ArkStream Capital: 2024 Q4 Quarterly Report
ArkStream Capital
A growth-driven crypto fund dedicated to growing Web3.0 unicorns
Industry Overview
On December 5th, Bitcoin surpassed the $100,000 mark, making history as anticipated by the market. At this historic moment, the global financial industry turned its attention to this milestone. Bitcoin’s new all-time high represents a pivotal milestone in the cryptocurrency space, significantly demonstrating the expanding influence and growing acceptance of the crypto market while signaling tremendous growth potential in the future.
This achievement not only validates the long-held beliefs and expectations of ArkStream Capital but also symbolizes the affirmation of the entire cryptocurrency industry's faith. For the industry, whether it’s the risk-and-opportunity-laden primary market, the efficient and diversified secondary market, or the dynamic and vibrant on-chain ecosystem, Bitcoin's breakthrough has injected vitality into all segments. The market delivered impressive performance in the fourth quarter as a result.
Bitcoin Price Chart / Source: LSEG Workspace
Bitcoin's successful breakthrough of the $100,000 mark was driven by a combination of factors, with the most critical being the macroeconomic environment's rate cut expectations and Donald Trump's victory in the U.S. presidential election.
The Federal Reserve's two interest rate cuts this quarter had profound impacts on the market, further stirring market dynamics. On one hand, rate cuts lower borrowing costs, encouraging investors to seek higher-yielding assets, which has driven more capital into the cryptocurrency market. On the other hand, rate cuts improve market liquidity, helping to support asset prices. Additionally, the stablecoin market benefited from the macro rate cuts, achieving record-high issuance and significantly increasing market liquidity, thereby reigniting market vitality. ArkStream Capital forecasts that with the implementation of quantitative easing policies in 2025, liquidity will further improve, resulting in significant growth for cryptocurrency assets and market expansion.
During the U.S. presidential campaign, Trump expressed clear support for the development of Bitcoin and the cryptocurrency sector, making a series of positive commitments. Specifically, he proposed establishing a national strategic Bitcoin reserve, incorporating Bitcoin into the national financial strategy framework, and ensuring that the government holds a certain amount of Bitcoin. Moreover, Trump pledged to adopt favorable regulatory policies and provide support for startups to promote healthy growth in the crypto space. Upon his election victory, Trump took two major steps to support the development of the cryptocurrency sector. First, he nominated Paul Atkins, an advisor to Reserve Rights with deep expertise in the cryptocurrency field, as the new SEC Chair. Second, he created the position of White House Director of AI and Cryptocurrency Affairs, appointing David Sacks, a former PayPal executive with extensive knowledge in big data and cryptocurrency, to the role.
A project led by the Trump family, WLFI aims to provide fairer, more efficient, and secure financial services by integrating innovative financial solutions and blockchain technology, particularly through the incorporation of DeFi. WLFI actively invests in and collaborates across key areas such as lending, real-world assets (RWA), and stablecoins. Its partnership with Aave provides a mature and reliable lending protocol platform, and it has integrated new stablecoin assets like Ethena's sUSDe, expanding the range of collateral assets and diversifying funding sources.
According to Spot On Chain data, since November 2024, WLFI's primary wallet addresses have made significant acquisitions of mainstream crypto assets, including ETH, cbBTC/wBTC, LINK, AAVE, ENA, and ONDO. This activity has sparked market interest in WLFI's asset movements and enthusiasm for collaborating DeFi projects, particularly those generating tangible returns. A notable example is WLFI's December 2024 partnership with Ethena, incorporating Ethena’s yield-bearing stablecoin sUSDe into its lending platform as collateral. This move increased the platform's stablecoin deposit sources. Upon the announcement of the collaboration, the ENA token experienced a short-term surge of over 10%, highlighting the market's recognition of WLFI's influence.
Following Trump's election victory, MicroStrategy significantly ramped up its Bitcoin investments. According to the latest data, the company purchased nearly 150,000 Bitcoins in Q4 2024, spending approximately $13.5 billion at an average cost of $90,000 per Bitcoin. In comparison, the total net asset value of Bitcoin spot ETFs grew from $60 billion at the end of Q3 to nearly $110 billion by the end of Q4, with $50 billion in new capital inflows. MicroStrategy alone accounted for nearly 25% of all net inflows into Bitcoin spot ETFs during this period.
