On April 28th, 2023, Cryptogram Venture (CGV) announced that the second Tokyo Web3 Spring Hackathon (TWSH), is initiated by CGV and jointly supported by experts from institutions such as Keio University, NTT DOCOMO, MetaFocus, TEAMZ, CoinW Labs, etc. The registration channel for (pre-)participation projects has now opened at https://www.web3hackathon.io/, and institutional cooperation and recruitment are underway. CGV FoF recently sponsored one of the most influential Web3 offline summits in Japan, the TEAMZ Web3 Summit 2023, and will organize the Tokyo Web3 Spring Hackathon (TWSH) Demo Day event at Toranomon Hills on the first day of the summit (May 17th) in Tokyo. Dozens of guests, including former Japanese Cabinet Secretary and current Ministry of Digital Society Promotion Minister Hiroshi Hirano, Tim Draper, the founder of Draper Associates, Satoshi Watanabe, the founder of Astar Network, Yuzo Kano, the CEO of BitFlyer, Jason Sai, a web3 special examiner for NTT DOCOMO, Amo Kensuke, the COO of Coincheck, David Gan, the founder of OP Crypto, Akio Tanaka, a founding partner of Infinity Ventures Crypto, Mable Jiang, the chief revenue officer of STEPN, Tony Gu, a partner of NGC Ventures, and Qi Liu, the co-founder of SevenX Ventures, will attend the event and give speeches. The choice of Japan as the birthplace of TWSH is in line with the Japanese government’s efforts to develop Web3. Recently, Japanese Prime Minister Fumio Kishida stated that the advent of the Web3 era could lead to economic growth in Japan. In the future, the Japanese government will carry out institutional reforms to create an environment that promotes the creation of new services, including Web3-related infrastructure. Japan has great development potential in the encryption and Web3 fields and may occupy an important position in the global Web3 market. The organizer CGV stated this hackathon activity differs from previous industry hackathon events in that it emphasizes the sustainability and development capabilities of projects in addition to development capabilities. Therefore, the contest is expected to last for up to six months. The construction and development of the Web3 ecosystem is not something that can be done overnight, and it is hoped that, with a more responsible examination and more patient support, outstanding talents and teams in the Web3 field can be discovered and assisted globally to jointly explore the enormous development space of Web3. The first Japan Web3 Hackathon, hosted by CGV, was held from July to October 2022, and was jointly launched by institutions such as the Ministry of Education, Culture, Sports, Science and Technology of Japan, Keio University, Sony, Softbank, and Cointelegraph Japan (CTJ). Dozens of well-known global blockchain industry institutions such as Metis, MetaEstate, Atom Capital, Binance, BAI Capital, Consensus Lab, Gate.io, IOSG Ventures, IPFS infinite Japan, NGC Ventures, OKX, Tokyo Tower, and Tokyo Esports Gate supported the event, with over 100 outstanding projects participating from Japan, the United States, Singapore, Dubai, Hong Kong and other regions. Ultimately, nine projects from different tracks stood out through selection and shared a $150,000 prize pool. Some of the favored projects also received investment from investment institutions and support from Japanese local resources. When it comes to the focus of the second Japan Web3 Hackathon, Steve Chiu, the founder of the organizer CGV, stated that the projects for this event not only cover popular Web3 tracks such as blockchain infrastructure, DeFi, GameFi, Metaverse, NFT and SocialFi, but also place emphasis on innovative trends such as Zero-knowledge Proof (ZK), encrypted AI fusion, innovative stablecoins, DePIN (decentralized physical infrastructure network), Soul Binding Tokens (SBT), completely on-chain games, and new social applications. Participating institutions will have the opportunity to have early contact with front-line projects, and communicate with global Web3 industry institutions and practitioners. As for participating projects, they will have the chance to obtain investments and entrepreneurial guidance from top global VC institutions, win the total prize pool of hundreds of thousands of dollars, and receive support from a multimillion-dollar incubation fund. According to the schedule of the competition, from April to June during the event, project registration, screening and review, Demo Day exhibitions (Tokyo Toramagashi), online preliminaries, and excellent project roadshows will be held sequentially, and the award ceremony will be held in Japan in September. As of now, more than 30 VC institutions from all over the world have registered to participate in the project selection and review, and more institutional cooperation is being confirmed. For institutional cooperation applications (event support, project selection and review, media cooperation, etc.): Yurinatyou@cgv.fund Registration channel for participating projects (pre-registration): https://www.web3hackathon.io/ About Cryptogram Venture (CGV): Cryptogram Venture (CGV) is a compliant crypto industry research and investment institution headquartered in Japan. With “research-driven investment” as its business orientation, it has participated in early investments in projects such as FTX, Republic, CasperLabs, AlchemyPay, The Graph, Bitkeep, Pocket, Powerpool, and JPYW, a yen stablecoin regulated by the Japanese government. At the same time, CGV FoF is an LP of funds such as Huobi Venture, Rocktree Capital, and Kirin Fund. Currently, CGV has branches in Singapore, Canada, and Hong Kong, About Keio University: Keio University, is a world-renowned research-based comprehensive university and the first institution of higher education in Japanese history. Keio’s predecessor was the “Rangaku Juku” founded in 1858, a private school that spread Western natural sciences. Under the guidance and influence of its founder, Yukichi Fukuzawa, it continued to develop and played a pioneering leadership role in Japanese society. About NTT DOCOMO: The largest mobile communication operator in Japan, with over 60 million contracted users. It provides 3G network services throughout Japan and provided LTE commercial network services as early as 2010. In November 2022, NTT DOCOMO announced that it will invest up to 600 billion yen (US$4 billion) in developing next-generation Web3 internet technology. About MetaFocus: MetaFocus is an accelerator that focuses on incubating innovative projects in the fields of cryptocurrency and metaverse. Its headquarters are located in Singapore, and it has branches in Tokyo, Hong Kong, and other locations. Its business currently covers some countries and regions in North America, Asia, the Middle East, and Europe, with over 50 partnering organizations and nearly 100 industry mentors. MetaFocus provides matching support to the founding teams at every growth stage of their startup projects. With a top-notch team of mentors and rich experience in project localization, MetaFocus offers personalized and differentiated coaching and support in areas such as industry, operations, marketing, financing, and going public. About TEAMZ: TEAMZ is a digital creative team that provides business strategies and solutions for Web3-related companies seeking new opportunities. It supports customer needs in the Japanese Web3 market through one-stop services from planning and development to ongoing support for Web3 products and services such as NFT, DAO, GameFi, wallets, and Metaverse integration. About CoinW Labs Established in early 2022, CoinW Labs is committed to building a world-class distributed ecosystem incubation laboratory, providing industry-leading and highly professional global blockchain investment and incubation services to accelerate builders and achieve sustainable growth and success in the blockchain field. The business focuses on Gamefi, NFT, DeFi and other areas. Since its establishment, it has successfully discovered and incubated more than 300 projects, achieving a financial investment return of over 20 times overall, and has been highly recognized in the industry for its high coverage and efficiency of services.

