Crypto Evolution 04 | OKX Ventures & Fundamental Labs: The Ascent of Infrastructure
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Crypto Evolution 04 | OKX Ventures & Fundamental Labs: The Ascent of Infrastructure
Cycles and narratives have always been central themes in the global crypto market. In the past, the industry largely relied on Bitcoin halving events to gauge market cycles and identify major narrative trends. However, with the approval of Bitcoin and Ethereum spot ETFs, the crypto market has become highly correlated with global financial markets, and the variables influencing crypto market movements are increasing in number and complexity.
Navigating Web3 tides with focused insights
Against the backdrop of soaring market volatility, it has become crucial to better perceive cyclicality and uncover future narrative trends. As hunters of innovative narratives, investment firms have always maintained a relatively forward-looking perspective. With this in mind, OKX has specially launched the column "Crypto Evolution," inviting leading global crypto investment institutions to systematically share insights on current market cycles, emerging narratives, and key verticals—offering initial thoughts to spark broader discussion.
Below is the fourth installment, jointly contributed by OKX Ventures and Fundamental Labs, focusing on the topic: "How should infrastructure evolve in its next phase?" We hope their insights prove enlightening.
About OKX Ventures
OKX Ventures is the investment arm of OKX, a leading cryptocurrency exchange and Web3 technology company, with an initial capital commitment of $100 million. It focuses on identifying top-tier blockchain projects globally, supporting cutting-edge technological innovation in the blockchain space, promoting healthy industry development, and investing in long-term structural value. Through its commitment to entrepreneurs advancing the blockchain ecosystem, OKX Ventures helps build innovative companies and brings global resources and historical expertise to blockchain projects.
About Fundamental Labs
Fundamental Labs has been investing in Web3 since 2016, supporting visionary entrepreneurs to drive innovation and create value for a better digital society. We manage a diversified portfolio spanning AI and crypto finance, and work closely with over 60 projects including Coinbase, Polkadot, VeChain, BNB, Avalanche, Anywhere, Peaq Network, Chainlink, Filecoin, Mask, SingularityNET, Stacks, Zecrey, and Bitlight Labs, all aimed at advancing the global Web3 ecosystem.
1. Current State of the Infrastructure Landscape
OKX Ventures: According to data from L2Beat, we now have an overwhelming number of rollups—but very few achieve active usage surpassing Ethereum.
In our observation, infrastructure (infra) has been the most sought-after sector in the primary market over the past two years, especially during the most challenging fundraising period of 2022–2023. However, this trend reversed toward the end of last year, when application-layer Web3 became the most heavily funded segment by VCs.
We remain firmly supportive of infra development, but constantly remind ourselves not to fall into the trap of reinventing the wheel, avoiding an imbalance between infra and applications that leads to the awkward situation where L2s > RaaS > DAU.
One contributing factor is tied to the modularization narrative. Independent architectures such as data availability (DA), execution, and interoperability can claim innovation or upgrades through minor conceptual tweaks or recombination, without needing to bear the cost of market education. The ultimate result is the widely criticized "ghost town" phenomenon across infra and increasingly fragmented ecosystems.
On the positive side, Ethereum has shed its label as a "noble chain," with single-digit gwei fees now commonplace. DeFi’s core trio—DEXs, perpetuals, lending—and pump-and-dump style asset issuance platforms have become standard features across all public chains, integrated into their technical stacks. Foundational solutions for on-chain financial interactions are now largely in place. Meanwhile, new infra solutions are emerging for high-concurrency, high-cost, complex-logic applications such as AI, social, and gaming:
1. High-performance blockchains using parallel EVM or Move;
2. zk coprocessors.
If our current trajectory holds, super apps enabling mass adoption may rapidly emerge within the next 2–3 years.