Additionally, MicroStrategy plans to propose $21 billion in equity financing and $21 billion in bond issuance at a special shareholder meeting to continue its Bitcoin investments. CEO Michael Saylor has actively advocated for more traditional giants, such as Microsoft, to invest in Bitcoin, although Microsoft shareholders voted against related proposals. The market holds mixed sentiments toward MicroStrategy's continued purchasing behavior—while some anticipate it will push Bitcoin to new highs alongside traditional industry giants, others fear potential black swan events that could disrupt the market.
MicroStrategy's BTC Holdings / Source:
Within the crypto market, the focus had previously centered on Bitcoin itself and speculative on-chain memes, leaving value investments focused on infrastructure development and real-world application adoption in a state of pessimistic stagnation. However, with the stabilization of the political environment in November, value investing has begun to show signs of revival. Sectors like DeFi, infrastructure, and emerging public chains are regaining market recognition. Investors who remained committed are now reaping steady returns, and value investing is once again attracting attention.
Specific projects like Ethena and Usual have gained significant traction, reflecting the market's growing preference for real-world assets (RWA) and stablecoins. Similarly, protocols like Curve have performed exceptionally well due to their low-slippage characteristics for stablecoin swaps. Strong fundamental projects conducting TGE this quarter, such as HypeLiquid and Morpho, as well as application-oriented projects like Virtuals, have not only delivered robust on-chain metrics but also seen their token prices repeatedly hit new highs. These trends indicate a resurgence in value investing, with innovation remaining a core driver of growth in the cryptocurrency industry. Capital flows are increasingly shifting toward these promising sectors.
However, there are challenges. Recent trends show a decline in both the number and total amount of fundraising activities in the primary market, creating a disconnect with the secondary market’s performance. Projects funded over the past two years are now facing long wait times for listings on top-tier exchanges, while second-tier exchanges continue to struggle with liquidity shortages. Furthermore, the speculative frenzy on-chain and the rise of anti-traditional risk sentiment at the start of Q4 have negatively impacted the post-listing pricing of primary market projects, further squeezing investment returns.
As these projects transition to the secondary market, they must contend with challenges such as a narrowing liquidity window, intense competition within the same sector, and limited exchange resources. These combined factors have brought unprecedented challenges to fundraising and investment activities in the primary market.
Quarterly Primary Market Fundraising / Source:
In the secondary market, investors often seek opportunities in the altcoin market to achieve returns that surpass Bitcoin’s growth. However, during the challenging market conditions of Q2 and Q3, while Bitcoin maintained high price levels, many fundamentally solid altcoins underperformed. This underscores the critical importance of timing; even with strong fundamentals, entering at the wrong time can result in unfavorable entry prices or prolonged capital lock-up costs.
Additionally, the secondary market presents challenges such as position management and risk control. Missteps in these areas can lead to capital drawdowns or losses. Although secondary market trading strategies do not need to address token listing or liquidity issues, they must contend with the complexities of target selection and timing.
Overall, strategies in the secondary market tend to have lower certainty, a higher risk-reward ratio, and limited scalability in terms of capital deployment.
Altcoin Performance / Source:
Focus on Sectors
DeFi
The DeFi sector experienced a robust resurgence in 2024. As a transformative force in the previous cycle, DeFi continues to enjoy widespread recognition within the industry. With the rise of Bitcoin and altcoin ETFs, coupled with potential large-scale capital inflows driven by U.S. policy developments, new users' demand for lending, DEXs, and stablecoin trading has steadily increased. This trend offers significant potential for the stable growth of DeFi's TVL (Total Value Locked) and asset scale.
Post-election market movements have initially confirmed this outlook. According to DeFiLlama, from November 6 to December 15, the influx of new and existing investors, alongside increased borrowing demand, drove DeFi's TVL from $87 billion to $130 billion, a surge of over 50%.