Bitcoin Ordinals is completely written on the chain of Bitcoin, like a tattoo, and becomes part of Bitcoin. Crops can only grow well on fertile land. Bitcoin has been operating successfully for 14 years and is now the 10th largest asset in the world by market capitalization, just behind Nvidia. CGV argues that Bitcoin has changed many people, allowing us to view the world from a new perspective and making us think about “what is value?” Even if there are still people who doubt Bitcoin, it cannot hide the fact that Bitcoin has become a mature and widely recognized asset. Top Assets by Market Cap Data source: Global ranking, https://companiesmarketcap.com/ While Bitcoin is changing us, it is undergoing evolution. The innovative projects based on Bitcoin, such as Bitcoin Layer 2 solution, Ordinals protocol, BRC-20, and Nostr protocol, spring up like mushrooms after rain. These innovations provide faster and more convenient trading solutions for Bitcoin, as well as greater potential and imagination for Bitcoin. Some people may question these innovations, but doesn't Bitcoin thrive on skepticism? Let's put aside our stereotypes for a while and understand the new concepts centered on Bitcoin, which is also the original intention of this article. Let's repeat the first sentence of the opening paragraph, an investment philosophy worth thinking about: Crops can only grow well on fertile land. Note: When it comes to innovations regarding Bitcoin, we are well aware that there is still much to be done. We warmly welcome your comments and suggestions, and sincerely invite you to join us in the discussion. I. Ordinals protocol - The era of sats is approaching As Ethereum is designed to support smart contracts and decentralized applications, it has a natural advantage in the NFT field. Based on Ethereum's ERC-721, developers can easily create, issue, and trade NFTs. You may wonder, why does not Bitcoin, which has the strongest consensus, issue NFTs. The original intention of Bitcoin was to become a peer-to-peer digital currency. Therefore, its network focuses more on security, stability, and simplicity, which constrain its development of smart contracts and Dapps. It doesn't mean the Bitcoin network can't support NFTs, or even issue “tokens”. It brings us to the point of discussion: Ordinals, a protocol created by Casey Rodarmor, a former developer of Bitcoin. 1. Origin of Ordinals: Bitcoin NFT In January 2023, Casey Rodarmor, a core contributor to Bitcoin, released the Ordinals protocol. The emergence of the Ordinals protocol stimulated discussions over Bitcoin NFT. How does the Ordinals protocol make NFT possible on Bitcoin? The total supply of Bitcoin is 21 million, and its smallest denomination is sats. 1 BTC is equal to 100 million sats. The Ordinals protocol proposes an innovative design based on “sats”, which allows for embedding various information such as images, text, and videos (also known as inscriptions) in “sats”. The uploaded inscriptions are connected to specific “sats”, which is similar to the minting of Ethereum NFT. The ultimate product is a sats with inscriptions, also known as Bitcoin NFT. Each sats has a unique tag and code, the corresponding content is also unique, transforming sats from a pricing unit to an NFT unit. The number of Ordinals inscriptions has exceeded 1.6 million, data source: Dune Analytics As of April 23, 2023, the number of Ordinals inscriptions had exceeded 1.6 million. It means that the NFTs in the Bitcoin ecosystem are unlikely to disappear. What value does Ordinals NFT create? Permanent on-chain. Bitcoin Ordinals NFT is completely written on the chain of Bitcoin, like a tattoo, forever becoming a part of Bitcoin. It makes sense to keep your favorite things permanently on the Bitcoin chain; Never return to zero. Ordinals NFT will not return to zero, its base value is a sats; Historical value. The total supply of Bitcoin is limited, and the total number of inscriptions that can be inscribed is also limited. Over time, early inscriptions become precious due to their historical status. In the NFT world, uniqueness and scarcity endow works with high value. The early NFT inscriptions of Bitcoin may become more and more precious. Partial infrastructure of the Ordinals ecosystem, source: CGV The Ordinals protocol was created three months ago. Currently, it has already spawned many ecological projects built around its infrastructure, including wallets, trading markets, and tools. Leading exchanges such as OKX and Binance have joined in supporting Ordinals Ecosystem. Some interesting Ordinals NFTs 1）TwelveFold TwelveFold is a Bitcoin NFT project launched by Yuga Labs. It is a series of 300-piece generative art collections. 2）Bitcoin Punks Bitcoin Punks is the first project to successfully upload the original Ethereum CryptoPunks to the Bitcoin blockchain using Ordinals, and all assets have been minted for free by collectors. 3）Taproot Wizards Why has Taprot Wizards received so much attention? It is said to be the largest block in Bitcoin's history, with a staggering capacity of 4MB, four times higher than the usual 1MB limit. 4）Pixel pepes “Pepe the Frog” is one of the most viral memes on the Internet. Pixel Pepes was airdropped from Ordinals Wallet and is composed of some of the most active KOLs and eco-developers in the ecosystem. 2. Exploration of Ordinals: BRC-20 CGV holds that the composability of the digital world has brought many interesting experiments to the industry. Two months after the release of the Ordinals protocol, Twitter user @ domodata proposed a Token standard - BRC-20 - on the Ordinals protocol. Mint and transfer functions of BRC-20, source: https://domo-2.gitbook.io/brc-20-experiment/ BRC-20 utilizes 𝗢𝗿𝗱𝗶𝗻𝗮𝗹 𝗶𝗻𝘀𝗰𝗿𝗶𝗽𝘁𝗶𝗼𝗻𝘀 of JSON to deploy token contracts, mint and transfer tokens. You can perceive BRC-20 as an NFT for Ordinals, which is similar to a check. BRC-20 does not have a smart contract. “Ordi” is the first BRC-20 token deployed by @domodata, source: https://domo-2.gitbook.io/brc-20-experiment/ More than 30,000 𝗢𝗿𝗱𝗶𝗻𝗮𝗹 𝗶𝗻𝘀𝗰𝗿𝗶𝗽𝘁𝗶𝗼𝗻𝘀 were minted within 24 hours after the release of BRC-20. @domodata also deployed $ordi, the first token of BRC-20, with a total of 21 million. Everyone could mint it for free, and all $ordis were minted in less than 2 days. Some of BRC-20 tokens, source: https://brc-20.io/ Although @ domodata has repeatedly stated that BRC-20 and $ordi are for experiments only and have no value, some people are trading $ordi and minting more BRC-20 tokens. There have been 3,466 BRC-20 tokens, with a total market value of nearly US$20 million. The arrival of the era of pricing based on “sats” Is it necessary to issue cryptocurrency on Bitcoin ordinals? BRC-20 does not have a smart contract, and the inscription can be used as a ledger. However, it is difficult to establish an efficient and stable system with an immutable ledger. Moreover, the 'writing' on the Bitcoin blockchain takes up very valuable resources. It requires paying some sats as gas fees and spending time waiting for transaction confirmation. BRC-20 