Preface
In 2020, the cryptocurrency industry saw the DeFi Summer. In 2021, Bitcoin and Ethereum hit record highs. Then NFT became popular, and everyone was looking forward to the blockchain in 2022. But looking back at the past, we find that the cryptocurrency industry has had a very bumpy year.
At the beginning of 2022, in order to cope with inflation, monetary and fiscal policies of many countries around the world began to tighten, and the macroeconomic environment continued to deteriorate. The cryptocurrency field is also difficult to remain immune. The Terra ecosystem quickly disintegrated in the middle of the year, and some large institutions (such as Three Arrows Capital, Celsius, Blockfi, etc.) also experienced chain liquidation and bankruptcy. The recent FTX/Alameda crash has caused a large number of customers to suffer heavy losses, and the blockchain market continues to fluctuate.
Despite the grim macro-environment, practitioners have shown admirable perseverance and fighting spirit. Developers continue to promote innovation, and Bixin Ventures and other investors are constantly exploring excellent projects and investing a lot of money to support the development of the industry. As the difficult year is coming to an end, Bixin Ventures will review its recent investment portfolio, further consolidate its investment principles, and remind itself not to forget its original intention and mission to promote the development of the industry.
Our Investment Manifesto
Adhering to the investment principles of "decentralization", "no access" and "autonomy", we believe that decentralized technology can strengthen individual ownership of assets such as data. With the advancement of technology, governance and decision-making power will also be transferred from centralized participants to a more widely dispersed group of people, fully motivating individual creativity and participation.
Based on our core principles, we focus on the following directions:
Infrastructure projects that promote large-scale application of Web3 networks
Innovative tools and applications with sustainable economic models and billions of active users
As an investment firm, we will grow with founders while leveraging our expertise and resources in the Asia Pacific region to help entrepreneurial teams develop, including global expansion.
The most exciting event in 2022: ▐ Blockchain infrastructure
Blockchain infrastructure is all-encompassing and rich in connotation, but they ultimately have to achieve one goal: how to abstract the underlying blockchain infrastructure so that end users do not feel its existence. Applications will drive blockchain to be used by large-scale users, and the goal of blockchain infrastructure is to ensure that it can meet the various needs of these applications.
L1s
Layerone (the underlying public chain) is the foundation on which all other applications are built and will continue to attract our interest in the future. In the past year, we have invested in:
(1) Two public chains that support the Move language: Aptos and Sui. The team comes from the Diem team with deep technical accumulation. We have incubated Starcoin, the first public chain that uses the Move language POW consensus, and gained a lot of experience in the process. We use this valuable experience to deploy and allocate developer resources to support the development of these two ecosystems.
(2) Mina, a privacy-focused public chain, is building a security layer with privacy features for Web3, while reducing the computing power requirements of node participants, thereby increasing decentralization.
(3) We also participated in the financing of Scroll, a L2 ecosystem based on ZK-rollup technology. We believe that zero-knowledge proof technology will be the key to achieving trustless privacy.
(4) To massively scale the data availability layer, we invested in Subspace Network, a highly scalable, modular blockchain that provides a shared infrastructure layer for builders across the ecosystem.
We are also working on various L1 blockchains to help us understand this niche, which you can learn more about via the hyperlink above.
Given the different priorities each blockchain is designed with, we recognize that there are many different approaches to blockchain scaling:
(1) Ethereum L2 provides a cheaper and faster alternative to L1 while retaining its decentralized properties. Of course, if users wish, they can also choose to settle directly on L1.
(2) The Cosmos blockchain design is centered around interoperability, giving birth to an ecosystem of application chains, each of which runs its own set of validators to manage economic security while being connected through the Inter-Blockchain Communication (IBC) protocol.
(3) The emergence of Alternate Layer in Solana, Avalanche and Luna in 2021, as well as investors’ strong interest in Aptos and Sui, two new public chains developed based on the Move language, also demonstrate the industry’s demand for high-performance, high-throughput and low-cost blockchains.
middleware
As the underlying blockchain evolves, we foresee some new trends emerging that could bring opportunities in the following segments:
(1) The network state will grow and require more management
(2) Increase the value of on-chain economy with greater security
(3) Stronger connections with the Web2 world will facilitate easier transfer of data from off-chain to on-chain
(4) Users want to transfer value securely across different blockchains, and the demand for interoperability will increase
(5) Better self-custody of personal assets
Therefore, we believe that decentralized storage solutions, decentralized staking solutions, permissionless oracles, trustless bridges, and non-custodial wallet solutions will play a big role in these trends respectively.