DeFi TVL / Source:
The lending sector, a cornerstone of DeFi, performed exceptionally well in Q4 2024. The decentralized lending market's TVL reached $55 billion, surpassing the previous cycle’s peak of $51.2 billion. AAVE maintained its dominant market position this quarter, holding over 40% of the market share and controlling nearly 70% of the DeFi lending market. The platform's active loan volume ranged between $7 billion and $8 billion.
AAVE's TVL growth was driven by several factors:
Data indicates that ETH, as a core lending asset, saw its supply annualized percentage yield (Supply APY) rise from 1.8% in early September to 2.5% in mid-December. Stablecoins such as USDT and USDC experienced even more dramatic APY increases, climbing from 3% and 4% to peaks of 15% and 17%, respectively, reflecting heightened demand for high-yield assets. Additionally, the loan-to-value (LTV) figure surged from $7.5 billion in early September to $16 billion by mid-December, indicating a significant expansion in loan volumes.
Currently, AAVE's TVL stands at approximately $21 billion, surpassing its previous cycle peak of $19 billion by around 11%. AAVE’s token price has reached $370, still offering an estimated 80% upside compared to the last cycle’s all-time high of $665. Expectations of further reductions in U.S. bank lending rates could encourage additional capital inflows into the DeFi lending market, further boosting AAVE’s TVL.
As a rising star project listed in Q4 2024, Morpho has leveraged the security and credibility advantages of leading lending protocols to quickly attract liquidity amidst a recovery in borrowing demand. Morpho Blue, the lending layer of Morpho, enables the creation of independent markets in a permissionless environment, catering to a wide range of risk preferences and use case requirements.
Built on the Morpho Blue protocol, MetaMorpho allows various types of lenders to create vaults in a permissionless manner, customize risk exposures, and allocate deposits to one or multiple Morpho Blue markets.
Morpho Architecture / Source:
Morpho's design offers an efficient yield-generating solution for stablecoin and pseudo-stablecoin whales, meeting their demand for secure and high-yield investments. Additionally, Morpho incentivizes lenders by providing Morpho tokens, boosting the Net APY to 110%-120% of the base APY. The platform integrates rewards from emerging stablecoin protocols such as Usual and ENA, further enhancing its appeal and offering users diversified yield opportunities.
At its TGE, Morpho's market cap was just $50 million. However, as the market recognized the platform's capabilities, investor confidence surged in the secondary market, driving Morpho's market cap to $460 million by Q4. Currently, Morpho's TVL has reached $3.2 billion. Considering the persistent demand for DeFi lending and Morpho's ability to innovate and optimize in a competitive market, its growth trend is expected to continue. This case illustrates that even in mature DeFi sectors, protocol-layer innovation based on user needs holds significant growth potential.
In trading and liquidity services, decentralized exchanges (DEXs) remain a cornerstone of the DeFi ecosystem. Curve excels in providing ultra-low-slippage depth for stable asset swaps, meeting the demand for fast, low-cost stablecoin exchanges. However, Curve's founder faced liquidation after leveraging CRV heavily, following a drop in its token price. This event temporarily depressed Curve's market value, leading to an undervaluation.
According to DeFiLlama, Curve's TVL grew modestly in Q4 2024, from $2 billion at the start of the quarter to $2.5 billion by its end. However, the stablecoin market remained highly active during this period. Tether alone issued $3 billion USDT from October 30 to November 14, and new stablecoins like sUSDe, USDe, and USD0, along with popular real-world asset (RWA) and stablecoin protocols, contributed significantly to transaction volumes. Curve's monthly fee revenue reached approximately $1.5 million, an improvement compared to previous quarters, though still far from its January 2022 peak of $11.5 million. Curve's token price rose from $0.23 in September-October 2024 to around $1, marking a 330% increase, though it still has significant upside potential compared to its previous cycle's high of $6.4.
Hyperliquid is an innovative decentralized platform focused on efficient perpetual contract trading, utilizing an order-book-based trading mechanism. It supports perpetual contracts and spot trading while delivering a low-latency, high-throughput trading environment on Layer 1 chains. The platform comprises a consensus layer (HyperBFT) and an execution layer (RustVM). HyperBFT, a modified version of the LibraBFT consensus algorithm, supports up to 2 million TPS. Through continuous optimization, Hyperliquid provides a trading experience comparable to centralized exchanges.
