ArkStream Capital: 2024 Q2 Investments and Updates
Investment Project Summary
In the second quarter of 2024, ArkStream Capital invested in a total of five projects. We will provide details about these projects and explain why we chose to invest in them.
Project Introduction
Compute Labs is an aggregation center and financial layer for GPU computing power in the AI field. Its core technology, the Compute Tokenization Protocol (CTP), provides accurate pricing mechanisms and tokenization/NFTization for various computing assets. This allows GPU-heavy asset operators to quickly recoup large amounts of liquidity. Users who lack channels to invest in GPU computing power assets and operational capabilities can purchase tokenized/NFTized GPU computing assets and distribute them across different centralized or decentralized computing networks through Compute Labs to earn returns. Compute Labs also plans to introduce various financial derivative products in the future, such as ETFs, vaults, compute indices, and graded contracts, to expand market liquidity and efficiency, ultimately building an aggregation center and financial layer for GPU computing power in the AI field.
Why Invest in Compute Labs
Based on an in-depth understanding of GPU market demand and development trends, ArkStream Capital has found that the demand for GPUs is experiencing explosive growth. The development of AI, machine learning, and blockchain technology requires significant GPU computing resources. However, the current GPU market is highly monopolized, making it difficult for ordinary users to participate and share in the investment opportunities. Additionally, the increasing demand for GPU computing resources has driven up GPU asset prices, causing heavy cash flow pressure for operators with GPU assets. This mismatch between market demand and expensive GPU asset prices is a significant pain point.
Tokenizing/NFTizing GPU computing assets can transform GPUs into tradable assets, lowering the entry barrier for ordinary users and easing the financial pressure on operators. By participating as investors, users encourage GPU asset operators to become GPU maintenance service providers, offering operational and maintenance services for GPU assets. This model effectively addresses current market pain points and achieves mutual benefits.
ArkStream Capital believes that while platforms like io.net focus on addressing GPU supply and demand issues, they invest less in asset tokenization. Therefore, there is a significant market gap in this area, which Compute Labs perfectly fills with its business and brand.
In addition to market positioning and solutions, ArkStream Capital sees rich GPU collaboration resources as a crucial step for success. Compute Labs has established solid partnerships with companies like NVIDIA, io.net, and Supermicro, laying a strong foundation for its future development. They are also continuously innovating under the incubation of the NVIDIA Inception VC Alliance.
Project Introduction
DappOS is a network focused on intent execution. It transforms intents into on-chain results and creates a bilateral market for them. On the supply side, service providers stake collateral and choose to run one or more intent task execution services. On the demand side, developers can find solutions to meet user intents based on the user’s status and the supply side. To help developers enhance the intent-centric functions of their applications, dappOS integrates advanced features such as unified accounts and real-time dApp interactions. Additionally, dappOS utilizes the innovative Optimistic Minimum Staking (OMS) mechanism to ensure that every intent task is executed efficiently and cost-effectively. The OMS mechanism requires intent tasks to have specific value, and users can receive predefined compensation if the task fails. This mechanism allows service providers to execute tasks, verify results, and penalize service providers for failed tasks, ensuring that every task succeeds or appropriately compensates users.
Why Invest in DappOS
ArkStream Capital believes that users are the cornerstone of the blockchain industry’s development. Wallets and block explorers are the main entry points in different blockchain ecosystems, but inconsistent processes and user experiences create a fragmented experience and pose security risks during multi-chain interactions. dappOS abstracts and encapsulates common components of different blockchains (such as wallets and block explorers), providing users with a unified entry product that simplifies processes, reduces learning costs, and enhances asset security. This innovation not only improves user experience but also lays the foundation for the widespread adoption of blockchain technology.
Traditional blockchain interactions require users to master a significant amount of specialized knowledge, while dappOS’s intent execution network strengthens users’ operational intents and reduces their involvement in implementation paths. dappOS efficiently and accurately identifies and executes user intents through an intent execution network formed by intent service providers, execution validators, and governance layers, settling intent-related transactions across multiple blockchain networks. This technical innovation is similar to the automotive industry’s autonomous driving, making blockchain interactions more convenient and secure. ArkStream Capital believes that a network centered on user intents will play a crucial role in the future, and dappOS’s exploration in this field is highly forward-looking.