As a result, we invested in:
(1) Arweave, a decentralized storage network that utilizes idle disk space
(2) Swell Network, a permissionless, non-custodial, and liquid ETH staking protocol
(3) Switchboard, a permissionless oracle that allows the creation of high-performance data feeds from any API
(4) Layer Zero, a full-chain interoperability protocol that supports cross-chain communication
(5) Gnosis Safe, a digital asset management platform that allows multi-signature schemes
(6) Meson Network, a bandwidth market on Web3, focuses on integrating and monetizing the idle bandwidth resources of long-tail users at low cost
(7) Safeheron, a multi-party computing (MPC) and trusted execution environment (TEE) technology provider that improves custody security
(8) Bitkeep, a decentralized multi-chain digital currency wallet, is committed to providing users with safe and convenient one-stop digital asset management services
(9) BloXroute, a high-performance, globally distributed blockchain transmission and content distribution network. Similar to CDN, BloXroute has pioneered BDN technology and provides BDN services that accelerate on-chain transactions for DeFi traders on Ethereum and BSC.
We also further incubated:
(1) OneKey, an alternative hardware wallet solution to Ledger and Trezor
(2) Openblock, an MPC wallet, does not require users to keep mnemonics and can restore their accounts through social means.
Another area worth paying attention to is those on-chain data processing projects, such as indexing services, API calls, etc., which are very important for application developers.
▐ Application Layer
Back to the application layer, we believe that user-centric design and value-added should be the core in the underlying logic. Similar to how Web2 consumer applications gradually gained mass adoption after iterating their product UI/UX, we believe that Web 3 applications need to make the user experience as seamless and straightforward as possible. For example, the difficulties in a new user's experience may include: obtaining crypto assets, the application registration process, the need for multi-signature verification, etc. Most notably, the inability to interact with most applications on mobile devices is a huge pain point, which leads to incompatibility with existing user groups.
DeFi
The first wave of Defi Summer showed the real demand for such products, but mass-market availability remains a critical issue that has yet to be resolved.
DEX
There is no doubt that the demand for decentralized exchanges is increasing, especially after the collapse of centralized exchanges. Currently, most of the trading volume happens on CEXs simply because they have higher availability. In this case, the next wave of DeFi products needs to have similar or higher availability to attract more users, especially non-crypto native users.
As a result, we invested in:
(1) Drift protocol, a high-performance decentralized exchange on Solana that will replace the way people execute trades and swaps on CEXs. The upcoming Drift v2 version will include several new products, such as spot swaps and lending.
(2) Pontem is a development studio on Aptos that has launched products such as Liquidswap, the largest AMM-based DEX on Aptos, and Pontem Wallet. Pontem Wallet is a consumer-centric wallet that not only offers a great user experience and low fees, but also seamlessly integrates with most applications in the Aptos ecosystem.
Derivatives
Likewise, we believe that on-chain and decentralized derivatives are the future. The underlying problem is the lack of mature infrastructure that allows these applications to flourish like centralized applications. As mentioned above, progress made at the infrastructure layer could be a turning point for the development of decentralized derivatives.
As a result, we invested in:
(1) Arrow Market, a decentralized financial market options protocol on Avalanche, aims to democratize the entire options trading channel (from market making to brokerage to clearing and settlement).
(2) Rage Trade, the most liquid ETH perpetual trading platform and stablecoin farm on Arbitrum. It is worth noting that Rage Trade is powered by Layer Zero, which enables them to unify the liquidity of multiple chains.
(3) Struct Finance, a derivatives platform that provides users with a way to customize interest rate products and combine them with other available products in the ecosystem to build high-quality structured products.