is created based on Ordinals, making it very fragile. As BRC-20 does not use Bitcoin UTXO, it is prone to problems in trading. Recently, after Unisat launched the BRC-20 trading marketplace, it was suspended due to related trading attacks. BRC-20 is still in the experimental stage, why do some people participate in it? Apart from the speculative nature of FOMO, if you deploy and mint some tokens, you will find that the release of tokens via BRC-20 seems to have achieved the original idea of the encryption industry. That is to say, everyone can easily issue tokens, and the biggest value is that it's on Bitcoin. It occupies a portion of sats, and these BRC-20 tokens are like incarnations of Bitcoin, which gives them value. Unisat's BRC-20 token trading market, source: Unisat More importantly, in CGV's view, the era of pricing based on "sats" has arrived, with all Ordinals NFT trading platforms starting to use Bitcoin for pricing. After Unisat launched BRC-20 related tokens, these tokens are directly priced using sats. It can be seen that the era of pricing based on "sats" has arrived Summary Regardless of the success or failure of the Ordinals protocol and BRC-20, their emergence has opened up new possibilities for Bitcoin, making the Bitcoin ecosystem more diverse and vibrant. Most importantly, they have transformed sats, the smallest denomination of Bitcoin, from a concept to a practical unit. II. Lightning network - Let sats flow Bitcoin has been plagued by issues such as slow transaction speed, high transaction fees, and difficulty in scalability, constraining its performance and application scenarios. How to solve these issues? Many developers are attempting to build so-called Layer 2 networks based on Bitcoin. The Layer 2 network is a technical solution built based on the Bitcoin mainnet (Layer 1). By running protocols or platforms on top of the basic layer, the Layer 2 network can fully utilize the security and decentralization characteristics of the Bitcoin mainnet while providing a more efficient trading experience. There are many Layer 2 solutions, among which the lightning network and side chain (such as the liquid network) are the mainstream, and the former is widely used. Next, let's talk about the lightning network. What is the lightning network? Lightning network is one of the Layer 2 solutions. It is mainly used in Bitcoin payment scenarios, helping users save costs and improve efficiency. Why could the lightning network complete peer-to-peer payments at a lower cost and faster speed? Because the lightning network places the transaction process off the chain, only the final transaction results are confirmed on the Bitcoin mainnet. Advantages of the lightning network -Smaller transactions are more convenient Through the lightning network, users can use sats, the smallest denomination of Bitcoin, to make payments, satisfying the needs of daily sporadic consumption. Bitcoin transaction fees, data source: https://bitinfocharts.com/comparison/bitcoin-transactionfees.html -Reduce transaction costs At present, the transaction fee for Bitcoin is approximately US$2. At the peak of the market in 2021, the fee exceeded US$60. With the lightning network, the fee is around 1 cent for US$100 transaction, which is quite cost-effective for daily small payments. -Accelerate transaction processing speed Currently, the Bitcoin network can process up to 7 transactions per second, and network congestion may cause the delay in transaction confirmation, affecting the user payment experience. Theoretically speaking, the lightning network can reach a processing speed of millions of transactions per second. Development of the lightning network As the technology of the lightning network gradually matures, the payment and social giants are driving its popularization. As of April 25, 2023, the lightning network has a total of 16,000 nodes and nearly 75,000 payment channels, with channel funds of approximately 5,379 Bitcoins (nearly US$152 million). Real-Time Lightning Network Statistics, source: 1ML Let's take a look at the current usage scenarios of the lightning network: Social platform payments and tips Many people use the lightning network because of the Nostr protocol and the Damus built on top of it. They support payments and tips via the lightning network. Cross-border remittance In January 2023, digital payments platform Strike announced a partnership with Send Globally to enable remittances via the lightning network between users in the U.S. and the Philippines. With Send Globally, the US dollar can be converted into Bitcoin, which is sent via the lightning network to a third-party partner in the recipient's country, and then converted into local currency and directly transferred to the recipient's account. Merchant payment Strike collaborated with Shopify, Blackhawk Network, and NCR to establish a Bitcoin payment system that allows merchants to quickly receive US dollars after clients make payments using cryptocurrency. At present, the merchants that support the payment system include McDonald's Corporation, CVS, Walgreens, Whole Foods, and Walmart. The lightning network has been trying to realize the original intention of Bitcoin - to become a point-to-point electronic cash system. In addition to large transactions, sats in small transactions can flow very easily through the lightning network. Although the lightning network faces many challenges on its way to popularity, as the technology matures and usage scenarios continue to enrich, it will definitely become a powerful assistant to Bitcoin. Final thoughts CGV deems that whether you are a developer or a speculator, as long as you involve in Bitcoin, you promote the prosperity and development of Bitcoin and its community. Whether it is the Ordinals protocol, BRC-20 experiment, or Layer 2 solution such as the lightning network, they have expanded the application range of the Bitcoin network, allowing for the use of “sats” and the pricing based on “sats”, thus reducing the psychological pressure and lowering the threshold for entry. There is nothing wrong with the open development and multifaceted attempts of the Bitcoin network. With the accumulation of wealth effect and the increase in the number of users, the competition among ecological products will gradually promote overall improvement. ​At present, many projects centered on Bitcoin are still in a state of chaos, with varying levels of quality. The only thing you need to pay attention to is to protect your Bitcoin. ｜Disclaimer: The information and materials presented herein are from public sources and the Company makes no warranty as to their accuracy or completeness. Any descriptions or projections of future conditions are forward-looking statements, any recommendations and opinions are for reference only and do not constitute investment advice or implication to anyone. The strategies that the Company may adopt may be the same, opposite, or unrelated to those that readers speculate based on this report. About Cryptogram Venture (CGV): Cryptogram Venture (CGV) is a Japan-based, fully compliant crypto industry research and investment institution. With a business orientation of “research-driven investment,” it has participated in early investments in FTX, Republic, CasperLabs, AlchemyPay, The Graph, Bitkeep, Pocket, and Powerpool, as well as the Japanese government-regulated yen stablecoin JPYW. At the same time, CGV FoF is an LP for funds such as Huobi Venture, Rocktree Capital, and Kirin Fund. It has established Web3 hackathons and industry summits as brand events under its umbrella. From July to October 2022, it initiated Japan’s first Web3 Hackathon (TWSH), which received joint support from the Japanese Ministry of Education, Culture, Sports, Science and Technology, Keio University, SONY, SoftBank, and other institutions and experts. CGV has branches in Singapore, Canada, and Hong Kong.