Additionally, dappOS’s collaboration with multiple well-known blockchain projects proves the feasibility and market recognition of its technical solutions. These collaborations not only provide technical support for dappOS but also enhance its influence and competitiveness in the industry. Finally, the professional background and extensive experience of the dappOS team are key reasons for ArkStream Capital’s confidence in its future development. ArkStream Capital believes that under the leadership of this team, dappOS will continue to innovate and drive the development and application of blockchain technology.
Project Introduction
Avail is a data availability layer network that ensures the secure and efficient publication of Rollup layer-2 network data through its core technologies, Data Availability Sampling (DAS) and light node mechanisms. DAS technology significantly improves data verification efficiency and reliability through random data sampling verification, while the light node mechanism allows nodes to participate in the network with lower resource consumption, enhancing network decentralization and security. Avail continuously optimizes its product roadmap, introducing the innovative Unification Layer concept, which includes three stages: the first stage, Avail DA, provides stable and efficient DA services for the ecosystem; the second stage, Nexus, addresses liquidity fragmentation and enhances interoperability between different Rollups; and the third stage, Fusion, integrates Avail’s token mechanism and unified economic security.
Why Invest in Avail
Through in-depth research into the blockchain industry’s technological evolution, ArkStream Capital has found that infrastructure technology is rapidly evolving, and modular thinking has become the current trend. This approach deconstructs technology from the functional architecture level of blockchains, extending into many high-quality niche projects and investment targets. The data availability layer (DA) is particularly important because it can offload functions from Ethereum. Therefore, ArkStream Capital is confident in the development prospects of DA projects.
Avail, co-founded by Polygon’s Anurag Arjun, started as an internal R&D data availability layer project. Its early development can be compared to Celestia. Years of R&D accumulation have made Avail familiar with the modular development process of the blockchain industry. Avail not only deeply understands the technical needs of DA’s direct customers, such as OP Rollup and ZKP Rollup layer-2 networks, but also proposes feasible solutions for the entire data availability scheme. With the explosive development of layer-2 networks, Avail has upgraded its data availability positioning, proposing the Unification Layer plan to unify different Rollup liquidity, solve interoperability issues, and integrate its own token mechanism security services.
Moreover, Avail, derived from Polygon, inherits Polygon’s deep technical accumulation and has gained unique industry resources. In extensive industry collaborations, projects from various categories, whether chains (such as Arbitrum, Optimism, Polygon CDK, Polygon zkEVM, zkSync), SDKs and development frameworks (such as Dymension, RISC ZERO), or RaaS (such as AltLayer, Gelato), have all cooperated with Avail. This fully demonstrates that Avail’s solutions have gained significant recognition in the industry, and their maturity and reliability have been validated.
Based on the understanding of the entire data availability layer track and the feasibility of the team’s technical solutions and rich industry resources, ArkStream Capital has decided to invest in Avail.
Project Introduction
Mezo is an EVM-compatible Bitcoin layer-2 built on a minimized trust bridge BTC, aiming to provide native returns for Bitcoin holders. As Bitcoin’s economic layer, Mezo actively integrates various Bitcoin revenue channels, such as Babylon, and DeFi sector platforms for trading and lending. It employs the innovative Proof of HODL consensus mechanism, allowing users to protect the network and earn returns by locking BTC and MEZO tokens. Users can accumulate HODL points based on the locked time and BTC amount, continuously accumulating returns from the Mezo network.
Why Invest in Mezo
Mezo plans to attract long-term Bitcoin holders and provide them with native returns by building Bitcoin’s economic layer. This approach not only significantly releases Bitcoin’s liquidity but also provides users with a stable source of income. ArkStream Capital believes this approach is correct as it enhances Bitcoin’s application scenarios and increases the enthusiasm and participation of Bitcoin holders. Additionally, Mezo integrates numerous resources for returns and designs network activities to generate Gas fees calculated and paid in BTC. This distributes returns to network participants and users, ensuring network security and stability, and incentivizes more Bitcoin users to participate, creating a positive feedback loop.
The Mezo team comes from Keep Network / Thesis, the developers of tBTC. tBTC, a minimized trust bridge asset, has been successfully operating for a long time and has been deeply integrated into multiple blockchain ecosystem applications, proving its technical reliability and security. This successful experience provides a solid foundation for Mezo’s development, ensuring that Bitcoin holders can participate in the Mezo ecosystem safely and efficiently.
