The global cryptocurrency market has always revolved around cycles and narratives. Historically, the Bitcoin halving served as a key signal for market participants to anticipate shifts in sentiment and capital flows. However, with the recent approval of spot Bitcoin and Ethereum ETFs, the crypto ecosystem is now more tightly interwoven with traditional financial markets than ever before. This integration introduces new variables—macroeconomic trends, institutional adoption, and regulatory developments—that shape market dynamics.
In this evolving landscape, understanding cyclical patterns and identifying emerging narratives is more critical—and complex—than ever. Investment institutions are at the forefront of this exploration, actively seeking out next-generation infrastructure and application layers that can drive mass adoption.
To illuminate these shifts, OKX has launched the Crypto Evolution series, featuring insights from leading blockchain investors. This fourth installment is a collaborative deep dive by OKX Ventures and Fundamental Labs, focusing on one pivotal question: How should crypto infrastructure evolve in the next phase of growth?
Understanding Today’s Web3 Infrastructure Landscape
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OKX Ventures: Infrastructure Investment Trends and Challenges
According to L2Beat data, the number of rollup-based Layer-2 (L2) networks has exploded in recent years. Yet, only a handful demonstrate sustained user activity surpassing Ethereum’s base layer. This disparity highlights a growing concern: while infrastructure development has dominated primary market investments—especially during the bear markets of 2022 and 2023—there’s now a noticeable pivot toward application-focused Web3 projects.
Venture capital interest has shifted from foundational protocols to user-facing dApps, signaling a maturation in market priorities. While OKX Ventures continues to back core infrastructure, we caution against the "reinventing the wheel" mentality that often plagues early-stage innovation. Overinvestment in redundant or overly theoretical infrastructure risks creating a fragmented ecosystem where L2s outnumber actual daily active users (DAUs), resulting in what many call the "ghost town" phenomenon.
A major driver of this trend is the rise of the modular blockchain narrative. By decoupling components like data availability (DA), execution, and settlement, teams can recombine existing concepts under new branding—often without addressing real-world usability. While technically elegant, such innovations may lack product-market fit.
On a positive note, Ethereum has shed its reputation for high fees. Single-digit gwei transactions are now routine. Core DeFi primitives—decentralized exchanges (DEXs), perpetual futures, and lending protocols—are now standard across nearly all major public chains. Meanwhile, high-concurrency applications like AI-driven platforms, social networks, and onchain games are benefiting from new infrastructure solutions such as parallel EVMs, Move-based chains, and zk coprocessors.
If current trajectories hold, we may see the emergence of a true super app—a scalable, multi-functional Web3 platform—within the next two to three years.
Fundamental Labs: Innovation Across Layers
Web3 infrastructure today is marked by diversity and rapid innovation. Ethereum remains the most mature smart contract platform, while Bitcoin continues to solidify its role as digital gold. At the same time, high-performance Layer-1 blockchains like Solana, Aptos, and Cosmos are gaining traction due to their speed and cross-chain capabilities.
NEAR Protocol stands out for its leadership in onchain abstraction and AI integration, significantly boosting active address counts and positioning itself as one of 2024’s top-performing Layer-1s alongside Solana.
Decentralized finance (DeFi) remains the dominant application category. DEXs, lending protocols, and liquidity mining platforms not only serve users but also generate substantial fee revenue for underlying chains. Meanwhile, scaling solutions—particularly rollup-based L2s—are proving effective in increasing throughput and lowering transaction costs through offchain computation.
The result is a vibrant, multi-layered ecosystem where technological progress across execution, settlement, data availability, and interoperability is accelerating decentralized network development.
The Future of Blockchain Infrastructure
OKX Ventures: Key Shifts Ahead
The core mission of infrastructure remains unchanged: to serve as a secure, scalable state machine and asset settlement layer for real-world applications. However, two major shifts are emerging.
1. Institutional Adoption via ETFs: Risks and Opportunities
The approval of spot Bitcoin and Ethereum ETFs marks a turning point. On one hand, institutional custody through centralized exchanges (CEXs) like Coinbase could centralize staking power, threatening the decentralization of Proof-of-Stake (PoS) networks. If a small number of custodians control over 33% of staked ETH, economic security weakens—a concern echoed by Solana’s founder Toly when he called economic security “a meme.”
To counter this, Ethereum must embrace engineering solutions like liquid staking tokens (LSTs), distributed validator technology (DVT), and protocol-level governance reforms. Without them, debates over upgrades like PeerDAS may intensify.
On the opportunity side, ETFs offer unprecedented market education. They open doors for new product-market fits in areas like payments, AI infrastructure, social platforms, and real-world assets (RWA).