Stablecoins
A decentralized economy requires decentralized stablecoins. The collapse of LUNA not only heralded the end of algorithmic stablecoins, but also further emphasized the market's demand for truly decentralized stablecoins. Although there are currently varying degrees of decentralization in stablecoin models, we believe that the industry will continue to innovate and work towards this ultimate goal.
As a result, we invested in:
Thala is an overcollateralized, yield-stable stablecoin protocol backed by a basket of on-chain assets. Its diverse collateral of liquidity pledge derivatives, liquidity pool tokens, deposit receipt tokens, and RWAs ensures its decentralized, censorship-resistant nature without compromising capital efficiency.
game
Now that we’ve experienced the last wave of crypto-enabled P2E games, we believe the next wave will focus on leveraging blockchain technology to enhance the gaming experience, whether in game asset ownership or interoperability or even in the eSports space.
As a result, we invested in:
(1) Shrapnel, an upcoming AAA first-person shooter game based on Avalanche. The game is powered by next-generation community-driven tools and built on the blockchain to provide true ownership.
(2) Star Atlas, a next-generation gaming metaverse that integrates state-of-the-art blockchain, real-time computing, multiplayer video games, and decentralized finance technologies.
(3) Midnight Evergreen, a platform for a range of AAA-level self-made and third-party games for different users. They try to integrate NFTs into the classic gaming experience in a way that enhances the experience.
NFT
We are still in the early stages of the NFT development cycle, and the first real wave of NFT craze began with PFP in 2021. NFT will enter art, music, sports, pop culture, brands and other fields, while driving the next wave of mainstream consumer adoption, and the importance of decentralized digital asset ownership will also be more widely accepted.
As a result, we invested in:
Few and Far, the next-generation Web3 experience platform, will include other projects in the NEAR ecosystem such as NFT, DeFi, and games.
social contact
Now is the best time for Web3 social networking to replace current social media platforms. Data ownership, portability, transparency, and anti-censorship make the top projects in the Web 3 social track more and more attractive. In addition, allowing users to truly own content will change the power structure between current platforms and content creators.
We invested in:
Solcial, a decentralized social network built on Solana, allows anyone to share content in a completely permissionless manner, avoids censorship, and rewards users and content creators in a fair manner.
Planet is a free, open-source tool for publishing and tracking web content. Planet does not rely on centralized servers, but uses IPFS for peer-to-peer content distribution.
Lifestyle & Entertainment
Web3 can help people integrate life scenarios into entertainment applications in a more creative way. Having such data will unlock new application scenarios, and applications for C-end users will also have new developments.
We invested in:
Gritti, a Web3-based lifestyle social app that helps users achieve their exercise goals and maintain a healthy lifestyle.
Here are some of the research we conducted in 2022: Featured Research
Solana Pay and the Future of Web3 Payments
A Deep Dive into Avalanche and Subnets
The Next Tough Battle: Ethereum Scaling Battle
The Importance of Staking Aggregators in the PoS Era
Cosmos Insights: A Focus on Interoperability
The Future of Stablecoins
Solana’s Long-Term Viability
A comprehensive analysis of the Move language: Javascript for Web3
Censorship Resistance of Bitcoin and Ethereum
GenesysGo: An overlooked important infrastructure provider on Solana
《In-depth NFT market data, exploring new trends in NFT market iteration》
Portfolio Deep Dive
"Bixin Ventures: Why we invested in Mina" "Drift Protocol: the innovator of perpetual transactions"
Portfolio Analysis: Sui led by Mysten
Structure.fi: Bringing real-world assets such as stocks and ETFs to the blockchain through tokenization
《Bixin Ventures: Why do we invest in the next generation new public chain Aptos? 》
Portfolio Analysis: Switchboard
Review and Outlook
Bixin Ventures began investing aggressively with its own capital about 18 months ago, and now has more than 20 employees in China, the United States, Singapore, Eastern Europe, and other places. We stand with outstanding founders and participate in their financing. As the market enters a recession and entrepreneurial teams focus on application development, we hope to continue to support more entrepreneurial teams. We are also proud of the development of our internal research team, which makes us better investors in this field.
Looking ahead to 2023, we hope to provide more targeted assistance to our existing portfolio and will actively seek and hire post-investment managers to provide internal support.
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