Key features of Hyperliquid include:
Hyperliquid is also KYC-free and has low transaction fees, making it an attractive option for arbitrage traders. Compared to GMX, which relies on Chainlink oracles, Hyperliquid avoids oracle-related risks. Additionally, unlike dYdX, which uses an order-book model, Hyperliquid overcomes performance bottlenecks and avoids slippage caused by network congestion or transaction confirmation delays. Hyperliquid also incentivizes community participation through HYPE token airdrops, fostering confidence and engagement in the platform's development.
Hyperliquid's HIP-1 and HIP-2 mechanisms have maintained a large open interest (OI) volume, with major trading pairs such as ETH-USD, BTC-USD, and SOL-USD. Currently, Hyperliquid accounts for over 50% of trading volume in the perpetual contract DEX space, leading the market. According to Coinalyze and
, its OI volume is about 10% of Binance's. In December 2024, Hyperliquid generated approximately $30 million in USDC revenue, with an annualized revenue exceeding $360 million, ranking just behind Ethereum, Solana, and Tron.
The price of the HYPE token surged from $3 at launch to over $30 within a month, achieving a nearly 10x increase and solidifying Hyperliquid's position as a market leader. Although Hyperliquid's market cap remains below other L1 and L2 platforms, its revenue-to-circulating market cap ratio is far ahead of its competitors.
Hyperliquid Revenue / Source:
Overall, the recovery of the DeFi sector in Q4 2024 was primarily driven by products offering real yields, with usability and security becoming critical competitive advantages. Platforms like Aave and Morpho attracted significant users in the lending sector by providing reliable and efficient services. Curve continued to play a key role in stablecoin swaps, meeting the market demand for fast and low-cost transactions. Meanwhile, emerging decentralized exchanges like Hyperliquid quickly rose to prominence in derivatives trading, further enriching the DeFi ecosystem. Web3 wallets offered by major exchanges also consistently attracted users into the DeFi space, fueling growth in the sector. Overall, DeFi is steadily expanding through the interplay of lending, DEXs, and stablecoins, with its future large-scale growth likely to benefit from supportive policies and continued innovation.
RWA and Stablecoins
Real-world assets (RWA) encompass a broad range of asset categories, including stablecoins, private credit, U.S. Treasury bonds, commodities, and equities. Among these, stablecoins stand out for their uniqueness and importance, warranting treatment as an independent sector. Non-stablecoin RWA assets are relatively smaller in scale due to the complexities of asset standardization and regulatory uncertainties, so the focus here is on stablecoins.
Since 2018, dollar-pegged stablecoins have played a pivotal role in the cryptocurrency market. They serve not only as a unit of account for transactions but also as shadow dollar assets, widely used in various scenarios such as transfers and payments. As of December 1, 2024, the total market capitalization of stablecoins increased to $193 billion, marking a 48% year-over-year growth.
For example, the daily on-chain transfer volume of stablecoins now consistently ranges between $25 billion and $30 billion, even during bearish market conditions, with a minimum of $10 billion in daily transfers. Regarding trading volume, industry data from CoinMarketCap shows that the monthly trading volume in November reached $6 trillion, accounting for 30% of centralized trading activity. This percentage excludes on-chain stablecoin transactions, suggesting the actual share may be even higher.
Beyond issuance, trading volume, and transfer volume—the three core metrics—stablecoins are also leveraging stable-yield assets like U.S. Treasury bonds as their underlying assets. This strategy provides stable and sustainable returns, generating positive externalities for the industry and further facilitating the integration of Web3 with the real economy.
Stablecoin Daily Transaction Volume, Source:
In the stablecoin market, increasing demand has led to the emergence of various types of stablecoins, including fiat-backed stablecoins, decentralized collateralized stablecoins, and algorithmic stablecoins. Fiat-backed stablecoins dominate the market and continue to expand in scale. However, driven by evolving transaction needs, decentralized stablecoins are actively exploring new pathways.