Display: CGV Research Author: Cynic Nowadays, Ethereum occupies half of the infrastructure of the blockchain industry, but its dominant position in the mainnet is being challenged by many latecomers. One of the industry consensuses is that multiple chains will coexist in the future, and cross-chain or even full-chain will be the most critical link in the multi-chain ecology. However, cross-chain bridges connecting various blockchain networks are plagued with security issues, and the cross-chain ecosystem seems to be in jeopardy. The emergence of ZK Bridge (a cross-chain bridge using zero-knowledge proof) will effectively solve various defects of the current cross-chain solutions and realize the interconnection of all chains. Heimdallr guards Rainbow Bridge Image source: Klugh, Maria Tales from the Far North (Chicago, IL: A. Flanagan Company, 1909) In Nordic mythology, Heimdall is a mysterious and important god who guards Bifröst, the Rainbow Bridge connecting Asgard to Midgard. If we compare the Rainbow Bridge connecting Asgard and Midgard to the cross-chain bridge, can zero-knowledge proof shoulder the responsibility of guarding cross-chain security and serve a role like the invincible Heimdallr on the Rainbow Bridge? This report presents the comprehensive analysis of the ZK Bridge by the Investment & Research Team of CGV Research, and strives to explore the development potential of zero-knowledge proof in solving cross-chain security issues and removing high-performance bottlenecks. TL; DR — What is ZK Bridge? ZK Bridge is a cross-chain bridge using zero-knowledge proof, with zero-trust, license-free, scalable, and efficient features. — Why do we need ZK Bridge? The current centralization and trust assumption of cross-chain bridges lead to poor security, frequent vulnerabilities, and serious losses; while cross-chain bridges that emphasize security are low in efficiency and high in cost. ZK Bridge can simultaneously maintain security, decentralization, and efficiency. — How to implement ZK Bridge? A light node solution based on ZK-SNARK — Related project introduction: Succinct Labs, zkIBC by Electron Labs, zkBridge by BerkleyRDI. What is a cross-chain bridge? Cross-chain bridge is a technological solution that allows for the transmission of value and information between different blockchain networks. By using a series of crypto and protocol techniques, the cross-chain bridge has realized the safe, verifiable, and trust-free transfer of assets and data, thus promoting interoperability between blockchain networks. Generally speaking, we divide cross-chain bridges into direct asset cross-chain bridges and universal message cross-chain bridges. Why has cross-chain bridge become a target of criticism? As a centralized pool of huge funds, the cross-chain bridge is naturally attractive to hackers — the benefits brought by successful attacks are huge. Besides, security assumptions may differ between chains, the code of assets across chains is more complex and code audits cannot identify all vulnerabilities, thus providing opportunities for hackers who are driven by huge incentives. The specific attack schemes are divided into the following types: Centralized attacks: Some cross-chain bridges rely on centralized relays or validators to transmit and validate transactions. This kind of design may lead to a single point of failure, and attackers can destroy the entire cross-chain system by attacking these centralized components. Economic incentive attacks: Cross-chain bridges usually require setting appropriate economic incentives to ensure the honest acts of validators and relays. However, it is not easy to design appropriate incentive mechanisms, and insufficient or imbalanced incentive designs may cause malicious behaviors or collusive attacks. Double-spend attack: In some cases, attackers may attempt to spend the same asset on the source and target chains, resulting in double spending of the asset. It is necessary to design effective preventive measures for cross-chain bridges to prevent double-spend attacks. Replay attack: Attackers may attempt to replay transactions on the target chain that has already taken place on the source chain to obtain improper benefits. It is necessary to implement transaction validation and anti-replay mechanisms for cross-chain bridges to prevent such attacks. Off-chain coordination attacks: Some implementations of cross-chain bridges rely on off-chain coordination, such as state channels or side chains. Attackers may disrupt the normal operation of cross-chain bridges by disrupting or attacking off-chain coordination. Inter-chain consensus attack: As the cross-chain bridges involve multiple blockchain networks, different networks may adopt different consensus algorithms. Attackers may exploit the weaknesses of inter-chain consensus to launch attacks, such as implementing a 51% attack on a single chain to affect the correctness of cross-chain bridges. Overview of current mainstream cross-chain bridge solutions There are no solutions. There are only trade-offs. — — Thomas Sowell Thomas Sowell (a representative of the Chicago School of Economics) The core cross-chain issue is how to verify the reliability of messages from another chain. Different solutions have been proposed to address this issue, including different levels of trust assumptions. Trust graph of cross-chain bridges Comparison of technical parameters of current mainstream cross-chain solutions The combination of light nodes and relays is the earliest cross-chain solution, represented by BTC Relay, which aims to use Ethereum services by paying Bitcoin. However, due to a large amount of on-chain computing and storage, it is expensive to run on-chain light clients. Moreover, due to the heterogeneity of consensus algorithms and signature algorithms between different chains, the cross-chain solution is not scalable. Therefore, it is necessary to implement the light client and relay for each pair of two specific chains. So far, only IBC on the Cosmos application chain has achieved large-scale on-chain light clients. The success lies in the extremely high-level standardization of Cosmos application chain, and each application chain needs to run the Tendermint