A review of Bitcoin ecological data
Macroscopically, Bitcoin is the cornerstone of Crypto, and Bitcoin has formed an extremely strong value consensus, including ETFs, halving, and macro liquidity. At the micro level, the number of addresses and users on the Bitcoin chain has grown rapidly, and BTC Dominance has remained stable.
• First of all, the cumulative number of Bitcoin addresses exceeded 1.2 billion. There are more than 420 million crypto asset users worldwide, a number that has grown rapidly from 5 million users in 2016. According to TokenTerminal, the number of monthly active users of Bitcoin is about 13.7M, and the on-chain transfer data is 17.5M. In terms of on-chain data growth, Bitcoin's blockchain size is about 507GB, a 70% increase from three years ago. These all reflect the explosive growth in the usage of crypto assets, especially Bitcoin.
Source: glassnode
图源:tokenterminal
• Secondly, Bitcoin Dominance continues to be high and remains the cornerstone of the crypto market. Bitcoin accounts for 47% of the total market capitalization of crypto assets. While this percentage fluctuates with the rise of other crypto assets, Bitcoin remains the market leader.
Source: coingecko
图源：delphidigital
• Third, the halving is positive: when mining output is halved, the supply of new bitcoins slows down, and if demand remains the same or increases, then the price should theoretically rise. Under the influence of this mechanism, the halving is seen as a potential value catalyst.
○ Bitcoin YTD price has increased by more than 150% in 2023, and the market's optimism about Bitcoin has begun to show up in the price. The upward trend with the April 2024 halving is likely to continue, or even accelerate.
○ Looking at historical data, Bitcoin has achieved returns of more than 400% on average in the 12 months following the first two halves. This provides a historical precedent for observing and predicting future movements and provides investors with a level of confidence.
• Fourth, Bitcoin spot ETFs: making their volatility progressively more similar to that of traditional financial markets. Coupled with the backing of financial institutions such as Blackrock, Bitcoin spot ETFs are seen as an endorsement of Bitcoin. It can be expected to attract new capital, which was previously cautious about the crypto market. Previously, some media believed that ETFs are expected to bring tens of billions of dollars of incremental funds to BTC in the next year.
○ Reference gold ETF, the first gold ETF in the United States, SPDR Gold Shares (GLD), launched in November 2004, amassed more than $1 billion in assets in just three days. In its first year of existence, GLD's assets under management (AUM) soared to more than $3 billion. As of 2023, global gold-backed ETFs have around US$150 billion in assets under management, suggesting that these investment vehicles have a profound long-term impact on the gold market.
○ In addition to this, liquidity changes at the macro level, such as changes in the Fed's balance sheet, changes in the US Treasury market, are potential positives for the crypto market in 2024. Federal Reserve (Fed) liquidity support is likely to be the main force driving Bitcoin and the crypto asset market as a whole in 2024.
The technological innovation of the BTC ecosystem and the development trend of the second layer
Technological innovations that deserve more attention in the coming year
1. Asset issuance agreements could lead to innovation:
○ Ordinals: Creating one-of-a-kind NFTs using sats, the smallest unit of Bitcoin, has generated a certain consensus on the inscription at the head of the market, and there is a risk of network congestion and centralization.
○ RGB: Expanded dyed coins and the Lightning Network for optimized privacy and scalability.
○ Taproot Assets: Based on the Taproot protocol activated in 2021, it improves the privacy and efficiency of smart contracts, and integrates with the Lightning Network to improve the process and speed of asset issuance and transfer.
2. BitVM: Turing-Complete Virtual Machine:
○ Concept: On the basis of no need to change the Bitcoin consensus, complex smart contract verification is realized, and the working principle is off-chain computing and on-chain verification.
○ Pros: Enhance programmability without changing Bitcoin Core rules, reduce on-chain data burden, and increase fraud protection.
○ Limitations: Only two-party contracts are supported, theoretical practicability needs to be tested, and implementation may face performance and cost challenges.
○ Resurrection of OP_CAT: The potential recovery of this opcode may provide additional adaptability and efficiency to BitVM.
