Market Overview
Overall market performance: This week, the crypto market was affected by the Christmas holiday and showed an overall downward trend. Although the market sentiment index slightly rebounded from 7% to 10%, it is still in the "extreme panic" range. It is worth noting that despite the overall weakness of the market, USDC (mainly in the US market) still achieved a growth of 1.91%, indicating that institutional funds are still flowing into the market, bringing some confidence to the market.
DeFi Ecosystem: TVL in the DeFi sector fell slightly by 0.37% this week to $52.7 billion. However, stablecoin yield projects such as machine gun pools performed well, and the supply of stablecoins continued to grow, indicating that even if the market falls back, liquidity continues to flow in, and stable yield projects are still popular.
AI Agent development: The AI Agent track continues to attract market attention, with a total scale of $10.9 billion. In particular, the aipool model combined with TEE technology has become a new focus of the market and may become another new asset issuance method after "inscription". This also reflects the trend of deep integration of AI and blockchain technology.
Meme currency trend: Due to the impact of holidays and the overall market decline, Meme currency performance has been relatively sluggish this week. Investor participation and capital inflows have significantly reduced, and market enthusiasm has turned to other tracks. This also reflects the high volatility of the Meme currency track.
Performance of public chains: The public chain sector is relatively resilient, with Stacks completing an important milestone for sBTC, BOB advancing the development of BitVM Bridge, and Taiko launching a new round of ecological plans. This shows that major public chains are still actively engaged in technological innovation and ecological construction.
Future Outlook: Looking ahead, the market may continue to remain sluggish during the New Year's Day holiday. Investors are advised to maintain a defensive configuration, increase the proportion of holdings of top assets, and moderately participate in some high-yield machine gun pool projects. In the long run, the market generally expects that there may be a wave of rising prices in the first quarter of 2025, and AI Agent and DeFi machine gun pool projects are worthy of special attention.
Market sentiment analysis
The market sentiment index rose to 10% from 7% last week, but is still in extreme panic territory.
Altcoin performance: Altcoins underperformed the market benchmark this week, with a general sharp decline. The Christmas holiday caused a sharp drop in liquidity, increased market volatility, and was prone to violent price fluctuations. This led to low overall market sentiment. Under the current market structure, it is expected that Altcoins will keep pace with the market in the short term and it is difficult for them to have independent market trends.
Panic and bottom reversal: When Altcoin is in an extreme panic range, the market is often close to the stage bottom and a rebound may occur at any time.
Overview of overall market trends
Market downturn: The cryptocurrency market is in a downward trend this week, and the sentiment index remains in the extreme panic zone.
The DeFi sector performed strongly: DeFi projects continued to attract market attention, especially attention to the improvement of basic returns.
AI Agent draws attention: The AI Agent track has been hotly discussed this week, and investors have begun to actively seek the next possible market outbreak point.
Hot Tracks
AI Agent
Although the overall market is in a downturn this week, the discussion of the AI Agent track remains high. Even though the token prices of many AI Agent projects are also falling, the market is very interested in the combination of AI and blockchain. This week, the most discussed model is aipool, which combines AI Agent and TEE, especially how it will affect the future development of DeFi.
Every time the crypto market has a cyclical surge, it is usually accompanied by the emergence of new asset issuance methods. In the past, we have seen asset issuance in various forms such as ICO, IEO, IDO, INO, etc., which have driven the rapid development of the market each time. Today, with the integration of AI and blockchain, aipool has become a new asset issuance method that has attracted much attention. If this model can be widely accepted, it may bring a wave of asset issuance driven by the aipool model in the future. Therefore, it is worth paying attention to projects like aipool.
The top five AI Agent projects by market capitalization are:
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DeFi track
TVL Growth Ranking
In the past week, the TVL growth of some projects in the market has been very eye-catching. The following are the top five projects with the highest TVL growth (only projects with TVL exceeding US$30 million are counted):
1. Resolv (no token issued): (Recommendation index: 3 stars)
Project Introduction: Resolv is a Delta neutral stablecoin project that focuses on the tokenization of market neutral portfolios. It achieves a source of income independent of fiat currency in a decentralized manner, aiming to provide competitive returns to liquidity providers.
Latest developments: This week, Resolv completed a technical upgrade and successfully transformed the project into Omnichain, integrating LayerZero and Stargate technologies. Its OFT standard has passed security audits from multiple institutions. In terms of ecological development, Resolv attracted a second $100 million in funding, with an ecological growth rate of 84%. USDC Vault offers an APY of 36.36% in Euler Finance and attracts a TVL of $5.67 million. In addition, Resolv has launched the wstUSR pool and introduced a unified points structure.
2. USDX Money (unissued): (Recommendation index: 3 stars)
Project Introduction: USDX Money is an emerging synthetic USD stablecoin protocol that aims to create a crypto-native stablecoin solution through a multi-chain and multi-currency strategy. Its core goal is to maintain the stable peg of USDX to the US dollar through a Delta neutral hedging strategy.
