Review of Bitcoin ecosystem investments by major investment firms
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Review of Bitcoin ecosystem investments by major investment firms
This article provides a brief overview of Bitcoin ecosystem projects invested in by major exchanges (Binance, OKX, KuCoin) and leading investment firms (DWF Labs, ABCDE, Polychain Capital, Waterdrip Capital, LK Ventures) in 2023.
Navigating Web3 tides with focused insightsAuthor: Web3CN
As is widely known, during the 2023 Bitcoin ecosystem wave, early movers like OKX and Unisat gained significant advantages by betting on the Bitcoin ecosystem early. Although attention and capital have been partially diverted to other narratives such as ETH and the halving in the short term, sufficient funding and interest have already poured into this sector. As a result, 2024 will bring abundant opportunities for consolidation, development, and sharing of rewards.
Against this backdrop, competition within the Bitcoin ecosystem in 2024 is set to become a long-term narrative among major players such as Binance and OKX—especially due to spillover effects between large institutions. Projects invested in during 2023 naturally emerge as frontrunners.
Web3CN aims to provide a brief overview of Bitcoin ecosystem projects invested in during 2023 by leading Web3 institutions, including top-tier exchanges (Binance, OKX, KuCoin) and leading investment firms (DWF Labs, ABCDE, Polychain Capital, Waterdrip Capital, LK Ventures). The previous article, "Top Institutional Investments in the Bitcoin Ecosystem (Part 1): Exchanges," covered exchange investments. This article focuses on projects backed by investment firms.
It must be emphasized that lead or participation by top-tier institutions does not guarantee project success. The Bitcoin ecosystem remains in its early stages and faces numerous challenges and uncertainties, including technological maturity and business model sustainability. DYOR (Do Your Own Research)!
ABCDE Capital
Du Jun, co-founder of ABCDE, recently stated, "We are preparing to deeply participate in the construction of the Bitcoin ecosystem, with Layer2 being our preferred sector. On the day the project launches, we will publish an address with 50 million USDT or equivalent BTC, exclusively allocated for the project's development."
Bitcoin Ecosystem Stablecoin Protocol bitSmiley
bitSmiley (https://twitter.com/bitsmiley_labs) is a stablecoin protocol built for the Bitcoin ecosystem, enabling users to over-collateralize native BTC on the BTC network to mint the stablecoin bitUSD. It also includes lending and derivatives protocols, aiming to build a new financial ecosystem for Bitcoin:
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Decentralized stablecoin protocol: Through the Bitcoin network, BitSmiley has launched an over-collateralized stablecoin protocol issuing UNO, a USD-soft-pegged stablecoin. Users can mint UNO by locking BTC as collateral in the BitSmiley vault—a smart contract on the Bitcoin blockchain;
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Trustless lending protocol: BitSmiley’s native lending platform enables users to engage in decentralized lending activities. Borrowers can receive desired tokens by pledging BTC and get their BTC back after repaying the borrowed assets plus interest;
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Derivatives protocol: BitSmiley plans to expand into lending-based derivatives to improve capital efficiency and meet demand for more complex financial instruments in DeFi;
Additionally, bitSmiley was selected as a high-potential project in the November 2023 BTC Hackathon co-hosted by ABCDE and OKX Ventures and is scheduled to launch its testnet this quarter.
Bitcoin Ecosystem Project Bitmap Tech (formerly Recursiverse)
Bitmap Tech (formerly Recursiverse, https://bitmap.tech/) is an innovative project aiming to build an intelligent, decentralized, and composable digital world via the Ordinals network and Bitcoin L1.
It operates four core services: the Bitmap.Game metaverse platform, the BRC-420 asset protocol and trading marketplace Recursiverse, the Recursive Application Matrix, and an upcoming BTC Layer2 project:
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Bitmap.Game: The first metaverse product based on Bitmap assets, allowing users to chat, trade, and play games with others. It is currently the largest metaverse application by user base on the Bitcoin network;
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BRC-420 Protocol: A decentralized economic framework operating on the Ordinals network, enabling creators to earn revenue directly without relying on platforms to process or host transactions;
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Recursive Index and Inception Inscriptions: Demonstrates relationships and reference counts between inscriptions, highlighting the value created through interconnected inscriptions. Inception introduces a multi-layer recursive inscription method where top-level inscriptions can contain vast content and logic within minimal digital footprints;
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Bitcoin L2 Network: Plans to bridge the BRC-420 protocol and Bitmap with second-layer solutions such as ZKP, Rollups, and Lightning Network, further advancing its vision of a decentralized metaverse and establishing itself as a key player in the evolving digital world;
Bitcoin L2 Project B² Network
B² Network (https://www.bsquared.network/) is a Layer2 solution built on Bitcoin, combining ZKP with BTC Rollup technology to write aggregated storage and ZKP proofs directly into BTC inscriptions, achieving higher authenticity and usability for BTC L2.