consensus and comply with IBC standards. In a multi-chain world with various consensus mechanisms, signature schemes, and virtual machines, it is difficult to verify on-chain light clients. Current mainstream cross-chain projects shift the verification process off-chain to avoid the high cost of on-chain light nodes, causing different levels of trust assumptions and potential fraud risks. The Investment & Research Team of CGV Reserach introduces some of the key solutions according to the level of trust, from high to low. Cross-chain solution 1: Multiple signatures without pledges Typical projects include Multichain, Wormhole, and Ronin Bridge. These all require the implementation of multi-signature and MPC, which require entity verification of transactions and verification (i.e., signature) of their validity. After passing the threshold (often 2/3), the transaction is considered to be validated. In this solution, each entity needs to run the entire node for verification. There is no cost for lies without pledges, but reputational damage caused by dishonesty may lead to greater potential costs. Hence, the verification of nodes is often associated with fixed off-chain identities to increase the cost of doing evil. Multichain’s message verification is guaranteed by the SMPC network, which consists of 24 nodes. Messages signed by more than 2/3 of nodes are considered to pass verification, and SMPC nodes do not need to pledge and are relatively fixed. AnyCall’s security is based on the trust assumptions of SMPC nodes. The trust layer of Wormhole is constructed using the PoA mechanism, with a set of trusted Guardians responsible for verifying inter-chain messages. Guardians are specific entities endorsed by capital and reputation. Currently, Wormhole has 19 Guardians, including well-known large companies such as FTX, Everstake, and Chorus One. Cross-chain solution 2: Oracle and relayer A typical project is LayerZero, which ensures cross-chain security by separating the delivery of messages and proof of message from verifying the delivery transaction of relayer. The core design idea of LayerZero is the separation of oracle and relayer. In LayerZero, relayer is responsible for delivering messages and proof of message, while oracle is responsible for obtaining block headers from the source chain as needed according to the block where the messages are located, and then the terminal on the target chain verifies the transactions delivered by relayer according to the block headers obtained by oracle. As long as the two do not collude, cross-chain security can be guaranteed. It is worth noting that although Layerzero calls its technical solution as Ultra Light Node, the solution is fundamentally different from light client. LayerZero verifies the proof of transaction provided by relayer through the block header provided by oracle. The verification occurs at the end of the target chain and is the native validation. However, the verification of the block header is completed by a third-party oracle network as an external validator, and the verification process occurs off the chain. Cross-chain solution 3: Multiple signatures with pledges On the basis of MPC, a layer of proof of equity has been added. Typical projects include Celer, Axellar, deBridge, Hyperlane, and Thorchain. If evil is committed, the validator’s pledge will be significantly reduced, effectively increasing the validator’s cost of deception in economic terms. A problem that PoS Bridge faces is the imbalance of validators. To alleviate this problem, Axellar adopts the quadratic voting scheme, where the signature weight will be proportional to the square root of the $AXS pledged by the validator; while Hyperlane adopts the “verifiable fraud proof” scheme, where the validators’ joint wrongdoing will be immediately detected and Slash will be executed; pNetwork and Bool Network directly require all nodes to pledge the same number of tokens. Cross-chain solution 4: Optimistic validation The knowledge of game theory is used to increase the risk of users’ evil through the game scenarios between users. Typical projects include Nomad and Synapse. The basic logic of optimistic verification is to set up a group of challengers and a challenge window period based on external verification to challenge incorrect verifications. The validator needs to pledge, and when the behavior is inappropriate, the challenger will challenge and provide proof of fraud. If the challenge is successful, the validator’s pledge will become the challenger’s reward. Nomad has a challenge window period of 30 minutes. In terms of optimistic verification, it requires that at least one challenger is honest and there are economic incentives to challenge. Compared to external verification, this is a smaller trust assumption, under which attackers cannot guarantee the success of attacks, no matter how much economic cost they pay. All traditional cross-chain solutions are mentioned above, but the development of ZKP has brought new solutions to address the dilemma of the safety and efficiency of cross-chain bridges. What is ZK Bridge? ZK Bridge is a cross-chain bridge that employs the zero-knowledge proof, without introducing trust assumptions. It adapts to multiple isomorphic/heterogeneous chains, generates zero-knowledge proof off the chain, and is only responsible for verification on the chain, thus greatly reducing the cost of computing and storage on the chain. It has zero-trust, license-free, scalable, and efficient features. Let’s first provide a basic overview of the principles of light clients. Light clients, also known as light nodes, are often presented in the form of light smart contracts on the chain. The basic principle of the light client is to deploy the light node contract of the source chain on the target chain to verify messages from the source chain. If we want to achieve bidirectional cross-chain, we need to deploy the light node contract of the other chain on both chains. Compared to full nodes, light nodes do not store sequences of complete blocks and only store sequences of block heads. Despite its small size, the block header contains a cryptographic summary of the complete data in the block. When a light node needs to know whether a transaction is included in the chain, it can perform simplified payment verification (SPV) on the transaction through the block header of the block where the transaction is located and the Merkle path of the transaction. In the following figure, the collection of green squares is the Merkle path of blue squares. To maintain the light nodes of the source chain deployed on the target chain, it is necessary for the off-chain agent to continuously synchronize block heads of the source chain with the target chain. The light node contract has no trust assumption for the off-chain agent, which is responsible for synchronizing block heads. Given that the light node performs validation on its synchronized block headers, the off-chain agent cannot deceive the light node. The logic of the light node’s validation of