Author: Frontier Lab
Market Overview
Overall market overview: This week, the crypto market showed a downward trend due to the Christmas holiday. Although the market sentiment index rose slightly from 7% to 10%, it was still in an extremely panic range. It is worth noting that despite the overall market weakness, USDC, which is mainly based in the US market, still achieved a growth of 1.91%, indicating that institutional funds are still continuing to enter the market, injecting certain confidence into the market.
DeFi ecosystem development: The TVL of the DeFi sector fell slightly by 0.37% to US$52.7 billion this week, but stablecoin income projects such as machine gun pools performed well, and the overall supply of stablecoins has maintained an upward trend, indicating that despite the market correction, basic liquidity is still continuing to flow in, and stable income projects such as machine gun pools are sought after.
AI Agent Development: The AI Agent track continues to receive high market attention, with a total scale reaching $10.9 billion. Particularly, the aipool model combining TEE technology has become a new market focus, expected to become a new asset issuance method following 'inscriptions,' showing the trend of deep integration between AI and blockchain technology.
Meme Coin Trend: Affected by the holiday and the overall market decline, the Meme coin track performed poorly this week, with a noticeable decrease in investor participation and capital inflow, and the market's heat temporarily shifted to other tracks, showing the high volatility characteristic of this track.
Public Chain Performance Analysis: The public chain sector has shown strong resilience against declines, with Stacks completing an important milestone for sBTC, BOB promoting BitVM Bridge development, and Taiko launching a new round of ecological plans, indicating that major public chains continue to push for technological innovation and ecological development.
Future Market Outlook: Looking ahead, the market is expected to continue its sluggish trend during the New Year's Day holiday. Investors are advised to maintain defensive allocations and increase the proportion of top asset allocations while moderately participating in high-yield gun pool projects. In the long term, the market generally expects a rising trend in the first quarter of 2025, making AI Agent and DeFi gun pool projects worthy of close attention.
Market Sentiment Index Analysis
The market sentiment index rose from 7% last week to 10%, still in the extreme fear zone.
Altcoins performed weaker than the benchmark index this week, showing a significant downward trend. Due to the Christmas holiday, liquidity sharply decreased, leading to increased market price volatility, making sudden spikes and drops more likely. Consequently, market sentiment is not very high. Given the current market structure, it is expected that Altcoins will synchronize with the benchmark index in the short term, with a low probability of independent market movements.
When Altcoins are in an extreme fear zone, the market is often at a stage bottom, ready to flip upwards at any moment.
Overview of the overall market trend.
The cryptocurrency market was in a downward trend this week, with the sentiment index still in extreme fear.
Crypto projects related to DeFi performed outstandingly, showing the market's continued focus on enhancing base yields.
AI Agent track projects had high public sentiment this week, indicating that investors are actively seeking the next market breakout point.
Hot Tracks
AI Agent
This week, the overall market is in a downward trend, with all tracks experiencing declines. Although most tokens in the AI Agent track also faced a downturn this week, the discussion around them was the highest in the market. The focus of market discussions this week was on the AI Agent + TEE model (aipool) and its future development and impact on DeFi.
One of the boosters for periodic surges in the crypto market is the emergence of new asset issuance methods. For example, past methods like ICOs (Initial Coin Offering), IEOs (Initial Exchange Offering), INOs (Initial NFT Offering), IDOs (Initial Decentralized Exchange Offering), and inscriptions have all rapidly propelled market development and boosted crypto market prices. With the rapid integration of AI and crypto, the current stage of aipool has become a highly popular asset issuance method, and it is a continuation of the 'money-printing FI' in early 2024. If the aipool asset issuance method is widely accepted by the market, a wave of asset issuance driven by the aipool model is likely to emerge in the near future, so we should pay close attention to aipool-type projects.
Top five AI Agent projects by market cap:
DeFi Track
TVL Growth Rankings
The top five projects with the highest TVL growth in the past week (not including projects with relatively small TVL, with a standard of over $30 million), source: Defilama.
Resolv (Not yet issued): (Recommended Index: ⭐️⭐️⭐️)
Project Introduction: Resolv is a Delta-neutral stablecoin project that focuses on the tokenization of market-neutral investment portfolios. This architecture is based on economically viable and fiat-independent sources of yield. This allows competitive returns to be distributed to the protocol's liquidity providers.
