OKX Ventures May 2023 Monthly Report: Covering LSD, Decentralized Derivatives, and MEV Tracks

Over the past month, the cryptocurrency industry has been rapidly developing, and OKX Ventures has witnessed this rapid development:

The BTC ecosystem continues to evolve rapidly, and OKX introduces the concept of BRC-30. BRC-30 adopts the design principles of BRC-20 and introduces stake-related operations such as deposits, minting, and withdrawals. BRC-20 has seen a rapid growth in May, with a total market cap of $475 million and 24k+ BRC-20 tokens. BRC-30’s push for block space demand can allow miners to earn higher income and bring new communities to Bitcoin, enhancing the vitality of the Bitcoin community. OKX Ventures will firmly believe in and continue to pay attention to the development of the Bitcoin ecosystem, and work with partners such as Unisat to lead the industry and continue to explore.

The ZK Layer2 ecosystem is developing rapidly. zkSync Era TVL, led by zkSync, has exceeded $440 million and shows a significant upward trend, ranking third in the entire Layer 2 ecosystem. In just three months, the cumulative number of depositors has jumped from 10k to 770k, achieving nearly an 80-fold user expansion. Among them, about 20k accounts contributed more than 27 million in transactions in three months. Although there is still a big gap compared to the TVL of Arbitrum and Optimism, zkSync’s daily user payments have gradually surpassed the previous two.

Stargate, a LayerZero project at the forefront of multi-chain life, has grown more than 300% since March, with active users increasing by 30 times and the number of users remaining at around 150k, providing users with more convenient trading methods, cheaper transfer fees and more secure cross-chain methods. The MEV field also maintains a good momentum, and the MEV TAM has accumulated to about 450 million, and Flashbots has launched new features such as SUAVE.

OKX Ventures has continued to pay attention to the industry in May, and continues to look at ZK ecology, infrastructure, DeFi, Web3.0 and other tracks, and has invested in projects such as Prisma, Rage Trade, and Shutter.


Project Overview

Prisma Finance is an LSD stablecoin protocol that focuses on realizing the full potential of Ethereum liquidity collateral tokens.

Prisma allows users to mint a stablecoin (acUSD) fully collateralized by a liquidity collateral token. This stablecoin will be incentivized on Curve and Convex Finance to create an efficient capital flywheel, allowing users to earn transaction fees, CRV, CVX, and PRISMA beyond Ethereum staking rewards.

Prisma’s codebase is entirely immutable, based on Liquity, to create a powerful protocol and truly decentralized stablecoin with advantageous and flexible collateral parameters, making it attractive to those who want to take full advantage of LST without the risk of other stablecoins. The Prisma DAO will be responsible for managing parameters, emissions, and protocol fees.

Project Highlights

Prisma allows users to mint Prisma’s native over-collateralized stablecoin (acUSD) using any of the following LST, providing unparalleled capital efficiency for liquidity providers of ETH tokens. Loans secured by LST will be automatically repaid with the help of Ethereum staking rewards.

Prisma’s code is based on Liquity, with complete immutability, aiming to create a powerful protocol and truly decentralized stablecoin with flexible collateral parameters that attract users who want to fully leverage their liquidity collateral token potential. The Prisma DAO will be responsible for managing parameters, issuance, and protocol fees. The project is supported by many top industry founders such as Curve Finance, Convex Finance, FRAX Finance, etc.

OKX Ventures believes that the Ethereum liquidity collateral token (LST) market has grown rapidly in recent years, with a current market value of USD 18 billion, accounting for 10% of the entire Ethereum market value, and has become the DeFi category with the largest TVL and the most potential market. Prisma Finance may represent one of the most promising directions in the LST track.

Rage Trade

Project Overview

Rage Trade is a fully on-chain perpetual futures protocol based on the Arbitrum ecosystem, which creates deep liquidity by innovatively recovering underutilized LP through UNI v3 treasury strategies. The project was launched on the Arbitrum network on December 13, 2022.

The core products of Rage Trade are Delta Neutral Vault and 80-20 Vault. Delta Neutral Vault allows users to earn ETH rewards on GMX in a Delta-neutral way by recycling liquidity across the chain; 80-20 Vault allows at least 80% of LP tokens to continue to generate revenue on the original protocol, with the remaining 20% used as virtual liquidity for Rage Trade.

Project Highlights

Fully recoverable liquidity across the chain: LayerZero allows all existing liquidity funds from other protocols, including AMMs (such as Curve), money markets (such as Aave), and derivatives protocols (such as GMX), to enter, which can expand the depth of the capital pool.

80-20 Vaults Strategy: can help protocols achieve risk balance, i.e., improving capital efficiency while maintaining fund safety.

Delta Neutral Vault: Provides liquidity on GMX in a Delta Neutral manner (through two vaults, the Risk-Off Vault and the Risk-On Vault, shorting on Aave to reduce risk exposure to ETH and BTC) while earning ETH rewards on GMX. The advantage is to ensure that GLP stakers receive returns by reducing market risks.

Using vAMM model for arbitrage: The vAMM model is independent of oracles and price-pegged assets, so arbitrageurs can hedge their positions on CEX and profit from price differences.

OKX Ventures believes that Rage Trade can provide users with higher capital efficiency, more sufficient liquidity, smoother trading experience, and more considerable LP returns through the above features.


Project Overview

Shutter Network is a MEV protocol that uses threshold encryption to prevent front-running/anti-cheating. Their main work is to cooperate with L2 and side chains to integrate this mechanism and add an encrypted or shielded mempool to protect the MEV of the entire rollup/side chain while improving the anti-censorship feature.

Project Highlights

Currently, MEV is still a huge obstacle to the mainstream adoption of DEFI, and the current ecosystem’s approach to this problem is heavily dependent on centralization and trust assumptions, such as solving this problem in relayers or sorters. Shutter can improve this situation, provide lower trust assumptions for MEV issues, improve user experience, and the stability of decentralized markets.

The Shutter team has made rapid progress in product landing, and it is expected that the first instance of this type of pre-run and censorship protection will be implemented in the Gnosis chain. In addition, they have also received funding from Optimism DAO as the first step in adding encrypted mempool to the OP stack. Shutter’s product has been recognized and demanded by multiple ecosystems.

OKX Ventures is optimistic about the MEV track and believes that Shutter can effectively prevent malicious parts of MEV (pre-run, sandwich attack), retain “benign” MEV (arbitrage, liquidation), and provide more use cases based on its technical architecture, such as using the same threshold encryption DKG to provide shielding/encrypted voting in Snapshot.

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