Latest development: USDX Money completed the UI/UX upgrade this week to improve the user experience. It also launched USDX/USDT and sUSDX/USDX liquidity pools on Curve Finance, and the ecological scale continues to expand. Through cooperation with Lista DAO, sUSDX has reached 170 million US dollars TVL. At the same time, USDX Money launched the X-Points incentive program including content creation and angel programs, and held a special Christmas event.
3. Usual (USUAL): (Recommendation index: 5 stars)
Project Introduction: Usual is a decentralized stablecoin project supported by Binance, involving three main tokens: stablecoin USD0, bond product USD0++ and governance token USUAL.
Recent developments: Recently, Usual received a $10 million Series A funding led by Binance Labs and KrakenVentures, and launched a new product UsualM in cooperation with the M^0 Foundation. Usual also became the largest USD0/USD0++ pool on Curve Finance, with a TVL of more than $1.5 billion, ranking among the top five stablecoins in the world. The DAO treasury also doubled to $17 million. At the same time, Usual launched the USUALx staking income with an APY of 18,000% and launched a community airdrop.
4. Hashnote (no token issued): (Recommendation index: 2 stars)
Project Introduction: Hashnote is a project focused on institutional cryptocurrency management, using blockchain technology to provide transparency and optimize asset management, combining digital assets with traditional finance to provide innovative yield enhancement solutions such as USYC.
Latest development: Hashnote reached a strategic cooperation with CoreDAO this week and participated in its ecological group panel meeting to launch an innovative Bitcoin dual-staking model. The model combines BTC and Core Token to provide users with a sustainable income solution. The project CEO's sharing at the meeting received more than 14,000 views, showing the market's strong interest in this innovative model.
5. Spectra (SPECTRA): (Recommendation index: 2 stars)
Project Introduction: Spectra is a future yield tokenization protocol that allows DeFi users to deposit interest-bearing tokens of other protocols and trade the future earnings of these assets in advance. Spectra rewards users by issuing future yield tokens (FYT) through smart contracts.
Latest developments: This week, Spectra launched a new governance contract on the Base mainnet, and launched the Gauges and Incentivize pages in the Spectra App, optimizing the multi-lock function for veSPECTRA holders so that they can participate in the Gauge voting mechanism more efficiently. In addition, Spectra completed the APW emission adjustment, and the new emission mechanism is implemented at a ratio of 1:20.
Summary: Judging from the performance of these projects, the projects with faster TVL growth this week are mainly concentrated in the field of stablecoin income, especially in decentralized stablecoins and income enhancement.
Overall performance on the track
Stablecoin market value performance: USDT fell from $145.1 billion to $144.7 billion this week, a drop of about 0.27%; while USDC rose from $42.1 billion to $42.9 billion, an increase of 1.91%. Although the overall market is on a downward trend, USDC, which is mainly in the US market, still grew, indicating that the market's purchasing power is still continuing to enter the market.
Liquidity is gradually increasing: As interest rate cuts continue, the risk-free arbitrage rate in the traditional market continues to decline, while the arbitrage rate in the cryptocurrency market, especially DeFi projects, is increasing due to the rising asset value. Now returning to DeFi seems to be a good choice.
Funding status: The TVL (total locked value) of DeFi projects has increased from $52.9 billion last week to $52.7 billion now. Although there has been a slight decline (0.37%) in the past two weeks, the decline is not large. The main reason is that the Western market (especially the United States) is on Christmas holiday this week, and the token trading volume and on-chain activities have decreased. In addition, next week is the New Year's Day holiday, and the situation is not expected to change much in the short term. Therefore, we should focus on the overall TVL changes in the market in January to see if the downward trend will continue.
In-depth analysis
The driving force behind the rise:
The main driving factors of this wave of growth can be analyzed from the following aspects: The market has been in a downward trend recently, resulting in a decline in the annualized rate of return (APY) of major DeFi protocols. Stablecoin yield projects have increased their yields by issuing tokens or points rewards. Overall, this makes the APY of projects such as "machine gun pools" relatively more attractive and a highlight in the market. Specifically:
Market environment: Although we are in a bull market cycle overall, the market has been in a downward trend recently, which has caused the market's base interest rate to drop significantly.
Interest rates: The rise in base lending rates reflects changes in market expectations for pricing of funds.
In terms of income: The yields of stablecoin income projects have begun to expand, attracting more users to participate, which also provides stronger support for these projects and forms a healthy growth momentum.
Potential risks: As the market has been rising recently, investors are more concerned about yields and lending leverage, but ignore downside risks. In addition, due to the Christmas holiday this week, market liquidity has dropped sharply. In the case of insufficient liquidity, the selling pressure in the market has not been effectively taken over, resulting in a drop in prices. At the same time, this has also triggered the liquidation of long contracts in the market, increasing investors' losses. Due to the risk of chain liquidation caused by the liquidation, the market fell further, more assets were liquidated, and prices fell further.
