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Backing Chainway Labs to Augment Bitcoin as a Compute Platform

Backing Chainway Labs to Augment Bitcoin as a Compute Platform - Galaxy Ventures

Galaxy is proud to announce our lead investment in the seed round of Chainway Labs, which is developing Citrea, Bitcoin’s first ZK Rollup.  

We made the investment with a strong view on the fundamental unit economics of rollups in mind (see here for our piece on The Best New Business Model in Crypto), understanding that rollups with differentiated value propositions have the chance to capture substantial network effects and the best rollups will end in “the fat tail of the power law distribution.” In our eyes, Citrea meets those criteria and more by unlocking Bitcoin’s distinct strengths.  

Bitcoin’s Massive Monetary Base Has Been Stranded 

Bitcoin offers a simple product: send/receive BTC and store it without intermediaries. It is powerful enough in its simplicity to have earned its status as a form of money which stands outside state control. 

While Bitcoin is a truly decentralized and censorship-resistant form of money — a massive achievement and one which we believe will play a greater role in the future — there are limited on-chain financial applications that allow one to use BTC. That massive $1T capital base is stranded without access to trust-minimized financial services applications.  

A Monetary Asset or a Compute Platform? 

Moreover, there have always been disputes within the Bitcoin community about what the network really is: is Bitcoin (i) primarily a scarce digital asset (monetary phenomenon), (ii) primarily a distributed and uncensorable p2p networking technology (internet computer network), or (iii) primarily a decentralized compute network that firstly provides a financial application called money but also may do other things (decentralized consensus platform)? And beyond what Bitcoin is, what should it be? These questions have driven debates within Bitcoin for 15 years and the pendulum continues to swing.  

Where one lands on the above questions may have knock-on impacts for how one thinks about other questions like Bitcoin’s long-term security budget, the role of Layer 2 solutions, the place for other blockchains and competition among blockchains, and BTC’s role as a Store-of-Value asset. 

Ordinals Showed There is Demand for Bitcoin as a Platform 

In any event, Ordinals have shown that there is real demand (on the order of millions of transactions per week) to do things other than hold and send BTC. Inscriptions are the process of recording arbitrary data into the Bitcoin blockchain and their success lends strength to Bitcoin’s position as a consensus platform. Ordinals showed the clear demand for Bitcoin blockspace that we believe will be replicated with rollups.  

Weekly Inscriptions by Type
Weekly Inscriptions by Type

Rollups Will Pair Turing Completeness with Bitcoin Security 

Bitcoin has historically been limited to an extremely constrained programming environment using Bitcoin Script, a very simplistic programming language which allows for multisig transactions, time locks, and other primitive functionality. However, because of limits in its programmability, Bitcoin as a network has been underutilized and its base asset — the most valuable cryptocurrency — has been stranded. Beyond that, the lack of interesting applications has meant fundamental risks to its long-term security due to sparse transaction fee income for miners. The adoption of miniscript, a higher-level programming language that enables much more expressive coding in Bitcoin Script, has meaningfully moved the needle here, but introducing Turing-complete L2s to Bitcoin will pour gas on the flame. 

Once built, the EVM-compatible Citrea will enable programmability, ease-of-use, and security not previously available to Bitcoin users in expressive L2s, which will create further demand to use BTC as a financial collateral and broadly in on-chain applications. The team’s solution is technologically defensible and such inventive solutions will lead to greater adoption of Bitcoin as a settlement layer for rollups. 

The Ambitious BitVM Work 

Citrea’s latest achievement impressed us within Galaxy: the team is implementing a Zero Knowledge Proof verifier within open-source BitVM with implementation by the ZeroSync team that will allow the Citrea rollup to have trust-minimized bridging with Bitcoin. When we made the investment, Citrea was planning to launch a sovereign rollup that utilized Bitcoin for data availability and required a multisig bridge to pass assets and data down to Bitcoin. One Bitcoin developer jokingly asked, how to stop Bitcoin from being “a landfill for rollups” — referencing the limited actual tie between a sovereign rollup and a data availability platform. BitVM is the answer to that question and Citrea is well on their way to implementing it. 

The Best is Yet to Come 

Bitcoin is and always has been an open, decentralized platform to which anyone can interact without permission. The only constraint is that transactions must abide by network consensus rules. Citrea follows these rules while unlocking a powerful new computation layer for the world’s most valuable blockchain network.  


Will Nuelle is general partner at Galaxy Ventures. Alex Thorn is Galaxy’s Head of Firmwide Research and a member of the firm’s investment committee.