3. Development of Bitcoin Covenants:
○ Core Value: Allow UTXOs to be created with additional conditions to increase the diversity and security of smart contracts.
○ Development and Evolution:
▪ Early Proposals: Various proposals, such as OP_CHECKOUTPUTVERIFY and OP_CHECKSIGFROMSTACK, seek to improve Bitcoin's smart contract capabilities.
▪ Recent Developments: OP_TXHASH and OP_CHECKTXHASHVERIFY improve scripting access to SegWit data, as well as the flexibility and decentralization of Layer 2 solutions.
Overall, BTC's technological innovation is focused on improving the viability of asset issuance standards, privacy, and the complexity and security of smart contracts. These innovations present a range of exciting possibilities for the future of Bitcoin, and the richness of the BTC ecosystem is expected to continue to grow with the efforts of the community and developers.
Layer2 innovations include Rollups and Sidechains
Layer 2 solutions include sidechains, plasma, rollups, etc., the difference between rollups and sidechains is that rollups cannot operate when the mainnet fails (consensus is formed on the mainnet), while sidechains can still operate independently when the mainnet fails (there is independent consensus).
• There are two types of rollups: validating the mainnet and "witnessing" the mainnet:
○ No Authentication "Witness Only": Only DAS is stored and aggregated. For example, the Celestia class generates DAS details and stores them in its own sovereign layer for security, or aggregates and stores DAS in taproot (because it is too expensive to store detailed DAS);
○ ZKP Verified: ZKP-based fraud proof scheme. For example, B^2 converts the ZKP verification program into an arithmetic circuit, the addition gate and the multiplication gate are implemented by AND gates, the arithmetic circuit as a whole is converted into a logic gate circuit, and is implemented with bitcoin script, and finally forms the Circuit Taproot, and then puts the taproot commitment into the main chain, compared with bitVM, its circuit is deterministic, which can simplify the design. Its rollup transaction details and Proof data are stored using a variety of decentralized storage protocols, and can be resumed after the rollup is stopped.
• Sidechain projects have independent scheme preferences, and the impossible triangle is security, speed, and decentralization:
○ Stacks - Proof of Transfer (PoX): Stacks miners validate transactions by bidding on Bitcoin to be the producer of the next block, and by generating blocks and validating them, send a hash of the completed block header in the message field of the Bitcoin transaction, and then permanently record it on the main Bitcoin blockchain;
○ RSK: Rootstock (RSK) and Bitcoin use the same SHA-256 algorithm, and are connected to Bitcoin through two way bridges.
○ Drivechain: A Bitcoin open sidechain protocol that can customize different sidechains according to different needs. It is designed from two Bitcoin improvement proposals, BIP 300 "Hashrate Escrows" compresses 3-6 months of transaction data into 32 bytes through "Container UTXOs", BIP 301 "Blind Merged Mining" (RSK), and the security of the network is maintained by existing Bitcoin miners through merged-mining;
Layer 2 evaluation criteria: The extent to which mainnet security is reused
There are two ways to reuse:
• 1. Reuse the consensus of the mainnet and reuse the POW: that is, the da and consensus of the mainnet are used, and it is necessary to evaluate how to use the first layer; zk schemes such as Bitmap and B^2 both use the scheme of aggregating zkproof and storing it to the mainnet, and the confirmation of commitment can be completed through a similar Optimistic Rollup challenge mechanism.
○ Here, we believe that in the short term, the mainstream is the mainnet "witness" data scheme, but in the long term, we are optimistic about the mainnet "verified" data scheme, and the fraud proof of optimistic rollup may be a better solution: the off-chain ZKP is written to the inscription and deposited into the BTC network, and the ZKP validator generates a logic gate commitment, which promises to be written to the Bitcoin network as a taproot, and Bitcoin is carried out through fraud proof on-chain confirmation, which can inherit the security and efficiency of BTC while ensuring legitimacy;
○ At present, projects such as B^2 are working in this direction, nodes + part of Bitcoin together as the DA layer, responsible for the validity and data availability of ZK-Rollup tx, and BTC mainnet as the settlement layer, responsible for transaction finality.