block head is no different from that of the full node and mining node. It is divided into two parts, namely effectiveness validation and finality validation. The Investment & Research Team of CGV Research argues that for the PoW chain, verification of effectiveness mainly refers to verifying the proof-of-work of the block, and the verification of finality is to check whether effective blocks are appended behind the block header (in BTC chains, an append of 6 blocks is generally considered to confirm the finality of a block, while in Ether, an append of 25 blocks is generally considered to confirm the finality of a block). For PoS chains, verification of effectiveness refers to verifying whether a block has been generated by randomly selected blockers, while verification of finality refers to whether the block has been signed by validators with voting weights of more than 2/3. There is no need to perform the verification of the effectiveness of the light nodes of PoS, but it is necessary to verify their finality. Because in the PoS chain, the final block must be valid, while in the PoW chain, it may not be valid. The implementation of ZK Bridge follows almost the same process as the light node and relay solution, with slight changes. In ZK Bridge, the relay off the chain is still required to monitor the source chain and forward the block information of the source chain to the target chain. It not only forwards the block header, but also the proof of validity generated using the ZK-SNARK algorithm. On the target chain, light nodes do not directly verify the effectiveness of transactions based on block headers, but rather verify them on the chain based on proof of validity, thus lowering the computational burden. The implementation roadmap of ZK Bridge Why is ZK Bridge expected to end the cross-chain war? Among the cross-chain bridges that have been deployed and put into use, many of them have suffered serious security attacks, with a huge amount of money stolen, causing large-scale panic at the time. Today, people still hold a skeptical attitude toward the safety of major cross-chain bridges. There is an increasing need for a secure, zero-trust, decentralized cross-chain bridge to lay a solid foundation for a full-chain ecology. Statistics of funds lost and funds returned of some cross-chain protocols in 2022-Image source: DeField（https://defiyield.info/ ) The Investment & Research Team of CGV Research deems that ZK Bridge has brought new solutions to address the dilemma of safety and efficiency of cross-chain bridges. Specifically, by generating a zero-knowledge proof for the block header off the chain, the correctness of the source chain’s block header is verified by the proof generated by the ZK-SNARK algorithm. In this way, no external trust assumptions are added, and the only thing we trust is mathematics. Moreover, the verification process of zero-knowledge proof on the chain significantly lowers the computing and storage costs compared with the original light node verification. Introduction to some projects of ZK Bridge Succinct by Succinct Labs Gnosis Chain Omnibridge is a cross-chain bridge between Ethereum and Gnosis, using the mainstream solution of MPC. Team members of Gnosis want to explore cross-chain designs that do not rely on centralized entities, and Succinct Labs and Gnosis collaborate on this, with Gnosis DAO providing R&D grants. The verification process of Ethereum mainly includes the verification of Merkle proof of block headers; Merkle proof of validators in the sync committee; and the correct rotation of the BLS signatures of the sync committee. The core idea is to use zk-SNARK (Groth16) to generate a proof of validity with constant size, which can be efficiently verified on Gnosis on the chain. Illustration of Succinct cross-chain solution- Image source: Succinct’s official website（ https://www.succinct.xyz/ ) Succinct Labs’ cross-chain solution is capable of transmitting any message between any two Ethereum-compatible PoS chains. Currently, a cross-chain demo has been implemented between Ethereum and Gnosis, and a bridge deposit contract has been deployed on Ethereum to allow users to deposit. The bridge deposit passes a message to the ambient message bridge (AMB), which stores the message in the contract. The operator is responsible for obtaining proof from the sync committee, generating SNARK proof for valid BLS signature verification, and submitting updates to the light clients of Gnosis Chain. On Gnosis Chain, the Ethereum block where the deposit transaction is located is confirmed (usually 2 epochs, about 12 minutes). After the light client is updated to a height higher than or equal to that block, the relayer will automatically submit an executeMessage transaction to Gnosis AMB. The executeMessage transaction contains Merkle storage proof for the updated slot of the light client. During executeMessage, AMB uses the light client to obtain the Ethereum state root of the requested_slot and verify the Merkle storage proof to show that the message has been sent on the other side of AMB. Then, AMB uses the calldata specified in the message to receive the smart contract. Given the maturity of the tech stack and the overhead of on-chain verification, the team chose to use the most mature Circom and the cheapest Groth16 proof system for on-chain verification to generate ZK-SNARKs instead of using the newer and faster PLONK, KZG, or FRI. It is worth noting that although the project has been tested on the testnet, its usability is poor. According to the test by the author, the number of Successs tokens on the Goerli testnet has been reduced after passing through bridges, but the Gnosis network has not received tokens, and the dashboard on the website has no bridge records. It is also important to note that the cross-chain becomes unidirectional. In other words, it can only go from Goerli to Gnosis, not the other way around. zkBridge by BerkleyRDI zkBridge proves the correctness of the block headers of remote blockchains through ZK-SNARKs, therefore it does not introduce any external trust assumptions. In fact, zkBridge is secure as long as the connected blockchains and basic light client protocols are safe, and there is at least one honest node in the block header relay network. Of course, it is worth noting that although one honest node can guarantee security, too many dishonest nodes will significantly reduce the availability of the cross-chain bridge, and the light client will frequently reject the proof and fail to obtain real information. Illustration of zkBridge cross-chain solution-Image source: https://rdi.berkeley.edu/zkp/zkBridge/zkBridge.html Specifically, zkBridge mainly consists of the block header relay network and updater contract. In the block head relay network, the relay retrieves the block head from the sender blockchain C1, generates a block head validity proof, and sends the block head and proof to the updater contract set on the receiver blockchain C2. For the updater contract, once the relevant proof is verified, the corresponding