Among these, Ethena has emerged as a standout. Ethena's issuance of USDe, a synthetic dollar, has secured a strong position in the DeFi space with its innovative financial solutions. What sets USDe apart is its use of advanced Delta hedging strategies to maintain its peg to the US dollar, distinguishing it from traditional stablecoins.
Over a little more than a year, USDe's issuance has grown steadily, successfully weathering the bearish market conditions of Q2 and Q3. It has now risen to become the third-largest stablecoin, trailing only USDT and USDC, and has entered another phase of rapid development.
Stablecoin Data / Source:
Additionally, leveraging the support of BlackRock, the world's largest asset management company, Ethena has launched a new institutional-grade stablecoin, USDtb, under its BUIDL initiative. As a product independent of USDe, USDtb provides users with a distinct risk profile, offering an alternative choice.
USDtb's introduction enhances USDe’s ability to navigate market challenges. Specifically, during periods of negative funding rates, Ethena can close USDe's hedging positions and reallocate assets to USDtb. This strategy reduces associated risks and bolsters the overall system's stability and resilience.
USDtb Data / Source:
Beyond Ethena, Usual's issuance of USD0 is also worth attention. This stablecoin leverages real-world assets (RWA) as its underlying collateral, deeply integrating the stability of traditional financial instruments with DeFi’s transparency, efficiency, and composability. USD0 operates within a permissionless and compliant framework, directly channeling real returns from RWA to community users, showcasing its competitiveness among new-generation stablecoins.
The emergence of these innovative stablecoins not only enriches market diversity but also provides users with more choices and investment opportunities.
领英推荐
ArkStream Capital believes that stablecoins play a crucial role in navigating market cycles in the crypto industry. Their growth momentum will persist, with metrics across payment and trading applications continuing to rise. Decentralized stablecoins, with their advantages in transparency, decentralization, and yield, deserve long-term attention and investment. Currently, Ethena is emerging as a market leader, while Usual is actively working to expand its market share. In the future, decentralized stablecoins are expected to grow alongside the broader sector and capture a significant share from traditional centralized stablecoins.
AI Agent
In Q4 2024, the AI Agent sector in the crypto industry gained unprecedented attention and experienced explosive growth. AI Agents have evolved from serving as auxiliary functions of traditional AI models to becoming core drivers of community ecosystems, shedding their earlier "tool-like" nature. During this quarter, projects such as ai16z and ELIZA on the Solana chain, and VIRTUAL and AIXBT on the Base chain, saw their market capitalizations grow several times in response to the market's enthusiasm. Meanwhile, traditional AI Agents in the sector performed relatively modestly.
As new and old players transition, the role of AI Agents has shifted. Historically, AI Agents in the crypto market were primarily used to assist in updating and iterating existing products, such as FET and OLAS, which focused more on integrating blockchain with AI model training or creating practical applications like workflow assistance or emotional companionship (similar to the original intention of building robots to assist with daily tasks).
However, the development model has shifted from "product-oriented" to "community-oriented," emphasizing the growth of AI Agents themselves and the construction of their ecosystems. This shift mirrors the concept of building a fully autonomous community composed entirely of AI Agents.
AI Agent Market Cap and Share / Source:
In the current "community-oriented" development model, ai16z and Virtuals stand out as the most prominent projects. According to the latest data from
, the total market capitalization of AI Agents has approached $16.7 billion, with a growth of nearly 37% during the final week of Q4 2024. Combined, ai16z and Virtuals account for approximately 50% of the AI Agent market share.
ai16z: A Decentralized Investment DAO
ai16z operates as a decentralized DAO leveraging AI for investment management. Its core component is the open-source AI agent framework ElizaOS, designed for creating, deploying, and managing AI agents. Within this framework, two core applications stand out:
Virtuals Protocol: Empowering AI Agent Creation
Similarly, Virtuals Protocol is advancing AI agent development. Formerly the gaming guild Path DAO, it underwent a strategic transformation in 2023 to become Virtuals Protocol. The launch of the fun.virtuals platform enables users to easily create and deploy their own AI agents, complete with a one-click deployment feature.