• 2. Reuse mainnet liquidity and reuse POS: for example, Babylon's fully penalizable security, stakers' security and staking liquidity, for example, wbtc bridges BTC to ETH and Solana, so ETH and Solana can be understood as BTC sidechains, stacks and Bevm all adopt similar schemes;
○ Here, we are bullish on Babylon, leveraging the security of Bitcoin's native chain while bringing additional trust and capital to the PoS chain. This cross-chain staking structure helps build a new economic model in which PoS chains can strengthen their own security through Bitcoin's market cap, and Bitcoin holders can earn potential gains by supporting the security of PoS chains. This mechanism also increases the availability of Bitcoin and may incentivize more people to participate in the Bitcoin ecosystem.
OKX is committed to building the BTC ecosystem
OKX Ventures invests in supporting the innovation of projects in the BTC ecosystem
B^2 Network
• Project presentation
○ The B^2 network is a Layer-2 solution located on Bitcoin, combined with ZKP's BTC rollup, which can write aggregated storage and ZKP into BTC inscriptions to achieve higher legitimacy and availability of BTC layer 2.
○ It runs the first ZK Proof Commitment Rollup based on ZK-proof technology. Leveraging rollup technology, Turing-complete smart contracts are supported, enabling off-chain transactions to be executed and costs reduced. In Bitcoin's transaction confirmation, a combination of zero-knowledge proof, gate commitment, and Taproot's challenge response ensures the privacy and security of transactions.
○ The purpose of the network is to transform Bitcoin into a versatile platform that lays the foundation for applications such as DeFi, NFTs, and other decentralized systems.
• Project advantages
○ Security & Decentralization: Based on Bitcoin, all B^2 rollup transactions can be restored. With zero-knowledge proof commitment and challenge-response, two-way confirmation is achieved on Bitcoin, not just one-way data writes.
○ Seamless development and onboarding: EVM compatibility allows developers to quickly migrate from other EVM-compatible chains to the B^2 network and simplifies DApps development. By executing account abstraction, Bitcoin address accounts, Ethereum address accounts, and email accounts are supported, allowing Bitcoin users to interact across chains in B^2 without changing wallets. Storing Bitcoin state, which enables cross-chain transactions to be triggered without the need for a bridge from Layer 1 to Layer 2, also provides developers with the ability to program on top of Bitcoin transactions, and provides a trusted decentralized Bitcoin indexer service.
○ Performance readiness for large-scale users: Rollup Layer operations using rollup technology do not require consensus, ensuring high performance, and security is guaranteed by the strong data availability layer of the B^2 network. Low cost, affordable fees for users, and no increase in expenses when demand surges.
Bitmap Tech (前 Recursiverse)
• Bitmap Tech (formerly Recursiverse) is an innovative project that aims to build an intelligent, decentralized, and composable digital world through the Ordinals network and Bitcoin's layer 1 layer. The project embodies an unwavering commitment to building a valuable metaverse ecosystem and has launched a series of cutting-edge products:
○ BRC-420 Protocol: A decentralized economic framework that operates on the Ordinals network. It allows creators to receive revenue directly without the need to accept or escrow transactions through the platform.
○ Recursive indexing and Inception inscriptions: Demonstrate the relationships between inscriptions and the number of citations, emphasizing the value that interconnected inscriptions can bring to the network; Inception introduces a multi-layered recursive inscription approach, in which the top-level inscription can contain a large amount of content and logic in a very small numerical footprint.
○ Bitcoin Layer 2: Plans to bridge the BRC 420 protocol and Bitmap with Layer 2 solutions such as ZKP, rollups, and Lightning Network are expected to further build on its vision of a decentralized metaverse, making it an important player in the continued evolution of the digital world.
○ Bitmap.Game: The first metaverse product based on Bitmap assets, any user can enter the world and chat/trade/play games with other players, and it is also the largest metaverse product with the largest number of users on the Bitcoin network.
• Project Highlights:
○ High degree of freedom: Anyone can create their own metaverse inscription using the BRC-420 protocol.