The network aims to transform Bitcoin into a multifunctional platform, laying the foundation for applications such as DeFi, NFTs, and other decentralized systems. Its Alpha testnet has already launched.
During its ongoing Odyssey campaign, the team disclosed, “Points are permanent markers of contribution, paving the way for future rewards.”
Bitcoin Staking Protocol Babylon
Babylon (https://babylonchain.io/)’s core vision is to leverage Bitcoin’s $800+ billion market cap as a security foundation, introducing Bitcoin to PoS chains via native staking to deliver native BTC-backed security.
Babylon acts as middleware within a three-layer architecture: Using modular plug-in design, it connects one end to Bitcoin’s PoW network and assets, while nesting atop various PoS consensus algorithms on the other end, helping PoS chains gain consensus security powered by Bitcoin staking—fulfilling the vision of multiple PoS networks “sharing Bitcoin’s security.”
In this model, Bitcoin remains staked natively on its own chain—no wrapping or bridging required. Babylon serves as the control layer enabling interaction between Bitcoin and PoS chains, while PoS chains and DApps remain free to choose whether to adopt Bitcoin-backed economic security mechanisms.
Bitcoin Ecosystem Infrastructure Particle Network
Particle Network is infrastructure driving mass adoption of Web3, offering products including Modular Smart WaaS and cross-chain account abstraction protocols. Recently, it launched BTC Connect, the first account abstraction protocol in the BTC ecosystem.
In December 2023, Particle Network released BTC Connect—the BTC ecosystem’s first account abstraction protocol—featuring Smart Account, Paymaster, Bundler, the BTC-native wallet Modal, and the Omnichain Inscription Protocol.
Initial ecosystem partners include 10 BTC ecosystem companies: Unisat Wallet, Bitmap Explorer, Brc420, MAP Protocol, BEVM, B^2 Network, ZkFair, BitSmiley, UXUY, and BitLayer.
Polyhedra: Cross-chain Messaging Protocol for Bitcoin
Polyhedra Network (https://polyhedra.network/) has launched a zkBridge-based cross-chain messaging protocol for Bitcoin to enhance interoperability. zkBridge allows light client smart contracts deployed on any blockchain to directly verify Bitcoin’s PoW consensus and Merkle proofs for each transaction. zkBridge enables transferring all current and historical data from the Bitcoin network to any Layer1 or Layer2 blockchains (such as Ethereum, BNB Chain, Arbitrum) and on-chain applications, while remaining compatible with the latest Bitcoin protocols like Ordinals, BRC-20, and Atomicals.
Furthermore, by introducing a decentralized crypto-economic model based on staking/re-staking and Multi-Party Computation (MPC) technology, zkBridge allows other blockchains to securely verify data and write it back to the Bitcoin network. The system ensures security through staking and slashing mechanisms, solving the challenge of verifying cross-chain messages given Bitcoin’s lack of native smart contract support.
DLC.Link: Bitcoin DeFi Ecosystem Protocol
DLC.Link (https://www.dlc.link/) implements Discreet Log Contracts (DLC), locking Bitcoin in on-chain custody controlled by Ethereum and other smart contract chains, enabling lending, trading, derivatives, and more.
It consists of an oracle layer (e.g., Chainlink or Pyth), smart contracts running on blockchains (e.g., DeFi contracts on Ethereum), and an Attestor component that retrieves data from smart contracts and converts it into instructions to settle DLCs.
DLC.Link has received grants from ChainLink and Stacks and is actively discussing with multiple CeFi institutions and smart contract chains how to bring native BTC into their businesses/ecosystems.
DWF Labs
Bitcoin Gaming & Entertainment Ecosystem: Bitcoin Cats
Bitcoin Cats (https://www.bitcoincats.world/) is a GameFi platform in the Bitcoin ecosystem that maps Bitcoin assets (BRC20, Ordinals NFTs, etc.) to Ethereum (and other Layer2s), bringing new functionalities such as Play-to-Earn, staking, yield farming, and SocialFi to Bitcoin assets.