Virtuals offers a comprehensive platform akin to the "Apple ecosystem" for AI agent creation and token issuance, creating a self-sustaining ecosystem. While ai16z emphasizes an open-source framework and decentralized governance, Virtuals focuses on streamlined user experiences and closed-loop ecosystems. These distinct technical architectures, tokenomics, and market strategies cater to different user needs.
The Rise of Meme-Driven AI Agents
The wave of AI Agent adoption can partly be attributed to GOAT and ACT, two AI Agent memes. Despite lacking practical utility, they broke the mold of traditional AI Agents by combining technology with meme culture, rapidly attracting user and capital interest. This paved the way for a shift from meme-driven projects to infrastructure-based ones focused on future narratives.
Virtuals introduced the novel IAO (Initial Agent Offering) model, merging "AI Agent functionality + Token + Meme," pushing the concept to new heights. In the Virtuals ecosystem, AI Agents are not only tools for virtual personas or value analysis but also serve as memes themselves. AI Agents have transcended their original roles as service providers, becoming central to ecosystem development and driving user interaction and community growth.
Two Primary Categories of AI Agent Projects
The AI Agent market is now broadly divided into two main categories:
These dual approaches reflect the diversity of strategies within the rapidly growing AI Agent sector.
AI Agent: Development and Evolution
The rapid growth and evolution of AI Agents bear striking similarities to the early hype cycles of the blockchain industry. Distribution platforms like Virtuals, vvaifu, and Zerebro, as well as frameworks like ElizaOS, ARC, and Swarms, are currently competing in a manner akin to the early battles among Layer 1 blockchains. According to the time machine theory, infrastructure-focused AI Agent projects, due to their strategic importance, tend to attract mainstream market funds, enjoy higher market capitalization, and command a premium because of their scarcity compared to application-layer projects.
As infrastructure matures and approaches saturation, the synergy between infrastructure and applications will become the central theme of the next phase, driving the sector toward a period of deep integration. Unlike traditional project development, AI Agent applications prioritize pre-validating market demand post-roadmap and TGE, leveraging ecosystem tokens or associated token mechanisms to continuously drive innovation and ecosystem growth. This approach has led to several-fold growth in the sector's total market capitalization within the quarter.
As wealth effects become apparent, more new projects are emerging, demonstrating significant potential in various subfields, including market analysis, on-chain operations, and intent execution. For example:
ArkStream Capital believes the current fervor in this sector is evident. Fueled by FOMO, various capital sources are pouring in, leading to a rapid expansion of projects. Despite this, no single project has yet achieved a market capitalization exceeding $10 billion. This phase can be considered the "early stage" of the Web3 AI Agent sector, characterized by time-sensitive, speculative behavior as participants race to enter the field as quickly as possible.
ArkStream's Outlook ArkStream Capital predicts that the "second phase" is imminent, where market attention will shift to product quality. This will usher in a wave of natural selection—low-quality and speculative projects will be quickly eliminated by mainstream capital. With the continued iteration and advancement of traditional AI technology, ArkStream Capital remains optimistic about the sector’s future. The current level of enthusiasm underscores its potential, and the first AI Agent projects to surpass $10 billion in market capitalization are expected to become significant milestones for the industry.
Meme: Growth and Evolution
Over the past three months, the Meme sector has witnessed remarkable growth and transformation in total market capitalization, trading activity, thematic diversity, and exchange support. From October to early December, Meme tokens saw their total market cap hit record highs, accompanied by a surge in trading volumes. The market has welcomed a variety of new Meme tokens, including:
These emerging Memes have injected vitality into the market, driving on-chain liquidity and attracting a wave of new investors. This growth has contributed to the overall prosperity and development of the Meme and crypto industries.
Performance of Established Meme Tokens Meanwhile, traditional Memes like DOGE, PEPE, and WIF have remained strong. In particular, PEPE and WIF were listed on Robinhood in November 2024, highlighting the recognition of Meme tokens by North American compliant exchanges and further expanding their market influence.
