up to 7.4 billion. The on-chain transaction volume generated by gaming projects is 23 times higher than the average of DeFi protocols. For example, Sweat Economy, supported by NEAR, is one of the most widely used mobile earning applications in the world. In the past 30 days, it has had 1.04 million UAW. Currently, there are more than 145 million users who remain active and healthy while earning cryptocurrency.

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Image: Delphidigital

With the arrival of opportunities in the 3A gaming industry, blockchain games will become a new point of user growth. From the supply side, after a year of development in 2023, a large number of high-quality games are poised to be released. It can be imagined that with the support of 3A game IPs, traditional game users will smoothly enter the Web 3.0 world, gradually opening up new prospects for the gaming industry. OKX Ventures predicts that 2024 may usher in a revival of blockchain games, and the battle for users and asset value between various games will unfold. Currently, the capture ability of 3A games for users and asset value is highly regarded, and projects such as BIG TIME, Ember Sword, and Shrapnel have been consecutively launched. For example, the timing of the launch of the BIGTIME token was just right, coinciding with the beginning of the market recovery. Players earn in-game token rewards every day, and the token price has also achieved a good increase, making it one of the more successful investments.

In the future, FOCG (Fully Onchain Game) will also become a new growth point in the gaming industry. FOCG refers to games where assets, settlements, and game logic all occur on the blockchain, creating a new and more complex paradigm for on-chain applications that will bring financialization and composability. Currently, the FOCG track is in a relatively early stage of development and construction, with applications and assets still somewhat scarce, thus presenting a huge growth opportunity. OKX Ventures is optimistic about FOCG and has focused on projects in the FOCG direction such as Curio to support industry innovation. It can be expected that FOCG will continue to grow around three peripheral ecosystems: engines, game content, and wallets/trading platforms.

Six, DePIN continues to maintain high growth

DePIN is a physical infrastructure grid that uses blockchain technology to transparently and efficiently manage real-world services, and is expected to explode in 2023. Currently, DePIN's market value exceeds $20 billion, with a growth rate of over 50% since the beginning of the year, a trading volume of $11 billion, and an annual on-chain income of approximately $15 million. According to the DePIN report released by Messari, the total number of DePIN ecological projects will exceed 650 in 2023, covering six sub-sectors: computing, artificial intelligence projects, wireless, sensors, energy, and services. It is worth noting that DePIN's income is based on utility rather than speculation. Compared to other cryptocurrencies, which have fallen by as much as 70-90% in bear markets, DePIN's income has only dropped by 20-60% from its peak, making it more moderate and sustainable.

Image: Coinmarketcap

OKX Ventures believes that in terms of applications, by 2024, DePINs will begin to explore new directions that combine AI, ZK, games, and other fields in a deeper way. For example, ZK-verifiable GPU cloud services can be implemented on the chain within 1-2 years, while centralized providers will be unable to provide services for them. In terms of narrative, the infrastructure of the DePIN track and specific Layer1 directions are promising.

Considering the advantages of high throughput, low cost, and large developer community, most DePINs are currently built on general-purpose chains such as Solana or Polygon. Projects like Helium and Render Network have already migrated to Solana, bringing a large number of users to the platform. According to Dune's data, the cumulative number of users on IOTex has reached 440,000, and the number of users on Helium on Solana has exceeded 180,000. From the perspective of user demand, by 2024, specific layer1s dedicated to DePINs will begin to launch and expand, and specific dedicated chains serving DePINs will emerge.

Seven, the macro environment is improving, entering a new era of encryption

With the establishment and improvement of regulatory systems for the cryptocurrency industry in various countries and regions around the world, such as El Salvador, Canada, Dubai, and Brazil, the industry is taking big steps towards compliance and may obtain a more favorable development environment and expand its popularity by 2024. Especially with the official approval of Bitcoin spot ETF by the US SEC, traditional financial investors have officially gained exposure to Bitcoin, which will further catalyze the compliance and scale development of the cryptocurrency industry, and force traditional finance to embrace innovation, jointly promoting the fairness, safety, and transparency of the financial industry.

According to Blockworks data, as of January 12, 2024, the first-day trading volume of the US Bitcoin ETF reached $4.6 billion, with Grayscale's GBTC trading volume exceeding $2.1 billion, BlackRock's IBIT exceeding $1 billion, and Fidelity's FBTC exceeding $680 million. Eric Balchunas, a senior ETF analyst at Bloomberg, said that in the two days since the launch of the Bitcoin ETF, nine issuing institutions have absorbed $1.4 billion in funds, exceeding the outflow of $579 million from GBTC, with a net inflow of $819 million. Both traditional macro funds and ultra-high net worth individuals continue to inject a large amount of liquidity into the crypto industry. From another perspective, the volume of on-chain stablecoins is also increasing, indicating that new funds are continuously flowing in. According to DefiLlama data, the total market value of stablecoins is $133 billion, reaching a new high, with USDT's market value reaching $94.9 billion, accounting for 71%.

Image: DefiLlama

With the support of capital, the development of the encryption ecosystem will be accelerated towards a more perfect direction. The blockchain infrastructure has developed rapidly in the past few years, and with the catalysis of VC capital, it has created necessary conditions for new applications and innovations. From 2017 to 2022, about $73.4 billion flowed into encryption-related enterprises and projects. In 2023, the total financing amount reached $9.13 billion, with a total of 1178 financing rounds.

Image: ROOTDATA

From January 2020 to January 2024, the categories of financing, except for CeFi, have largely flowed into infrastructure, Games, NFT, and DeFi. These types of projects have accumulated enough funds during the bear market period and have a certain guarantee in product delivery, becoming new targets for the next wave of innovation.

Image: ROOTDATA

Summary

The rise of the encryption industry has become the engine driving the huge changes in Internet technology and finance, and has opened the door to the future world. In this challenging and opportunistic field, the builders of the encryption industry have become the creators of the digital future, with their profound understanding and unique insights into blockchain technology, and through innovation and dedication, they have achieved great success in the encryption industry today. However, these builders are not satisfied with the status quo, but continue to push the encryption industry forward. They participate in open source projects, lead entrepreneurial companies, actively participate in community construction, and promote the prosperity and development of the entire industry. Their spirit of dedication not only inspires more young people to join this field, but also injects fresh blood into the entire encryption economy.

In addition, with the emergence of new technologies and solutions and the gradual establishment of a global regulatory system for encryption, the relationship between the encryption industry and the traditional financial system is constantly evolving. The interaction between the two sides is changing from competition and cooperation to integration, thereby affecting and promoting market liquidity between the two. It is evident that the encryption industry will reach a new level in 2024. However, the large-scale liquidity entry is not achieved overnight, and the encryption industry is showing a rapidly changing development trend. The emerging innovative projects urgently need professional support in terms of funding, technology, and strategy.

Looking back at history, since its birth in 2009, Bitcoin has experienced several economic cycles and market fluctuations, but it has always been able to rebound and create new highs, which has strengthened the confidence of long-term value investors in Bitcoin, including OKX Ventures. In the rapidly changing market environment, OKX Ventures keenly perceives market trends, flexibly responds to market changes and adjusts strategies, and always firmly increases investment in industry innovation projects, not only successfully experiencing several rounds of bull and bear cycles and gaining rich rewards. In the future, OKX Ventures will continue to deepen its involvement in the primary market of cryptocurrencies, providing support for industry builders and these high-quality start-up teams and projects.