1Cat is the native token of the Bitcoin Cats gaming ecosystem, with a total supply of 10 billion. It can be used to purchase and upgrade in-game assets such as avatars, pets, equipment, and farmland, and also functions as a ticket granting access to special game features.
Additionally, 1Cat serves both as a utility token within the gaming ecosystem and as a meme coin, symbolized by a cat.
In January, Bitcoin Cats established a strategic partnership with DWF Labs to jointly build a cross-Bitcoin and EVM gaming and entertainment ecosystem.
BRC20 Launchpad LeverPro
LeverPro is a BRC20 launchpad launched by leveraged trading platform LeverFi (https://www.gov.leverfi.io/stake), focusing primarily on promising BRC20 DeFi projects. Users who stake LEVER tokens to participate in LVR governance will receive priority rewards from LeverPro.
At the end of December 2023, DWF Labs formed an investment and market-making support partnership with LeverPro, treating the LeverPro launchpad as one of its investment channels. DWF Labs stated that projects selected for the LeverPro launchpad are eligible for fast-tracked investment consideration.
TurtSat: Open-Source Bitcoin Donation Protocol
TurtSat (https://turtsat.io/) is a community-driven open platform designed to become the “Gitcoin of Ordinals,” providing a space to build, donate to, and influence Bitcoin Ordinals and BRC-20 projects.
In December 2023, DWF Labs partnered with TurtSat to promote and support high-quality Ordinals projects and teams.
Waterdrip Capital
Jademont, founder of Waterdrip Capital, stated that the firm has already invested in seven or eight Bitcoin Layer2 network projects. Based on current information, at least ten Bitcoin Layer2 networks are expected to launch next year.
BEVM: Fully Decentralized Bitcoin L2 Solution
BEVM (https://www.bevm.io/) is a BTC-as-Gas, EVM-compatible Bitcoin Layer2 whose core goal is expanding Bitcoin’s smart contract use cases, helping BTC overcome limitations of Bitcoin’s non-Turing-complete blockchain and lack of smart contract support. BEVM enables building decentralized applications with BTC as native gas on its Layer2.
When users bridge BTC from the Bitcoin mainnet to BEVM, their BTC is sent to a contract address managed by 1,000 nodes, and an equivalent amount of BTC is minted 1:1 on the BEVM (BTC Layer2) network.
When users initiate a withdrawal from BEVM back to the mainnet, BEVM network nodes trigger the Mast contract, and the 1,000 asset-holding nodes automatically sign according to predefined rules to return BTC to the user’s address—making the entire process fully decentralized and trustless.
This means all transactions are moved from the Bitcoin main chain to the Layer2 network. Since BEVM is fully EVM-compatible, it also enables BTC to easily power various decentralized applications, empowering sub-projects within the Bitcoin ecosystem:
Ethereum DApp developers can seamlessly migrate to BEVM and quickly deploy swaps, lending, liquid staking, and other DeFi scenarios, bringing greater possibilities to the Bitcoin ecosystem—making it one of the most decentralized and convenient options available.
Bitcoin Gaming Project Ordz Games
Ordz Games (https://www.ordz.games/) is the first GameFi project built on Bitcoin Ordinals (NFTs), founded by a prominent BAYC figure. The game features a retro-style aesthetic with 20 levels ranging from simple to challenging.
Its first game is Tank Battle, a GameFi project that etches retro game code onto satoshis and rewards users with BRC-20 tokens per season. The team has since launched a series of casual mini-games reminiscent of titles like “Sheep Sheep” and spaceship shooters.
Top 100 leaderboard players and active participants receive BRC-20 token (OG) rewards. The project hosted its first offline Ordinals event at Hong Kong Web3 Festival, with UniSat Wallet among its investors.
MAP Protocol: Peer-to-Peer Interoperable Bitcoin L2 Network
MAP Protocol is a peer-to-peer interoperable Bitcoin Layer2 network leveraging Bitcoin’s security mechanism to enable seamless interactions between assets and users from other public chains and the Bitcoin network, enhancing overall security and enabling BRC-20 cross-chain capabilities.
Compared to the Bitcoin main chain, MAP Protocol offers significantly lower Gas fees—down to just 35% of Unisat and OKX Ordinals platform costs.