Latest Development: This week, Resolv completed significant technical upgrades, successfully transforming into an Omnichain project through the integration of LayerZero and Stargate technologies. The OFT standard it adopted has passed security audits from multiple institutions. Resolv performed outstandingly in ecosystem development this week, attracting a second $100 million capital inflow within the week, with an ecosystem growth rate of 84%. Its USDC Vault provided up to 36.36% APY on Euler Finance, attracting $5.67 million in TVL this week. Resolv also launched the wstUSR pool on Pendle.fi and introduced a unified point structure.
USDX Money (Not yet issued): (Recommended Index: ⭐️⭐️⭐️)
Project Introduction: The USDX Money project is an emerging synthetic dollar stablecoin protocol designed to provide a new type of crypto-native stablecoin solution through a multi-chain and multi-currency strategy. The core goal of the project is to build next-generation stablecoin infrastructure and maintain the peg stability of USDX to the US dollar through Delta-neutral hedging strategies.
Latest Development: USDX Money completed a brand new UI/UX upgrade this week to optimize user interaction experience, while launching USDX/USDT and sUSDX/USDX liquidity pools on Curve Finance, continuously expanding its ecosystem, where sUSDX reached $170 million TVL through collaboration with Lista DAO. USDX Money also launched the X-Points incentive program, which includes content creation and angel projects, and held a special Christmas event.
Usual (USUAL): (Recommended Index: ⭐️⭐️⭐️⭐️⭐️)
Project Introduction: Usual is a stablecoin project supported by Binance, aimed at providing a new stablecoin solution through decentralization. The core mechanism of the project includes three main tokens: stablecoin USD0, bond product USD0++, and governance token USUAL.
Latest Development: Recently, Usual received $10 million in Series A funding led by Binance Labs and KrakenVentures, and launched a new product UsualM in collaboration with the M^0 Foundation. It has become the largest USD0/USD0++ pool on Curve Finance, with Usual TVL surpassing $1.5 billion, placing it among the top five stablecoins globally. The DAO treasury also doubled to $17 million, and the Usual project launched staking yields of up to 18,000% APY for USUALx and initiated a community airdrop campaign.
Hashnote (Not yet issued): (Recommended Index: ⭐️⭐️)
Project Introduction: The Hashnote project is a solution focused on institutional cryptocurrency management, aimed at providing transparency and optimizing asset management through blockchain technology. Hashnote combines digital assets and traditional finance to provide users with innovative yield enhancement solutions, such as USYC.
Latest Development: Hashnote reached a strategic cooperation with CoreDAO this week and participated in its ecosystem panel meeting, focusing on the launch of an innovative Bitcoin dual-staking model that combines BTC and Core Token, designed to provide users with sustainable yield solutions. The project's CEO shared new strategies at the meeting, attracting over 14,000 views, showing strong market interest in this innovative model.
Spectra (SPECTRA): (Recommended Index: ⭐️⭐️)
Project Introduction: Spectra is a protocol for the tokenization of future yields. DeFi users can deposit interest-bearing tokens from other protocols within a specified future term and trade the future yields generated by that asset in advance. Spectra operates by placing interest-bearing tokens (IBT) or any fixed-term yield-bearing assets in a smart contract and issuing Future Yield Tokens (FYT) in return.
Latest Development: This week, Spectra successfully launched a new governance contract on the Base mainnet, introduced Gauges and incentive pages in the Spectra App, and optimized the multi-locking function for veSPECTRA holders to participate more efficiently in the Gauge voting mechanism. Spectra also completed APW emission adjustments, with the new emission mechanism executed at a ratio of 1:20.
In summary, we can see that this week's projects with rapid TVL growth are mainly concentrated in the stablecoin yield segment (gun pool).
Overall performance of the track.
Stablecoin Market Cap Steady Growth: USDT fell from $145.1 billion last week to $144.7 billion, a decline of 0.27%. USDC increased from $42.1 billion last week to $42.9 billion, with an increase of 1.91%. It is evident that although the market is in a downward trend this week, USDC, which is primarily based in the US market, still saw growth, indicating that the purchasing power of the market is still maintaining a continuous inflow of funds.
Liquidity Gradually Increasing: The risk-free arbitrage rates in traditional markets have been continuously declining due to ongoing interest rate cuts, while the arbitrage rates of on-chain DeFi projects have been increasing due to the value appreciation of cryptocurrency assets. Returning to DeFi will be a very good choice.
DeFi tracks' TVL
(Source: https://defillama.com/categories)
Capital Situation: The TVL of DeFi projects rose from $52.9 billion last week to $52.7 billion now. Although there have been negative growth for two consecutive weeks, the decline is minor, at 0.37%. The main reason is that the Western market, led by the US, is currently in the Christmas holiday, with both trading volumes of various tokens and on-chain activities declining. Next week marks the New Year's holiday, and it is expected that there will still not be much improvement. Therefore, attention should be focused on the overall TVL changes in January and whether the downward trend continues.