block header of C1 will be stored. Additionally, the updater contract maintains a light client state. Once a new block header is added, the contract updates the light client state just like other light clients on C1, and updates C1’s current main chain. The updater contract also exposes a feature to the application, through which the application on C2 can obtain block headers of a given height on C1. After obtaining the information regarding block header, the application can perform more validations (such as specific transactions) and build its applications. To make the underlying zk-SNARK system compatible with on-chain usage, it is necessary to quickly generate proof and reduce the cost of on-chain proof verification. The main innovations of zkBridge include: DeVirgo: It adopts the distributed method to generate ZK-SNARK without trust assumptions. Besides, it significantly increases the time for generating ZK-SNARK off the chain by splitting the computational work and allocating it to more devices. Recursive proof: To reduce on-chain costs, zkBridge uses recursive proof to compress the volume of ZK-SNARK to around 131 bytes through two iterations. The first step is to generate the deVirgo proof, and the second step is to use the Groth16 proof generator for compression. The Groth16 validator generates and executes a proof of integrity for the deVirgo circuit. Batch processing: zkBridge implements an update contract for block headers, which takes block height as input and returns the corresponding block header. But zkBridge does not call the update contract when the new block is generated. The prover can first collect N block headers to generate a single proof. The N value can be set. The larger the N value is, the longer the user waits, but the lower the system operating cost. At present, zkBridge has implemented an instance of Cosmos Client on Ethereum using Solidity. According to testing, it can generate a ZK-SNARK of Cosmos Zone block header within 2 minutes. Then, on the Ethereum side, the verification cost is a constant of 230k gas per hour. By comparison, if ZK-SNARK is not used, the cost will be 64 million gas. It should be noted that relay network computing will suffer from the same communication complexity as MPC, which will seriously affect the time for proof. The communication complexity of the GKR multi-layer sum-check protocol is O (N log2 (number of signatures), where N machines are in the relay network. Even if there are 32 machines in the relay network with 32 signatures, it may cause numerous communicating sequential processes in the network, which damages the performance of distributed computing. zkIBC by Electron Labs Specifically, zkIBC hopes to simulate the trustless communication protocol — Inter Blockchain Communication Protocol (IBC) used in Cosmos, and expand its use to Ethereum. ZkIBC uses ZK-SNARKs to verify the light client state, quickly prove transactions on Ethereum, and keep up with the block generation time of the Tendermint. The main difficulty is that the Tendermint light client used in the Cosmos SDK runs on the Ed25519 curve, which is not supported by Ethereum. Besides, it is expensive and inefficient to verify Ed25519 signatures on Ethereum’s BN254 curve. The project roadmap is divided into five stages: research — implementation of ed25519 signature scheme — testnet — implementation of recursive Snark to reduce redundancy — mainnet. On February 2, 2023, the Positron testnet was officially launched to the public, supporting the cross-chain communication between Near and Ethereum. The current testnet requires approximately 20–30 minutes to achieve finality, including Goerli network finality (15–20 minutes), ZK Proof generation (5–8 minutes), and Near chain casting (10–20 seconds). The project claims to be completely open source, tested, smooth to use across chains, well-designed UI/UX, and supports bidirectional cross-chain. Reflections At a certain stage of development, blockchain technology usually evolves into a philosophy of trade-offs. The public chain suffers from the trilemma in terms of security, scalability, and decentralization; the cross-chain communication faces the dilemma of security and efficiency: the pursuit of efficiency leads to the introduction of third-party trust assumptions, resulting in security damage; while the pursuit of security by using the completely light node and relay causes high on-chain overhead. But, from the point of view of system design, even the unpledged MPC with the highest degree of trust can ensure the security of cross-chain bridges in most cases. The reason why many cross-chain bridges were stolen is due to the pursuit of transparency and open source code. The hidden vulnerabilities in complex code provide hackers with opportunities to exploit them. CGV Research holds that with the continuous progress of technology, the usability of ZK solution gradually increases, ZK Rollup is expected to be put into large-scale use in the second half of 2023, and ZK Bridge is also in the ascendant. We hope that the maturity of ZK Bridge can break the dilemma of security and efficiency faced by cross-chains, to realize the interconnection of all chains. References: 1. zkBridge: Trustless Cross-chain Bridges Made Practical（https://rdi.berkeley.edu/zkp/zkBridge/zkBridge.html） 2. Bridging the Multichain Universe with Zero Knowledge Proofs（https://medium.com/@ingonyama/bridging-the-multichain-universe-with-zero-knowledge-proofs-6157464fbc86） 3. Exploring ZK Bridges（https://zkvalidator.com/exploring-zk-bridges/） 4. Overall Comparison Between Multiple Blockchains（https://dune.com/springzhang/cross-blockchain-comparison-overview） Disclaimer: The information and materials presented herein are from public sources and the Company makes no warranty as to their accuracy or completeness. Any descriptions or projections of future conditions are forward-looking statements, any recommendations and opinions are for reference only and do not constitute investment advice or implication to anyone. The strategies that the Company may adopt may be the same, opposite, or unrelated to those that readers speculate based on this report. About Cryptogram Venture (CGV): Cryptogram Venture (CGV) is a Japan-based, fully compliant crypto industry research and investment institution. With a business orientation of “research-driven investment,” it has participated in early investments in FTX, Republic, CasperLabs, AlchemyPay, The Graph, Bitkeep, Pocket, and Powerpool, as well as the Japanese government-regulated yen stablecoin JPYW. At the same time, CGV FoF is an LP for funds such as Huobi Venture, Rocktree Capital, and Kirin Fund. It has established Web3 hackathons and industry summits as brand events under its umbrella. From July to October 2022, it initiated Japan’s first Web3 Hackathon (TWSH), which received joint support from the Japanese Ministry of Education, Culture, Sports, Science and Technology, Keio University, SONY, SoftBank, and other institutions and experts. CGV has branches in Singapore, Canada, and Hong Kong.