Thus, using MAP Protocol’s Bitcoin L2 technology, users can trade inscribed BRC-20 tokens on SATSAT with low Gas and zero congestion, then roll back to the Bitcoin main chain via Rolluper for trading on Unisat, OKX, and other Bitcoin L1 platforms.
MAP Protocol, the omnichain interoperability infrastructure, announced a joint $10 million ecosystem fund with Waterdrip Capital. The fund will focus on building the omnichain interoperability ecosystem, supporting innovative teams and projects contributing to blockchain interoperability that meet their investment criteria. Applications will soon be open.
LK Venture
In April 2023, Linekong Interactive Group (08267.HK) announced the restructuring of its crypto investment and research arm, Consensus Lab, officially launching LK Venture in Hong Kong to enter the Web3 industry. LK Venture will establish both primary and secondary market funds, with Linekong Interactive co-investing alongside multiple institutions as cornerstone investors.
In November 2023, Hong Kong-listed Linekong Interactive Group announced the launch of BTC NEXT, a $15 million Bitcoin ecosystem investment management fund. According to Wang Feng, co-founder of Element and founder of Linekong Interactive, BTC NEXT is a seed fund dedicated entirely to emerging crypto assets in the Bitcoin network ecosystem, covering various asset issuance protocols, marketplaces, scaling solutions, virtual machines, NFTs, RWA, and GameFi games.
MAP Protocol: Peer-to-Peer Interoperable Bitcoin L2 Network
MAP Protocol is a peer-to-peer interoperable Bitcoin Layer2 network leveraging Bitcoin’s security mechanism to enable seamless interactions between assets and users from other public chains and the Bitcoin network, enhancing overall security and enabling BRC-20 cross-chain capabilities.
Compared to the Bitcoin main chain, MAP Protocol offers significantly lower Gas fees—down to just 35% of Unisat and OKX Ordinals platform costs.
Thus, using MAP Protocol’s Bitcoin L2 technology, users can trade inscribed BRC-20 tokens on SATSAT with low Gas and zero congestion, then roll back to the Bitcoin main chain via Rolluper for trading on Unisat, OKX, and other Bitcoin L1 platforms.
ALEX Labs: Bitcoin Financial Layer Solution
ALEX Labs (https://linktr.ee/alexlab), a financial layer solution for Bitcoin, received strategic investment from LK Venture, under Linekong Interactive, via the BTC NEXT Bitcoin ecosystem investment management fund. The investment amount was not disclosed.
Founded in 2021, ALEX Labs is a DeFi protocol built for Bitcoin and BRC-20 tokens, focusing on next-generation Bitcoin users, innovators, and the broader ecosystem.
Polychain Capital
Bitcoin L2 Network Bitfinity
Bitfinity (https://linktr.ee/bitfinitnetwork), founded in 2021, is an EVM-compatible Bitcoin Layer2 network built on the Internet Computer. Previously, its InfinitySwap service aimed to mainstream BTC staking via AMM and was dubbed the “Uniswap of the Internet Computer (ICP) blockchain.”
Recently, Bitfinity raised $7 million in a token sale at a $130 million valuation, with participation from Polychain Capital, ParaFi Capital, Dokia Capital, and Draft Ventures. In 2021, Bitfinity also secured a $1.5 million seed round from Polychain, a16z Crypto, Internet Computer, Dfinity, and Draft Ventures.
Currently, Bitfinity is in testnet phase; mainnet launch date has not yet been announced.
Bitcoin Staking Protocol Babylon
Babylon (https://babylonchain.io/)’s core vision is to leverage Bitcoin’s $800+ billion market cap as a security foundation, introducing Bitcoin to PoS chains via native staking to deliver native BTC-backed security.
Babylon acts as middleware within a three-layer architecture: Using modular plug-in design, it connects one end to Bitcoin’s PoW network and assets, while nesting atop various PoS consensus algorithms on the other end, helping PoS chains gain consensus security powered by Bitcoin staking—fulfilling the vision of multiple PoS networks “sharing Bitcoin’s security.”
In this model, Bitcoin remains staked natively on its own chain—no wrapping or bridging required. Babylon serves as the control layer enabling interaction between Bitcoin and PoS chains, while PoS chains and DApps remain free to choose whether to adopt Bitcoin-backed economic security mechanisms.
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