In-depth Analysis
Driving Forces of the Rise:
The core driving factors of this round of rise can be summarized as follows: Due to the recent market downturn, the APY of various DeFi protocols has decreased, while stablecoin yield projects have raised yields through token/point rewards. Overall, this has given the gun pool projects a distinct advantage in APY. Specifically:
Market Environment: Although in a bull market cycle, the recent downturn has led to a significant drop in market base rates.
Interest Rate Side: Base lending rates have risen, reflecting market expectations for pricing funds.
Yield Side: The yield of stablecoin yield projects has expanded compared to other projects, attracting more users to participate in this transmission mechanism, strengthening the value support of stablecoin yield projects and forming a good growth momentum.
Potential Risks: Due to the recent upward trend in the market, investors are more focused on yield rates and borrowing leverage, while ignoring the risk of downturns. Additionally, this week, due to the Christmas holiday, there was a sharp reduction in market liquidity, leading to selling pressure without sufficient liquidity to absorb it, resulting in continuous price declines and triggering liquidation risks in the market, causing further price drops and liquidating more assets.
Other Tracks Performance
Public Chains
The top five public chains with the highest TVL growth in the past week (not including public chains with relatively small TVL), source: Defilama.
Stacks: This week, 922 BTC were transferred to the Stacks network, completing the first phase of the sBTC deposit limit of 1,000 BTC. In terms of DeFi applications, 35% of sBTC has generated yields on Zest Protocol. The ALEX community voted to allocate 12 million ALEX tokens for the Surge plan, and Stacks achieved L1/L2 asset exchange functionality through Bitflow Finance and AI console. Additionally, Stacks incentivized developers to contribute through the 'Stackies' community reward program.
BOB: This week, BOB collaborated with Fiamma Labs to develop and release a prototype of the BitVM Bridge based on zero-knowledge technology, scheduled to launch a testnet in early 2025. It also reached a partnership with Lombard Finance, successfully deploying Lombard Finance on the BOB chain, and held initial governance discussions with Aave, planning to introduce its protocol to the BOB network. Additionally, BOB launched a six-week DeFi incentive campaign to encourage LST holders to participate through Babylon Points and conducted several community education tasks and Spaces events.
Taiko: This week, Taiko launched the Trailblazers Season 3 program, setting up a reward pool of 6 million TAIKO tokens and launched the Liquidity Royale event, rewarding the first 100 liquidity providers with 12,000 TAIKO tokens. The number of projects on the Taiko chain ecosystem has grown to 130, adding Symmetric as an important DEX partner, and held the first community meeting in Turkey with ITU Blockchain and Node 101. Through holiday gift activities and Meme competitions, it has strengthened community building.
Cardano: This week, Cardano emphasized the technical advantages of slashing mechanisms in ensuring the security of users' ADA assets, launched convenient web application development tools, deepened cooperation with hardware wallet provider Ledger, and promoted the decentralization process of community governance through DReps (representatives) voting decision-making models.
Sei: This week, Sei announced a significant technological breakthrough named 'Giga,' successfully extending EVM to a processing capacity of 5 gigagas per second, achieving a 50-fold performance improvement. Additionally, it released the Giga Roadmap through Developer Office Hours, establishing a clear roadmap for future technological development, and launched the EVM Wrapped feature, allowing users to view their activity records across multiple EVM chains, enhancing cross-chain interoperability. Sei also held a holiday event '12 Days of Christmas,' collaborating with PythNetwork, Silo, and Nansen.
Overview of the rise rankings
The top five tokens with the highest rise in the past week (not including tokens with too low trading volume and meme coins), source: Coinmarketcap.
ZEN: This week, Horizen successfully deployed the Horizen 2.0 Devnet testnet, launching an optimized zero-knowledge (ZK) verification solution to reduce technical complexity and costs. It established a strategic partnership with Automata Network to promote Web3 development, and gained recognition from institutional investors through Grayscale's Horizen Trust. This week, Horizen completed the final halving of ZEN and launched on Bitvavo exchange. Horizen is also actively preparing for the token distribution plan of the zkVerify project.
MOCA: This week, Moca Network successfully integrated with SK Planet's OK Cashbag application, bringing significant user growth, including 1.5 million page views and 800,000 spinning wheel interactions. Moca Network remains active in community operations, enhancing user stickiness through Christmas marketing activities (#MocaFam) and particularly focusing on user safety education, frequently issuing anti-fraud reminders.