2. Plug-in Enhancements Across the Stack
Mid-to-downstream infrastructure innovations—such as shared sequencers, solver networks, zk coprocessors, and chain abstraction—are enabling modular upgrades. These plug-and-play components enhance cross-chain interoperability, reduce costs, and unlock new use cases through proof aggregation and execution layer optimization.
Fundamental Labs: User-Driven Evolution
Infrastructure evolution will ultimately be shaped by user demand. As adoption grows, so will expectations for performance, security, ease of use, and privacy.
We anticipate long-term trends toward:
- Higher throughput and parallel computation
- Modular design for flexibility
- Abstraction for simplified user experience
- Regulatory compliance without sacrificing decentralization
In public chains, we’re particularly bullish on Bitcoin’s infrastructure. The ETF influx brings liquidity and trust, fueling demand for scalability solutions like the Lightning Network, Taproot Assets, RGB, and BitVM.
NEAR’s advancements in account abstraction and AI integration also position it well for broader adoption.
In DeFi, clearer regulations will require stronger AML/KYC compliance tools. Stablecoins and compliance-focused infrastructure will become increasingly vital.
Emerging areas like decentralized AI compute, tokenized data (MachineFi), and compliant RWA platforms represent high-potential investment frontiers.
Investment Strategies and Observations
OKX Ventures: From Modular Stacks to Bitcoin-Centric Innovation
Since embracing the modular blockchain framework, we’ve categorized investments across execution layers (rollups), data availability (DA), settlement layers, and middleware.
Our portfolio includes leading L2s from previous cycles and newer parallel EVM projects like Sei, Monad, and MegaETH. For non-EVM chains such as Solana and Move-based ecosystems—which lack mature L2 ecosystems—we’ve backed execution layer innovations like SonicSVM and Lumio, though market acceptance remains uncertain.
We believe open ecosystems will prevail over closed or monopolistic L2/L3 designs.
In the DA space, innovation has been limited. We’ve invested in Celestia and Avail (from Polygon), but see growing potential in Bitcoin’s DA use case. Projects like Merlin, B2, and Bitlayer use Bitcoin as a DA layer due to its security. The UTXO-based RGB++ protocol is a notable exception.
Our investments in Babylon and BTC LSDfi projects like Lombard reflect our belief that Bitcoin must evolve beyond storage—toward native yield generation and DeFi ecosystems.
We’re also backing plug-in technologies like fully homomorphic encryption (FHE) and proof aggregation to accelerate blockchain usability at scale.
Fundamental Labs: Full-Stack Strategic Positioning
Our investment approach spans the entire tech stack:
- Base layer: BTC hashrate investments; L1s like NEAR, Avalanche, Polkadot
- Middleware: Filecoin (storage), Chainlink (oracles), Stratos (data)
- Applications: Metaplex (NFTs), Mintbase (minting)
- User access: Math Wallet, Mask Network
- Compliance: Coinbase (regulated exchange)
We also led early funding in Peaq Network, a DePIN pioneer. For us, Web3’s value lies in decentralization and user sovereignty—principles that guide all our infrastructure investments.
Frequently Asked Questions
Q: Why is infrastructure still important if applications are gaining traction?
A: Applications rely on robust infrastructure to scale securely. Without advances in scalability, interoperability, and cost-efficiency, even the most innovative dApps will struggle with performance bottlenecks.
Q: What is modular blockchain architecture?
A: It’s a design that separates blockchain functions—like execution, settlement, and data availability—into independent layers. This allows for specialized optimization but risks fragmentation if not well-integrated.
Q: How do ETFs impact blockchain decentralization?
A: ETFs bring institutional capital but often concentrate staking power in centralized custodians. This can undermine network decentralization unless mitigated by technologies like DVT or decentralized staking pools.
Q: Can Bitcoin support DeFi like Ethereum?
A: Not natively—but emerging solutions like BitVM, Taproot Assets, and Babylon enable programmability and yield generation on Bitcoin, paving the way for a native BTC DeFi ecosystem.
Q: What role does AI play in Web3 infrastructure?
A: AI enhances onchain abstraction, improves security analytics, powers decentralized compute networks (e.g., MachineFi), and enables smarter contract automation.
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Core Keywords
blockchain infrastructure, Web3 development, decentralized networks, Layer-2 solutions, real-world assets (RWA), modular blockchain, Bitcoin scalability, DeFi innovation
The path forward demands balance: between infrastructure depth and application relevance, between decentralization ideals and institutional realities. As OKX Ventures and Fundamental Labs continue to back visionary builders across this spectrum, one truth remains clear—the future of crypto is being built today, one line of code at a time.