Meme Market Data Looking at historical data from the Meme sector, as of the end of 2023, only a handful of Memes ranked among the top 500 cryptocurrencies by market capitalization, including DOGE, SHIB, BONK, PEPE, FLOKI, and ELON. Most other Meme tokens had relatively low market caps. However, by the end of 2024, the number of Memes in the top 500 surged to 48, accounting for nearly 10% of the total. The sector's total market capitalization reached approximately $104.7 billion, with 24-hour trading volumes of $7.4 billion. These figures demonstrate the growing recognition and market consensus around Memes.
Meme Market Capitalization / Source:
In this quarter, Meme tokens became a focal point in the cryptocurrency market, attracting significant attention from investors. Although the return of value investing trends in November diverted some capital away from Memes, certain newly listed popular Meme tokens managed to secure listings on major exchanges such as Binance and Upbit due to their strong market performance and extensive user bases. However, the lack of sustained inflows caused these Memes to experience substantial corrections from their peaks.
ArkStream Capital believes this correction perfectly illustrates the dynamics of an attention-driven economy, wherein Meme-related capital inflows and outflows fluctuate significantly with shifts in market focus. Many Meme tokens rapidly reached market caps of $100 million or more within a short timeframe. As such, undergoing corrections and withstanding the test of time is both natural and necessary.
ArkStream’s Perspective on Meme TokensArkStream Capital posits that the prosperity of Meme tokens is more than just a fleeting trend. Memes serve as a bridge connecting Gen Z to the Web3 world, leveraging their simplicity and accessibility to foster engagement and participation. This unique appeal ensures their longevity while also bringing emotional resonance and value to the market. Consequently, ArkStream Capital is actively exploring investment opportunities within the Meme sector, focusing on two main areas:
Project Investment
Project Overview Ethena, as an innovator in the DeFi space, is dedicated to providing stable and scalable crypto-native monetary solutions. Its first stablecoin, the crypto-native synthetic dollar USDe, employs an innovative Delta hedging strategy by holding a combination of mainstream crypto assets and corresponding short positions to maintain intrinsic stability. This design eliminates reliance on the traditional banking system and USD-backed infrastructure. As a result, USDe rivals fiat-backed stablecoins like USDC and USDT in stability while significantly enhancing capital efficiency and yields.
Ethena's second stablecoin, USDtb, was developed in collaboration with RWA-focused institution Securitize and supported by BlackRock BUIDL. USDtb connects traditional financial products such as USD, short-term U.S. Treasury bonds, and repurchase agreements, providing stable, yield-supported digital dollars backed by real-world assets. USDtb offers advantages including high liquidity, low risk, and stable returns while leveraging Web3 technology to ensure transaction transparency and settlement efficiency. Together, USDe and USDtb expand Ethena's footprint in the stablecoin market, and through their synergy, enhance the overall stability and credibility of Ethena's stablecoin solutions.
Why Invest in Ethena Ethena's vision is to reshape the cryptocurrency ecosystem by building a bridge between DeFi, CeFi, and TradFi to drive the next generation of financial innovation. Its flagship stablecoin, USDe, has been deeply integrated into various critical DeFi domains, including:
In the exchange sector, Ethena's liquidity pools not only support existing centralized and decentralized platforms but also solve the early liquidity challenges faced by emerging exchanges. Ethena has become a market leader in depth and off-market liquidity provision.
In TradFi, USDe has gained popularity for its unique yields, combining returns from multi-billion dollar-scale crypto-native assets while maintaining a low correlation to traditional financial interest rates. Its underlying assets are custodied by TradFi-recognized institutions, providing large investors with a convenient way to achieve outsized returns from the crypto market via a single asset.
The ENA token plays a critical role within the Ethena ecosystem. It functions as a governance token, granting holders rights to participate in key decisions such as electing risk committee members and shaping policy directions. Additionally, ENA holders can stake their tokens to earn additional rewards through sENA. In the future, ENA will also serve as a voting tool for Ethena's derivatives exchange, Ethereal, further emphasizing its importance in Ethena's roadmap. These functionalities solidify ENA’s role at the core of the Ethena protocol, underpinning decentralized governance and incentivizing user participation.