PHA: This week, Phala Network officially launched Phala 2.0, integrating GPU TEE technology and Ethereum Layer 2 scaling features. It also collaborated with NVIDIA to test that TEE achieved nearly 99% efficiency on H100/H200, and announced the decision to migrate the Khala chain to the Ethereum mainnet. Phala Network's TEE-as-a-Service has been adopted by several projects, including Flashbots. Throughout the year, the execution volume of AI Agent contracts has significantly increased to 4,500 times, with active TEE Workers reaching 37,650, demonstrating Phala Network's leading position in the decentralized AI infrastructure field.
AGLD: This week, Adventure Gold engaged with the community through a Christmas-themed marketing campaign, with Christmas blessing tweets receiving high community engagement (27 likes, 14 retweets). Adventure Gold also collaborated with BladeGamesHQ in the AI Agent-driven on-chain economy, showcasing the project's exploration in integrating gaming ecology with AI technology.
MOVE: This week, Movement launched several innovative products based on its tech stack, including Puffpaw Vape with multi-chain functionality (which tracks usage data and reward features), Vomeus smart Vape with a high-definition screen, and the Sentimint project that allows users to tag emotions and memories on items. Movement improved performance through Block-STM parallel optimization and Rollup architecture, and expanded its on-chain DeFi scenarios through cross-chain integration with WBTC.
Meme Token Rise Rankings
Data Source: coinmarketcap.com
This week, Meme projects were significantly impacted by the overall market decline. Due to the Christmas holiday, fewer users participated in market trading, leading to a withdrawal of funds from the market this week. As a result, the number of investors participating in Meme coin projects was noticeably reduced, indicating that current market attention and funds are not focused on the Meme coin track.
Social Media Hotspots
According to data from LunarCrush's top five daily growth and Scopechat's top five AI scores, the statistics for this week (12.21-12.27):
The most frequently mentioned theme was L1s, with the following token situations (not including tokens with too low trading volume and meme coins):
Data Source: Lunarcrush and Scopechat.
According to data analysis, the most followed project on social media this week was the L1s project. Due to the Christmas holiday, the US-dominated market entered a holiday phase this week, resulting in a significant decline in liquidity in the market, with most ordinary investors reducing on-chain investment activities accompanied by selling behavior, leading to a substantial market downturn, with relatively smaller declines in various public chains. During a general market downturn, public chains often perform better than other tracks. Besides buying BTC and ETH for hedging, most investors still invested in various public chains, which generally rose before other projects when the downturn ended.
Overall market theme overview
Data source: SoSoValue
According to weekly return rate statistics, the SocialFi track performed the best, while the RWA track performed the worst.
SocialFi Track: The absolute leader in the SocialFi track is still TON, accounting for 91.07% of the SocialFi track's market cap. This week, TON did not follow the market downtrend and instead rose by 6.3%, making the SocialFi track perform the best. This week, Toncoin collaborated with GMX to promote high-frequency DeFi trading development.
RWA Track: In the RWA track, OM, ONDO, and MKR have a large share, accounting for 44.28%, 23.85%, and 18.36% respectively, totaling 86.49%. This week, OM, ONDO, and MKR fell by 10.76%, 19.86%, and 8.28%, showing larger declines compared to other track projects, resulting in the RWA track performing the worst this week.
Next Week's Major Crypto Events Preview
On Monday (December 30), the European Securities and Markets Authority released the implementation of MiCA crypto regulations.
On Thursday (January 2), the number of initial unemployment claims in the United States for the week.
On Friday (January 3), the court approved the effectiveness of FTX's Chapter 11 restructuring plan.
Outlook for Next Week
Macroeconomic Factor Analysis: Next week will enter the New Year's Day holiday, with few macro data releases. In previous years, markets dominated by US purchases tend to continue the low purchasing power experienced during the Christmas holiday, leading to increased market volatility.
Sector Rotation Trends: Although the current market environment for the DeFi track is poor, investors generally expect a broad rise in the market in the first quarter of next year, so most investors are unwilling to sell their tokens. Meanwhile, to increase yield from holding tokens, many are participating in gun pool projects to enhance yields. The AI segment, particularly the AI Agent track, continues to attract sustained market attention, with a market size reaching $10.9 billion, and the asset issuance model based on AI Agent + TEE (aipool) has received widespread attention in the market.
Investment Strategy Suggestion: Maintain defensive allocation, increase allocation of top assets BTC and ETH to enhance the hedging properties of assets against risks, while participating in some high-yield gun pool DeFi projects. Investors are advised to remain cautious, strictly control positions, and manage risks effectively.
