ArkStream Capital's 6 Investments in Q1 2024
TechFlow Selected TechFlow Selected
ArkStream Capital's 6 Investments in Q1 2024
ArkStream Capital invested in 6 projects in Q1 2024: XION, Unicross, Polyhedra, BEVM, Merlin Starter, and Nubit.
Navigating Web3 tides with focused insightsAuthor: ArkStream
Investment Portfolio Summary
ArkStream Capital invested in six projects during the first quarter of 2024. Below, we disclose details about these projects and explain our rationale for investing.
Project Introduction
XION is the first modular universal abstraction layer, specifically built to enable seamless user experiences for mainstream consumers and drive mass adoption. XION’s universal abstraction layer includes protocol-level abstractions for accounts, signatures, gas, interoperability, pricing, devices, payments, and more. By abstracting away all cryptographic complexity, XION removes major onboarding barriers for new users while helping developers avoid fragmentation challenges. Its signature-agnostic infrastructure supports a wide range of existing cryptographic curves and can easily adapt to future developments, expanding its market reach and ensuring long-term viability and cross-protocol blockchain interoperability. Through interoperability abstraction, XION delivers seamless experiences not only for native applications but also for apps built across connected chains.
Why We Invested in XION
Depending on the measurement criteria, current crypto users number between 100 million and 200 million. ArkStream believes that during the next bull cycle, this figure will grow tenfold to one billion. Achieving such mass adoption requires highly user-friendly crypto infrastructure, with abstraction layers serving as a viable path forward. ArkStream first met the XION team in 2021 when they were building an NFT marketplace on Solana; we participated in their first funding round. When the bear market arrived and the NFT market failed to sustain momentum, the team made the difficult decision to pivot toward building an abstraction-focused Layer 1, advancing closer to their vision of mass adoption.
XION's universal abstraction solution quickly gained broad market consensus. In early February, just two weeks after launching its testnet, it surpassed 100,000 accounts. Two months later, that number reached 1.3 million, accompanied by 15 million total transactions and over 340 weekly active users (WAU). Their hackathon attracted more than 400 startup teams, and over 100 ecosystem partners include industry-shaping giants like Circle, Axelar, Injective, IBC, and Babylon. These metrics underscore XION’s growing influence and signal its potential to bring exponential user growth into Web3.
Project Introduction
UniCross is an asset minting, trading, issuance, and cross-chain platform for Bitcoin L2s, supporting the creation, exchange, and bridging of L1 assets across different Bitcoin Layer 2 networks. Users can mint, trade, issue, and bridge various L1-native protocols such as BRC-20, Runes, BRC-420, and ARC20 on L2s via UniCross, with full support for returning assets back to L1. The platform allows payments using multiple-chain assets including BTC, BRC-20s, and ETH.
Why We Invested in UniCross
The battle for Bitcoin Layer 2 began in Q1 2024—prior to which discussions remained largely theoretical. With Merlin Chain going live, competition has intensified. According to L2 Watch (https://l2.watch/), nearly 100 BTC Layer 2 projects are either preparing or already launched, employing vastly different technical approaches. Sidechains, rollups, EVM compatibility—each offers distinct cross-chain solutions, ultimately fragmenting users’ BTC across custodial and non-custodial wallets. However, most official sidechain bridges fail to support other native BTC assets. Inscriptions communities have been deprioritized compared to BTC HODLers, despite being the most dynamic participants in the ecosystem. Native assets like BRC-20, ARC-20, and Runes stuck on the Bitcoin mainnet urgently need revitalization on Layer 2s—especially evident now that Runes has driven mainnet gas fees far above transaction values.
UniCross addresses this gap effectively. Emerging from IDClub—the second-largest inscription tool—the UniCross team possesses exceptional market sensitivity and rapid iteration capabilities within the Bitcoin ecosystem. ArkStream deeply understands the team’s product strength in this fast-moving environment and decided to invest at the earliest stage of UniCross’s formation. We believe UniCross is uniquely positioned to capture significant market share in the upcoming BTC Layer 2 race.