ENA has demonstrated strong performance on major exchanges, with trading volumes consistently ranking among the highest, showcasing its active market presence and widespread acceptance.
Ethena employs a range of hedging strategies in collaboration with major exchanges to address potential risks in derivatives markets, ensuring the stability and security of USDe. The adoption of USDe as a base trading pair is steadily progressing, supported by Ethena’s efforts to enhance liquidity and mitigate risks. Ethena collaborates with leading global market makers, providing liquidity and depth, further strengthening USDe’s adaptability and resilience in the market.
ArkStream Capital believes the competition in the stablecoin space is far from settled. While USDT and USDC currently dominate, emerging challengers like Ethena have the potential to disrupt their market positions. Success hinges on stablecoin protocols with unique mechanisms, the ability to reliably maintain value, grow market capitalization, and expand use cases.
Just as DEXs now account for 10% of CEX trading volumes, decentralized financial products are rapidly gaining market share due to their verifiability and convenience. By 2025, ArkStream predicts decentralized stablecoins, led by projects like Ethena, will grow their market share to 10%, reaching a valuation of $20 billion. Furthermore, Ethena is poised to become a key financial instrument under Trump’s policies, reinforcing its strategic role in the revival of the U.S. economy and the reshaping of global finance, solidifying its importance in both domestic and international digital finance landscapes.
TRex
Project Overview TRex is dedicated to building a publisher network focused on gaming and entertainment content projects within the blockchain industry. Its goal is to guide project teams with a high-quality, scalable, and sustainable development approach by providing support in areas such as resource allocation, tokenomics design, strategic consulting, and marketing. For instance, two recently incubated gaming projects, Legend of Arcadia and Last Odyssey, have already attracted over 100,000 active users each.
Why Invest in TRex Leveraging the robust EVG ecosystem, TRex has significant advantages in funding and resources. EVG is one of the most successful Web3 project incubation and investment companies in the Asia-Pacific region, with a portfolio that includes renowned projects such as Celestia, Wormhole, Berachain, Animoca Brands, The Sandbox, Yuga Labs, and Kraken. Moreover, TRex has established a deep partnership with Animoca Brands. As a pioneer in the metaverse sector, Animoca's flagship project, The Sandbox, has gained widespread recognition from traditional internet and luxury brands, demonstrating Animoca’s exceptional capabilities in project incubation.
Both EVG and Animoca Brands are resource-rich and well-established institutions in the Asia-Pacific Web3 space, with teams primarily composed of professionals from traditional financial capital backgrounds in Hong Kong. These advantages enable TRex to implement high-quality, scalable, and sustainable strategies, offering comprehensive support to project teams in areas such as resource allocation, tokenomics design, strategic consulting, and marketing promotion.
Additionally, ArkStream Capital has observed a clear trend in the growth of gaming and entertainment content applications, driven by developments such as:
From Web2 hits like Black Myth: Wukong to the success of blockchain-based Taptap games, market recognition and demand for such applications are growing rapidly. In the near future, more developers and project teams are expected to actively enter this field. TRex’s one-stop, customizable publishing and incubation services will enable project teams to develop projects at lower costs while accessing premium resources, providing robust support for their growth.
ArkStream Capital believes that TRex, with its impressive track record and highly qualified team, has garnered support from seasoned experts in the Web2 and Web3 gaming and TMT sectors. Its plans to build a publisher network platform and a steadily expanding ecosystem position TRex as a high-value investment opportunity. As on-chain applications continue to diversify and grow on a large scale, the TRex network and its platform token are likely to become integral components of the GameFi sector.
Research Report
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ArkStream Capital is a venture capital firm specializing in early-stage investments in Web3 unicorns.
Founded by crypto experts with pedigrees from MIT, Stanford, Tencent, Google, and BlackRock, ArkStream leverages eight years of deep Web3 expertise to drive the zero-to-one growth of its portfolio companies.
ArkStream Capital is managing a portfolio of over 100 companies, including Aave, Flow, Sei, Manta, Fhenix, Merlin, Particle Network, and Space and Time.