○ Composability: The protocol is designed to integrate with Bitcoin Layer 2 solutions, bringing liquidity and scalability to Layer 2.
○ Innovative storytelling: Launching a novel "bitmap protocol" for the land of the metaverse, not limited to a single NFT form, but using it to tell a broader metaverse story.
○ Clear positioning: Bitmap is positioned as a metaverse protocol and NFT marketplace on Bitcoin, supporting inscriptions based on the BRC-420 protocol, and plans to integrate liquidity mechanisms through the second layer in the future.
○ Experienced team: The CEO has a rich entrepreneurial history of web2, VR, and web3 development engines.
○ Attractive products: The BRC-420 market already has derivatives and an active community, and the high-priced floor price merchandise indicates the strong interest of users and the involvement of whale participants.
○ Operational Momentum: The apparent market FOMO phenomenon around Bitmap NFTs, significant whale participation, and partnerships within the Bitcoin ecosystem highlight the operational strength of the project.
Babylon
• Project presentation
○ The Babylon project is a proposed Bitcoin staking protocol that allows Bitcoin holders to stake their idle Bitcoin to increase the security of the PoS (Proof-of-Stake) chain and earn in the process. It aims to enable the integration of Bitcoin with the PoS economic system.
○ The Babylon project attempts to use Bitcoin staking as a new way to utilize, which not only improves the efficiency of Bitcoin as an asset, but also strengthens the economic security of the PoS chain. This new use has a positive impact on Bitcoin itself, Layer 2 and the associated PoS ecosystem.
• Project Highlights
○ Strong security: The Babylon protocol guarantees the full security of the PoS chain, and if there is a security breach, at least 1/3 of the staked bitcoin will be deducted.
○ Staker Protection: As long as stakers follow the rules of the PoS protocol, they can guarantee that their funds can be safely withdrawn.
○ High liquidity: Babylon enables stakers to quickly revoke bonded bitcoins without relying on the community consensus mechanism.
○ Plug-in module design: The protocol is designed to be modular and can be easily combined with various PoS consensus algorithms.
○ System Architecture: Launched a system architecture for scaling multiple stakers and multiple PoS chain protocols.
○ Fast unbinding: A fast and frictionless asset unbinding process is designed to reduce the time required for unbinding.
BitSmiley
• BitSmiley, the BTC ecosystem's first native stablecoin project, is a comprehensive financial protocol built on the Bitcoin blockchain as part of the Fintegra framework. It consists of three key components:
○ Decentralized stablecoin protocol: Through the Bitcoin network, BitSmiley has launched an overcollateralized stablecoin protocol that issues UNO as a stablecoin that is soft-pegged to the U.S. dollar. Users can mint UNO by locking Bitcoin as collateral in the BitSmiley vault, a smart contract on the Bitcoin blockchain.
○ Trust and Freedom of Lending Protocols: BitSmiley's built-in native lending platform enables users to participate in decentralized lending activities. Borrowers can receive the tokens they want to borrow by staking BTC, and the pledged BTC will be returned after the loaned assets and interest are returned.
○ Derivatives Protocol: BitSmiley plans to expand into lending-based derivatives to improve capital efficiency and meet the demand for more complex financial instruments in the DeFi space.
• Project Highlights:
○ Stablecoin issuance mechanism integrated with Bitcoin blockchain: It effectively reduces the market risk caused by Bitcoin value fluctuations and provides users with a more stable trading medium.
○ Advanced Clearing & Auction Design: Dutch-style auctions are used to deal with the problem of insufficient collateral value, and the execution is automated through smart contracts, ensuring the robustness and decentralized nature of the system.
○ Innovative insurance and risk management solutions: Proposed insurance pricing models based on extreme value theory and T-Copula, which enable borrowing participants to hedge the risk of potential large price fluctuations, increasing the security of the protocol.
○ Capital efficiency improvement: The division and consolidation function of loans can improve capital utilization and meet the lending needs of different users.