Project Introduction
Polyhedra Network leverages advanced zero-knowledge (ZK) technology to enhance computational power, aiming to accelerate Web3 adoption by overcoming traditional computing limitations. Polyhedra’s flagship product, zkBridge, is a universal ZK interoperability protocol that simplifies Web2 and Web3 integration. It enables traditional financial institutions to seamlessly transfer real-world assets across networks, having completed tens of millions of cross-chain transactions and generated over 40 million ZK proofs. Through its partnership with Google Cloud, Polyhedra launched Proof Cloud—a developer-facing ZK proof platform designed to streamline application development and deployment. To further strengthen its technological edge, Polyhedra aims to integrate zero-knowledge proof capabilities directly into the Ethereum blockchain and expand applications on Bitcoin, enhancing interoperability across major ecosystems like Ethereum and Solana.
Why We Invested in Polyhedra
Since the inception of the first altcoin, enabling cross-chain swaps has been a persistent challenge developers strive to solve. Initially, atomic swaps offered a relatively centralized solution. Polkadot and Cosmos aimed to establish unified standards so all public chains could interoperate seamlessly. However, achieving standardization in a decentralized world proved difficult, leading the market to adopt more centralized bridges as temporary fixes—until the emergence of true cross-chain interoperability protocols. Over the past two years, Wormhole, LayerZero, and Polyhedra have formed a tripartite leadership, launching Portal, Stargate, and zkBridge respectively, each building comprehensive interoperability frameworks around their core bridge products.
Compared to the other two, Polyhedra strategically targeted the underdeveloped Bitcoin ecosystem this year. Using zkBridge and zero-knowledge proofs, Bitcoin can now securely transmit current and historical data to over 20 networks—including Bitcoin L2s, Ethereum, and Ethereum L2s—and maintain compatibility with innovative protocols like Ordinals, BRC-20, and Atomicals. This enables smart contracts on secondary networks such as Ethereum and Bitcoin L2s to trustlessly access Bitcoin data and protocols, executing complex logic secured by ZK proofs. Furthermore, Polyhedra collaborated with EigenLayer to design and implement a Bitcoin AVS (Actively Validated Service), allowing other blockchains to securely write data to and transfer assets onto Bitcoin. Today, key players in the Bitcoin ecosystem—including OKX Wallet, Unisat Wallet, Babylon, Merlin Chain, BitLayer, Bsquared, BEVM, and Particle Network—have partnered with Polyhedra, many of which are also ArkStream portfolio companies. We believe investing in Polyhedra is a critical component of our broader Bitcoin ecosystem strategy, positioning ArkStream to secure core resources and support further growth across our portfolio.
Project Introduction
BEVM is a decentralized, EVM-compatible Bitcoin Layer 2 network that uses BTC as gas. Leveraging technical upgrades from Taproot—such as Schnorr signatures—BEVM enables BTC to be transferred from the Bitcoin mainnet to Layer 2 in a fully decentralized manner. Because BEVM is EVM-compatible, all DApps running on the Ethereum ecosystem can operate natively on this BTC L2.
Why We Invested in BEVM
Bitcoin’s SegWit upgrade in 2017 allowed blocks to carry more data. The 2021 Taproot upgrade expanded this capacity to include more complex data types and introduced the Schnorr signature algorithm, making decentralized multi-signature setups feasible. This advancement enabled truly decentralized cross-chain operations, ultimately bringing decentralized BTC Layer 2s into reality. BEVM stands as a prime example of such innovation. SegWit and Taproot have reinvigorated Bitcoin, transitioning it from version 1.0 to 2.0 and revealing a richer, more functional ecosystem. The explosive rise of token issuance protocols like Ordinals in 2023 was a direct result of these upgrades, demonstrating to the community that asset creation on Bitcoin is viable. But issuing assets is just the beginning—what’s needed now is a rich and diverse application ecosystem on BTC Layer 2. That’s where BEVM comes in.