Fundamental Labs: The current Web3 infrastructure landscape is highly active, with significant progress and innovation across multiple domains. Bitcoin and Ethereum remain the dominant blockchains, with Ethereum being widely adopted due to its status as the earliest and most mature smart contract platform. At the same time, Layer 1 blockchains such as Solana, Aptos, and Cosmos have made substantial advances thanks to high performance and cross-chain compatibility. NEAR stands out with its focus on AI and on-chain abstraction narratives, seeing a notable rise in active on-chain addresses, making it one of the best-performing Layer 1s this year after Solana.
DeFi platforms—including decentralized exchanges, lending, and liquidity mining—remain the primary application category in the industry. Transaction fees generated by DeFi applications have become a major revenue source for leading public chains. Scaling technologies are maturing as well; Layer 2 solutions leveraging Rollup technology have greatly expanded blockchain transaction throughput, improving performance and reducing costs through optimized off-chain computation.
Overall, the state of Web3 infrastructure is characterized by diversity and innovation, with interconnected developments collectively advancing decentralized networks.
2. How Will Infrastructure Evolve?
OKX Ventures: The fundamental problems solved by infrastructure won't change—we still need faster, higher-performing systems to serve as the world's state machine and asset settlement layer. In the short term, as upstream infrastructure enters a phase of increasing homogenization, two key shifts deserve attention:
First, opportunities and challenges post-ETF approval:
On the challenge side, institutional holdings and professionalized node operation could impact the decentralization of PoS networks. Take Ethereum as an example: after ETF approval, CEXs like Coinbase may become custodians for most institutions. Their staking operations are highly centralized, meaning the cost to control 33% of nodes might be much lower than expected. As Solana co-founder Toly put it, “economic security is a meme.” When increased staking yields diminishing returns in terms of decentralized governance, Ethereum must employ engineering solutions—such as LST protocol governance and DVT—to prevent erosion of economic security. Otherwise, internal criticisms like those recently directed at Ethereum’s PeerDAS upgrade will persist.
On the opportunity side, we should seize the ETF moment—the best market education catalyst—to build infrastructure for new product-market fits, including payments, AI infrastructure, social, and RWA.
Second, the evolution of mid-to-lower-stack infrastructure such as DA, coprocessors, solver networks, shared sequencers, and chain abstraction. These components will act like plugins, enhancing infrastructure across multiple dimensions—enabling seamless cross-chain operations, cheaper financial interactions, and unlocking novel use cases via proof aggregation.
Fundamental Labs: Infrastructure evolution will ultimately be driven by user demand. As the Web3 user base grows, requirements for performance, reliability, and security will continue rising. Higher efficiency, lower fees, improved UX, and streamlined identity management will remain central to infrastructure development. Integration and collaboration across platforms and applications will also be critical. Throughout this process, privacy protection, data sovereignty, and decentralized governance mechanisms must evolve to enable effective community participation.
New public chains and Layer 2 networks continue to emerge, offering users more choices but also exacerbating ecosystem fragmentation and highlighting the need for stronger interoperability. Simultaneously, as regulatory frameworks take shape, infrastructure providers must ensure compliance while delivering services and protecting user rights.
In the long run, infrastructure will evolve toward higher performance, parallelized computing, modularity, technological convergence, abstraction in management, ease of use, cost efficiency, and regulatory compliance. From an investment standpoint, we consistently start from real industry pain points and actual needs, adopting a research-driven approach to support projects that positively advance the ecosystem.
Specifically, in the public chain space, we see strong potential in Bitcoin’s ecosystem infrastructure. The approval of Bitcoin ETFs will bring greater capital inflows and liquidity, enhance public trust, and accelerate broader adoption. Bitcoin scaling solutions such as the Lightning Network, Taproot Assets, RGB, and BitVM will gain new momentum. NEAR, as a leader in chain abstraction and AI narratives, offers promising solutions like secure aggregation and account aggregation that simplify cross-chain experiences—making it a project worth watching.
In the application space, as regulations become clearer, DeFi platforms may need to strengthen AML and KYC measures to comply with new rules. Compliance-focused tech infrastructure and stablecoins will grow in importance.