○ Future scalability and innovation guidance: The project plans a number of derivatives development, including credit default swaps (CDS), and is committed to building BitSmiley into a one-stop decentralized financial platform that supports multiple financial services.
alexGo
• Project Introduction:
○ alexGo is a platform based on the Bitcoin DeFi (decentralized finance) ecosystem, with the goal of becoming the top DeFi platform for Bitcoin users, innovators, and the broader ecosystem, addressing the limitations that Bitcoin faces in the DeFi space due to the need for smart contracts and a computational layer.
○ Leveraging the Stacks Layer 2 solution, alexGo has introduced smart contract functionality to Bitcoin, which aims to remove the barriers between Bitcoin L1 and L2 and create a seamless DeFi experience.
○ ALEX has set up "Bitcoin Lab's Ecosystem Fund", which provides financial support, technical services, community engagement, and a platform for project launch and growth, which is very attractive to project developers and investors.
• Project Advantages:
○ Seamless Bridging: Enhances the entire Bitcoin DeFi experience through the seamless bridging it provides between Bitcoin Layer 1 and Stacks Layer 2.
○ Transaction speed: Reduced the confirmation time per block from 10 to 15 minutes to just 5 seconds with Stack's Nakamoto Release.
○ Reliability and security: Full integration and cross-layer security, which includes working with industry groups to establish an on-chain Oracle for BRC-20 and elevate its reliability and security in Bitcoin DeFi.
Portal Defi
• Project Introduction:
○ Portal DeFi proposes the first true cross-chain private DEX protocol with the aim of addressing the risks of centralized exchanges as well as decentralized exchanges (DEXs) due to the use of cross-chain bridges and "wrapped tokens".
○ Launch of the PortalX system, capable of executing decentralized transactions and creating financial contracts for Bitcoin and other assets.
○ Users can directly access decentralized services with non-custodial wallets, which are comparable in responsiveness and liquidity to centralized exchanges, while keeping assets and data secure.
○ Adopt technological innovations such as multi-party hash timelock contracts and smart contracts, as well as validator aggregation to ensure fast, cost-effective, and secure execution of transactions.
• Project Highlights:
○ Cross-chain interoperability: PortalX supports asset swaps across different blockchains, completely eliminating the need to rely on centralized third parties.
○ Zero-knowledge protocol: Using zero-knowledge proof technology, Portal realizes transaction privacy protection and security of the interchange process.
○ Censorship resistance: The financial applications provided adhere to the principle of decentralization, guaranteeing freedom and the ability to resist external interference.
○ Non-custodial design: Users can trade without giving up control of assets, which solves the problem of asset custody.
○ PortalOS Operating System: A comprehensive operating system that supports multiple functions of Portal DeFi and ensures the efficient operation of the system.
○ Validator Incentive Mechanism: Introduce a proof-of-stake mechanism to use native tokens for staking to ensure that network participants have enough incentives to participate in system maintenance.
○ Tier-Nolan Atomic Swap Problem: Provides innovative solutions to the problems of classical atomic swap protocols, such as the fair option problem and the lack of incentives for facilitation.
○ Liquidity Aggregation: Through the design of on-chain contracts and protocols, the Portal aims to aggregate and match liquidity in decentralized finance applications.
OKX Ventures empowers the BTC ecosystem and launches the Bitcoin Ecosystem Hackathon
This year Ordinals exploded, essentially a large-scale application of asset issuance capabilities. Subsequently, a dazzling array of asset issuance protocols emerged, including Ordinals, BRC-20, RGB, Taproot Assets, Runes, Taro, Atomicals, TAP, PIPE, and many more. Data:
• BRC 20 : The cumulative number of BRC-20 transfers exceeds 45.4 million, and the cumulative transaction fee generated by BRC-20 exceeds 4,290 BTC;
• Ordinals: The cumulative total number of inscriptions exceeds 53 million, and the cumulative fees generated by Ordinals exceed 5,383 BTC.
The innovation of asset issuance standards will bring more possibilities to the Bitcoin ecosystem
The Ordinals ecosystem has exploded, and assets have been issued on a large scale, which in turn requires liquidity, infrastructure, and applications such as game NFTs. Therefore, we hope to guide more developers to invest in the Bitcoin ecosystem and use it to build a richer ecosystem.
