What to know:

• Arch Labs has partnered with DPI Capital to fund emerging projects on the Bitcoin DeFi protocol.
• DPI Capital is fully committed to Arch, believing it has the potential to outshine Ethereum.
• The venture firm is exclusively focusing on Arch, anticipating it might rival Ethereum’s DeFi landscape.

Bootstrapping decentralized finance (DeFi) on any blockchain depends on having builders with vision and funders ready to support them. This principle applies to both major platforms and the financial protocols that emerge from them.

Arch Labs, the namesake entity behind this initiative, effortlessly raised $7 million in seed funding from prominent venture firms last year. The current focus is on financing smaller protocols that could significantly enhance the network’s ecosystem.

They have established a valuable partnership. DPI Capital is allocating substantial resources to support early-stage DeFi projects included in Arch’s initial accelerator program, dubbed Keystone.

“We’re concentrating on the essential components for growth,” said Brent Fisher, a general partner at DPI Capital. This entails seeking and financing exciting projects focused on lending protocols, decentralized exchanges, stablecoin solutions, and real-world asset integrations.

Venture firms pursuing a singular protocol are not uncommon. For instance, Multicoin Capital, an early supporter of Solana, also invests in several smaller projects that drive the blockchain’s engagement. However, even Multicoin diversifies its portfolio beyond Solana, having led investment efforts into Arch last year.

DPI previously adopted a more diverse investment approach across the Ethereum ecosystem. However, recently, it has changed direction: “I’m committing entirely to Arch,” said Fisher.

DPI’s forthcoming fund will essentially serve as a quasi-official venture arm designated for projects exclusive to Arch. Such a focused strategy carries notable risk, primarily that the ‘pillar’ protocols selected as leaders validate this theory, and significantly, that Arch will gain traction.

Fisher’s emphasis is on the potential upside: Arch could emerge as a winning contender, with no better strategy than to invest broadly in it.

“This has immense potential, even the capacity to surpass Ethereum,” said Brent Fisher.

His bullish perspective on Arch draws from Bitcoin’s established standing as the leading cryptocurrency. Bitcoin’s value significantly exceeds Ethereum’s, even without a robust internal DeFi framework, which has historically been Ethereum’s stronghold.

Many family offices, investment firms, and increasingly, ETFs possess BTC and do so with little worry concerning their inability to utilize those assets for low-risk yield opportunities on the Bitcoin Network, unlike with ETH on Ethereum.

“I believe this opportunity is substantial, as highlighted by the ETFs involving Black Rock and ARK. To achieve a Delta neutral strategy of 10% is a game changer,” stated Fisher.

Arch’s Bitcoin-based programmability layer facilitates such opportunities. While not the only network with this vision, Fisher argues it excels by providing a “true native self-custody model” rather than relying on bridging or wrapping mechanisms. Retaining Bitcoin on the network minimizes risk, according to Fisher.

Thus, Arch’s Keystone accelerator serves as a crucial pathway for DPI to prioritize many teams aiming to deploy their BitcoinFi technology on the platform. DPI is poised to write checks of up to $250,000 for promising teams while also assisting them in attracting additional investors and scaling their efforts.