Additionally, we’re paying close attention to opportunities arising from technological convergence—such as decentralized AI compute infrastructure, tokenized training data, MachineFi, and compliant RWA platforms.
3. Industry Observations and Investment Insights
OKX Ventures: Compared to the previous cycle, the public chain infrastructure landscape has shifted notably since the emergence of modularization concepts—a transition the market took time to absorb.
Currently, we categorize projects into layers: execution, data availability (DA), settlement, and middleware addressing interoperability. Most of our investments across this tech stack were made in the past 1–2 years. For instance, in the execution layer focused on rollups, beyond having invested in all major L2 projects in the last cycle, we paid significant attention last year to the trending parallel EVM concept, backing representative projects such as Sei, Monad, and MegaETH.
Other chains, like Solana and Move-based L2s, are still immature in their L2 narratives. We’ve invested in execution-layer projects based on non-EVM chains such as SonicSVM and Lumio, but it remains uncertain whether cross-VM execution solutions will gain market acceptance. However, guided by blockchain’s principle of openness, we believe closed, monopolistic L2/L3 designs cannot be sustainable long-term solutions.
The DA layer has seen relatively fewer technological breakthroughs and exhibits stronger Matthew effects—we’ve only invested in Celestia and Avail (spun off from Polygon). Within this space, BTC’s ecosystem warrants discussion: at the end of last year, we engaged with over a hundred BTC Layer 2 projects. Since Bitcoin’s base layer lacks native smart contract support, it cannot function as a settlement layer. Existing solutions like Merlin, B2, and Bitlayer use BTC solely as a DA layer. The sole exception is the UTXO-based L2 protocol RGB++. Regardless of technical differences, we believe the core mission of BTC Layer 2s is to popularize concepts like non-custodial native BTC yield generation and on-chain asset issuance—especially gaining acceptance among Bitcoin purists for building DeFi and other ecosystems on BTC. This is why we invested in Babylon and BTC LSDfi projects such as Lombard.
That said, there have been some innovations in the settlement layer this year, though directly competing with Ethereum doesn’t seem politically viable yet, and most projects remain early-stage. We’ve also invested in co-processor areas such as FHE and proof aggregation, primarily because these plugin-like components help unlock large-scale blockchain adoption.
Fundamental Labs: Our investment philosophy has always centered on analyzing and allocating across different layers of the tech stack.
At the base layer, we’ve invested in BTC hashpower and supported a range of Layer 1s including NEAR, Avalanche, Polkadot, Nervos, and Platon. For the emerging DePIN sector, we led the funding round for Peaq Network in 2022.
In the middleware space, we’ve backed Filecoin, Chainlink, and Stratos. On the DApp application layer, we’ve invested in marketplace and developer frameworks such as Metaplex and Mintbase.
For the user access layer, we’ve supported Math Wallet, Mask Network, and RSS3. Recognizing that compliant centralized exchanges are vital infrastructure, we also invested in Coinbase. Overall, compared to traditional Web2.0, the essence of Web3 lies in greater decentralization and user sovereignty—this remains the core driver behind infrastructure development.
OKX Ventures Disclaimer, please read in full
https://www.okx.com/zh-hans/learn/okx-disclaimer.
Risk Warning and Disclaimer
This article is for informational purposes only. The content reflects the views of the authors and does not represent the positions of OKX or the aforementioned organizations. This article does not constitute (i) investment advice or recommendations; (ii) an offer or solicitation to buy, sell, or hold digital assets; or (iii) financial, accounting, legal, or tax advice. We do not guarantee the accuracy, completeness, or usefulness of the information provided. Holding digital assets—including stablecoins and NFTs—involves high risk and may experience significant price fluctuations. You should carefully consider whether trading or holding digital assets is suitable for you based on your financial situation. Please consult your legal/tax/investment professionals regarding your specific circumstances. You are solely responsible for understanding and complying with applicable local laws and regulations.
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