OKX Ventures held a winter roadshow day for BTC ecosystem projects held by ABCDE, BeWater and online, with a total of 51 projects applying and 7 projects receiving final investment. Hackathon Details:
• The project track involves Layer 2, RGB, Lightning Network, Taproot, Ordinals, BRC20, stablecoins, lending, etc.
• The project team comes from all over the world, they come from Singapore, Hong Kong, the United States, Russia, Hungary;
• 82% of founders are serial entrepreneurs;
For a richer developer ecosystem and application ecosystem, OKX Ventures will continue to invest $10 million to support emerging entrepreneurs in the industry.
OKX Web3 is an industry leader in the BTC ecosystem
OKX Web3 Wallet is the first wallet ecosystem in the industry to invest in the BTC ecosystem on a large scale, investing a lot of ecological resources, and has also won unanimous praise from the market.
OKX Web3 Wallet Data
As of the end of December 2023, the total trading volume of the OKX Web3 Wallet Ordinals market exceeded $1 billion, the number of unique addresses exceeded 120,332, and the total number of transactions reached 552,818, accounting for 92% of the daily trading volume, which is in the leading position in the industry as a whole.
Currently, the OKX Web3 wallet Ordinals marketplace is the number one marketplace for BRC-20 inscriptions and BTC NFTs, with 16,000 BRC-20 tokens available for trading. The OKX Ordinals marketplace is fully decentralized, with no platform service fees for interactions, and supports multiple features such as batch transfers, transactions, and inscribed BRC-20 and BTC NFTs.
As of the end of December, the annual number of transactions on the OKX NFT marketplace was about 20 million, with a daily trading volume of about $6.5 million and a total transaction volume of $2.366 billion. Affected by the inscription craze, the OKX NFT marketplace jumped to become the second-largest NFT marketplace by trading volume in just two months from November to December, accounting for 32% of the market share.
The OKX Web3 Wallet is close to users and continues to meet their needs
OKX Web3 Wallet always starts from user needs, and quickly refines user needs into product needs, rather than taking its own needs as user needs.
OKX has launched Cryptopedia, a one-stop DApp exploration and reward interaction platform, which regularly launches events themed around different blockchain networks, and works with corresponding partners to jointly set up DApp interaction tasks, so as to help users reduce search costs while using fragmented time to accurately interact.
OKX Web3 Wallet has launched the DeFi sector, which is a one-stop on-chain investment platform. Aggregate a variety of investment products from 10+ public chains, 60+ projects, and 200+ protocols, support V3 liquidity pools, one-click cross-currency investment, automatic income calculation, and save gas, making DeFi investment extremely simple.
According to the latest ecological map released by OKX Web3 Wallet, its wallet sector has access to 70+ public chains, more than 120+ DeFi platforms in the DeFi sector, 30+ NFT market aggregation platforms, and supports Game, Social, MEME, Tool and other ecosystems, with a total of more than 300 supported platforms and protocols.
summary
In terms of the Bitcoin ecosystem, OKX Ventures has demonstrated a strong commitment and determination to continue to contribute, committed to driving ecological innovation and accelerating the development of blockchain technology. The Bitcoin ecosystem is experiencing unprecedented growth with the number of Bitcoin users, data growth on the Bitcoin blockchain, and the explosion of new innovative protocols such as Ordinals. OKX Ventures is not only willing to provide financial support, but also provide services and resources to help partners grow together.
Recognizing the huge potential for innovation in the Bitcoin ecosystem, OKX ventures helps projects find a foothold in this magnificent crypto space by providing platform-level support such as the OKX Web3 Wallet and OKX Chain. For OKX ventures, the prosperity of the Bitcoin ecosystem goes beyond simple financial investment, and we value long-term industry development and scale growth.
Even as the market environment is unpredictable, OKX Ventures' focus is on the industry's fundamental continuous progress, with a focus on theoretical innovations, the introduction of new practical applications, and the actual growth of user traffic and the overall size of the industry. We firmly believe that in the next three to five years, OKX Ventures will accompany the market to witness and grasp the greater market opportunities brought by the Bitcoin ecosystem.