For the past six years, the BEVM team has been exploring BTC Layer 2 development. In 2018, their first product, ChainX, achieved cross-chain movement of over 100,000 BTC. The explosion of the Bitcoin ecosystem in 2023 signaled a new era, prompting the team to begin developing BEVM. BTC Layer 2 strategies generally fall into two categories: one, represented by Merlin, aggregates various solutions and prioritizes market-driven growth without strict adherence to decentralization; the other, exemplified by BEVM, emphasizes Bitcoin’s native nature and decentralization, persistently building over several years. Each approach has strengths. ArkStream hopes the philosophy behind Bitcoin’s evolution will spread throughout the crypto space, so we’ve backed the most promising teams across different strategic categories. We look forward to BEVM attracting more members of the native Bitcoin community to participate in Layer 2 development.
Project Introduction
Merlin Starter is the first launchpad platform on Merlin Chain, primarily focused on incubating local Merlin-based projects and providing promising ventures with project and asset support. Merlin Starter offers a combination of single-pool and multi-pool IDO formats, including oversubscription models, lotteries, and first-come-first-served mechanisms.
Why We Invested in Merlin Starter
Asset issuance remains central to the crypto industry. Whether through Ethereum smart contracts or emerging Bitcoin protocols like Ordinals, history shows that every major ecosystem surge begins with asset creation and distribution—from one-click mining, to one-click token generation, to one-click chain deployment and inscription minting. User acquisition always starts with assets. Following Merlin Chain’s mainnet launch and massive TVL accumulation, additional liquidity pools are essential. Beyond traditional DeFi pillars like lending, exchanges, and yield farming, launchpads and IDO platforms are indispensable. MerlinStarter has emerged as a leader in this space, seizing early momentum. Through high-profile project launches and strong ecosystem funding attention, it continues to attract top-tier projects to launch on its platform.
Project Introduction
Nubit is a scalable, efficient, Bitcoin-native data availability (DA) layer, deeply rooted in the Bitcoin ecosystem and actively advancing Bitcoin’s modular expansion. Nubit’s DA layer significantly increases Bitcoin’s data capacity and supports modular services such as Ordinals, decentralized indexers, Layer 2 solutions, and price oracles—enabling scalability and efficiency improvements across the Bitcoin ecosystem.
Why We Invested in Nubit
Over the past two years, numerous Bitcoin Layer 2 projects based on rollup architectures have begun gaining traction. However, due to Bitcoin’s non-Turing-complete scripting language, most rollup-style L2 solutions face limitations. While academic efforts like BitVM attempt to inherit Bitcoin’s security by simulating on-chain fraud proofs via circuit gates, adopting specialized native data availability solutions better aligns with market trends. ArkStream believes the modular blockchain architecture and the concept of data availability layers (DA), pioneered by Celestia, offer a compelling blueprint applicable to the Bitcoin ecosystem.
As one of the few DA projects in the Bitcoin ecosystem, Nubit holds a pivotal position thanks to its unique technical architecture and product offerings. Led by a professor from UC Santa Barbara’s computer science department, the core team consists of top researchers in blockchain and security fields. Advisors include Dahlia Malkhi, former CTO of Facebook Diem Blockchain and leading expert in consensus mechanisms; Chainlink’s distinguished scientist; and domo, founder of BRC-20. This gives Nubit a formidable academic and technical foundation. Notably, Nubit is collaborating with domo to establish industry standards, and its Modular Indexer is currently being integrated into major wallets and dApps.
Nubit is also working alongside leading projects to shape the narrative of Bitcoin Season 2. It has established partnerships with prominent names such as Merlin Chain and Bitlayer—EVM-compatible Layer 2 projects—BounceBit, a Bitcoin staking PoS chain; Babylon, a leader in Bitcoin staking and restaking; and Yala Finance, a liquidity protocol enabling native yield. Together, these collaborations drive steady progress in the Bitcoin ecosystem. Deep integrations allow Nubit to refine its technical solutions while strengthening its influence and competitiveness across the entire Bitcoin landscape.
ArkStream Capital’s investment in Nubit reflects our confidence in its outstanding technical capabilities and vast market potential, as well as our strong belief in the future direction of the Bitcoin ecosystem and broader technological innovation. As pioneers and supporters, we see not only Nubit’s inherent value but also the boundless possibilities and opportunities it brings.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
Arkstream Capital