弊社は、CryptoFundとCryptoStudioへの投資に焦点を当てたアジアベースのファンドオブファンズ（FoF）です。 日本、韓国、中国本土、台湾のファミリーファンドで構成されており、本社は日本に、支社はシンガポールとカナダにあります。 About us Portfolio ポートフォリオファンド ポートフォリオスタジオ ポートフォリオプロジェクト 投資調査 コンテンツシステムマップ 研究すること 48 minutes ago 5 min The second Japan Web3 Hackathon competition, Tokyo Web3 Spring Hackathon, is about to begin On April 28th, 2023, Cryptogram Venture (CGV) announced that the second Tokyo Web3 Spring Hackathon (TWSH), is initiated by CGV and... 51 minutes ago 9 min CGVhe era of sats is approaching: Ordinals protocol and lightning networkmay activate the explosion Bitcoin Ordinals is completely written on the chain of Bitcoin, like a tattoo, and becomes part of Bitcoin. Crops can only grow well on... 2 hours ago 16 min CGV Research: Can ZK Bridge “Terminate the Cross-chain War”? Display: CGV Research Author: Cynic Nowadays, Ethereum occupies half of the infrastructure of the blockchain industry, but its dominant... 1 2 3 4 5 キャリア採用 私たちは、成長と成功への情熱を分かち合える目標志向で意欲的な優れた人材の発掘に努めています。私たちは、幅広いOJT（On-the-Job Training）を提供し、優れた業績には報酬を与えます。 次のイノベーションは、誰からも生まれる可能性があります。そんな私たちの活動に共感していただける方を、心よりお待ちしております。 ご希望の方は履歴書を hr@cgv.fund （メール） にお送りください。履歴書の内容をもとに選考させていただき、追ってご連絡差し上げます。 Invest Manager Analyst Partner 会社情報 会社名：CGV株式会社 所在地：東京都千代田区丸の内3-2-2 設立：2022年5月19日 Contact us ニュースレター購読 提出いただきありがとうございます 送信

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Value the Insights CGV FoF is an Asia-based Fund of Funds (FoF) that focuses on investments in Crypto Fund and Crypto Studio. CGV FoF is composed of family funds from Japan, Korea, and China's mainland and Taiwan, with headquarters in Japan and branches in Singapore and Canada. Portfolio Funds Portfolio Studios Portfolio Projects Investment research content system map Investment research content system map NFT NFT Trading Market CGV Research / From Azuki to Takashi Murakami : Japans NFT Market May Usher in Explosive Growth Digital Collectibles NFT NFT Infrastructure CGV Radar / Will the Webb that Can Empower Cryptopunks Be the Next Hot Thing ? Digital Collectibles NFT DeFi Stable coin Exchange Asset Management Derivatives Index Synthetic Assets Options Predict Marketing Perpetual Contract Insurance Interest Rate Wallet Data Analysis Web3 Protocol Layer Public Chain Layer 1 CGV Research Why Solana May Become the ios of the Encrypted World ? Layer 2 CGV Research / Ethereum Layer 2 Solutions Create A Promising Future Cross-chain Bridge Infrastructure Identity Storage Privacy Data Analysis Service Agreement CGV Research : An Insight Into Top 3 Projects in the web Index Chart : Pocket Network , Arweave , and Livepeer Application Layer Service Agreement CGV Research / Why to Invest in the Move-to-earn Track ? SocialFi Others GameFi Basic Development Layer Listing Platform（IDO） CGV Research : Wi Treasure , Run by DAOS , Be the Nintendo " in the Web3 World ? Guild Game DAO DAO operating system PROTOCOL DAO Investment DAO Grants DAO Collector DAO Service DAO Metaverse Metaverse Platform CGV Radar / Chillchat : The First Metaverse with "Create to Earn" pixel NFT Metaverse Infrastructure Cloud Computing 3D Engine Metaverse Eco Services Avatar Estate Subscribe to our research reporter Careers We strive to discover exceptional goal-oriented, driven individuals that share our passion for growth and success. We provide extensive on-the-job training and reward outstanding performance. The next innovation could come from anyone. Please send your resume to hr@ cgv.fund to become part of our team today. Invest Manager Analyst Partner