Project Introduction
Kelp DAO is an LRT solution built on EigenLayer, using rsETH tokens. Launched by the renowned multi-chain liquid staking protocol Stader Lab, Kelp DAO allows users to interact with protocols like EigenLayer through smart contracts, restaking their native ETH or LST assets on EigenLayer. Holding rsETH tokens represents the user’s restaked Ethereum credentials. This setup not only allows trading restaked tokens in the secondary market or using them as collateral in lending markets, increasing the liquidity and utility of staked assets, but also passively earns EigenLayer reward points issued in KEP tokens. These rewards can be stored and traded flexibly before EigenLayer’s official launch. Currently, rsETH can earn points and additional rewards on DeFi protocols like Uniswap, Pendle, Balancer, and Curve. Additionally, the Kelp team stakes ETH from the treasury on EigenLayer and distributes points to community members, giving Kelp’s ETH an extra portion of EigenLayer points and Kelp DAO’s points, making Kelp DAO’s deposits account for over 10% of all EigenLayer deposits.
Why Invest in Kelp DAO
In the second quarter, the Restaking track experienced a new wave of growth, with TVL increasing from $14 billion to $19.5 billion, showing significant market recognition and attention. Additionally, the liquid staking protocol Lido and the well-known investment institution Paradigm launched the new Restaking project Symbiotic, reaching the TVL cap of $235 million within two days. ArkStream Capital believes this series of developments indicates that the Restaking track is rapidly expanding and attracting more industry giants and innovative projects, promoting further ecosystem prosperity. Given the overall track situation, ArkStream Capital continues to invest in well-performing LRT protocols with good growth momentum. Considering Ether.fi’s steady performance as the track leader, ArkStream Capital believes the remaining market share can still be captured by differentiated projects.
ArkStream Capital sees several key differentiators for Kelp DAO to penetrate the market. It supports not only native ETH but also accepts LST tokens like Lido and Frax, allowing users to interact with Kelp DAO without unstaking. Additionally, Kelp DAO has established partnerships with many Layer 2 solutions, including Arbitrum, Optimism, Blast, and Scroll, enabling L2 users to restake locally on Kelp DAO without slippage or fees. ArkStream Capital recognizes Kelp DAO’s close collaboration with EigenLayer and its clever use of the KEP token points model to penetrate the market and integrate with other DeFi protocols, increasing user stickiness. The team also plans to develop staking solutions on Solana, BNB Chain, and BTC platforms, extending the product to multiple ecosystems, including non-EVM chains. Most importantly, ArkStream Capital believes the LRT track is still in its early stages, and they see potential in Kelp DAO to expand project influence and accessibility, attracting more participants to the Restaking development.
Company Updates / Member Updates
New Member James Zhu, Research Analyst Graduated with a master’s degree in financial engineering from Duke University and a bachelor’s degree in economics from the University of Washington. During his undergraduate and master’s studies, he served as a research assistant at the Blockchain Lab and has over two years of investment experience in the web3 industry. James joined ArkStream Capital in 2024 as an investment analyst, focusing on Layer2, DeFi, and AI. Before entering the web3 investment field, he worked and interned at leading domestic IBD and consulting firms.
Research Reports
- ArkStream Capital: Why We Invest in Avail
- ArkStream Capital: Why We Invest in FHE
- Arkstream: Why We Invested in dappOS: The Intent Infra
Hosted and Attended Events
Offline Events
Bitcoin Asia, HongKong
https://x.com/allen_su1024/status/1788560805166010396
The cigar whiskey party, Hong Kong
https://x.com/allen_su1024/status/1789127822101069918
Twitter Space
Exploring the New Al paradigm in the Crypto Era
https://x.com/ark_stream/status/1806239610248499280
What Lessons Does the Hong Kong Ethereum ETF Offer to Wall Street?
https://x.com/ark_stream/status/1798287266160476185
Challenges and Opportunities in the Restaking Narrative
https://x.com/ark_stream/status/1793550767963648096
Unleashing Bitcoin’s Potential: Modular Innovations and Cross-Ecosystem Synergies
https://x.com/ark_stream/status/1787473578579136812
Demoday：
ArkStream Capital is a web3 focused fund established by native natives, encompassing primary market and liquidity strategies. The fund invests in web3-native and cutting-edge innovations, dedicated to fostering the growth of web3 founders and unicorns.
The ArkStream Capital team has been involved in the cryptocurrency space since 2015, with backgrounds from MIT, Stanford, UBS, Accenture, Tencent, Google, and other prestigious institutions and companies. The investment portfolio includes over 100 blockchain companies, such as Aave, Sei, Manta, Flow, Fhenix, Merlin, Avail, and Space and Time.