Other track performance
Public Chain
Over the past week, the TVL (total value locked) growth of major public chains has varied. Here are the top five public chains with the highest growth (excluding some smaller public chains):
1. Stacks: This week, the Stacks network has seen a big development, with 922 Bitcoins (BTC) transferred to the Stacks network, completing the 1,000 BTC deposit limit for the first phase of sBTC. Today, 35% of sBTC has generated income on the Zest Protocol. In addition, the ALEX community voted to allocate 12 million ALEX tokens for the Surge program. At the same time, Stacks has implemented L1/L2 asset exchange functions through Bitflow Finance and the AI console. In addition, Stacks has launched the "Stackies" community reward program to encourage developers to contribute to its ecosystem.
2. BOB: This week, BOB worked with Fiamma Labs to develop and release a prototype of the BitVM Bridge based on zero-knowledge technology, which is scheduled to be launched on the testnet in early 2025. BOB also reached a cooperation with Lombard Finance to successfully deploy its protocol on the BOB chain, and had preliminary governance discussions with Aave, planning to introduce the Aave protocol to the BOB network. In order to further promote the development of the ecosystem, BOB also launched a six-week DeFi incentive event, rewarding LST holders for participation through Babylon Points, and held a number of community education tasks and Spaces activities.
3. Taiko: This week, Taiko launched the "Trailblazers Season 3" plan, set up a 6 million TAIKO token reward pool, and launched the "Liquidity Royale" event, providing 12,000 TAIKO tokens as rewards to the top 100 liquidity providers. The number of projects on the Taiko chain has increased to 130, with Symmetric added as an important DEX partner. In addition, Taiko also held its first community meeting in Turkey with ITU Blockchain and Node 101, and strengthened community building through holiday gifting activities and Meme competitions.
4. Cardano: This week, Cardano highlighted the technical advantages of its “slashing” mechanism in ensuring the security of users’ ADA assets. Cardano also launched a convenient web application development tool and strengthened cooperation with hardware wallet service provider Ledger. At the same time, Cardano also promoted the process of decentralized community governance through the DReps (representative) voting decision-making model.
5. Sei: Sei launched a major technological breakthrough called "Giga" this week, which expanded the EVM (Ethereum Virtual Machine) to 5 gigagas per second, a 50-fold performance improvement. Sei also released the "Giga Roadmap", which sets a clear roadmap for future technological development. Sei also launched the EVM Wrapped feature, which allows users to view their activity records on multiple EVM chains, enhancing cross-chain interoperability. In addition, Sei also launched the "12 Days of Christmas" holiday event and reached cooperation with PythNetwork, Silo and Nansen.
Overview of the Rising Stars
Over the past week, the top five best performing tokens on the market (excluding tokens with small trading volumes and meme coins) are as follows:
1. ZEN (Horizen): This week, Horizen successfully deployed the Horizen 2.0 Devnet testnet and launched an optimized version of the zero-knowledge verification (ZK) solution, which aims to reduce technical complexity and costs. At the same time, Horizen has established a strategic partnership with Automata Network to jointly promote the development of Web3. In addition, Horizen has gained recognition from institutional investors through Grayscale's Horizen Trust. ZEN has also completed the final halving and is listed on the Bitvavo exchange. Horizen is also actively preparing the token distribution plan for the zkVerify project to pave the way for future development.
2. MOCA (Moca Network): This week, Moca Network successfully integrated with SK Planet’s OK Cashbag application, resulting in significant user growth – including 1.5 million page views and 800,000 wheel draw interactions. Moca continues to be active in community operations and has launched a Christmas marketing campaign (#MocaFam) to enhance user stickiness. It also pays special attention to user safety education and has issued multiple anti-fraud reminders, further expanding its influence.
3. PHA (Phala Network): Phala Network officially launched Phala 2.0 this week, integrating GPU TEE technology and Ethereum Layer 2 extensions. At the same time, Phala has cooperated with NVIDIA to test the nearly 99% efficiency of TEE on H100/H200. In addition, Phala also announced that the Khala chain will migrate to the Ethereum mainnet. Phala Network's TEE-as-a-Service has been adopted by multiple projects such as Flashbots, showing its strong strength in the field of decentralized AI infrastructure. This year, Phala's AI Agent contract execution volume has increased significantly to 4,500 times, and the number of active TEE Workers has reached 37,650.
4. AGLD (Adventure Gold): Adventure Gold interacted with the community through Christmas-themed marketing activities this week, especially the Christmas greeting tweets received high engagement (27 collections, 14 reposts). In addition, Adventure Gold cooperated with BladeGamesHQ on the AI Agent-driven on-chain economy, demonstrating the project's cutting-edge exploration in the integration of game ecology and AI technology.
5. MOVE (Movement): Movement launched several innovative products this week, including the multi-chain-enabled Puffpaw Vape (with usage tracking and reward functions), the Vomeus smart Vape with a high-definition screen, and the Sentimint project that allows users to mark emotions and memories on items. At the same time, Movement has improved performance through Block-STM parallelization optimization and Rollup architecture, and achieved cross-chain integration with WBTC, further expanding its on-chain DeFi scenarios.
Meme Token Gainer List
This week, the Meme project was hit hard by the overall market decline and the Christmas holiday. During the holiday, there were fewer market participants and capital outflow was more obvious, resulting in a significant drop in the attention and investor participation of the Meme coin track. Therefore, the current funds and attention are not focused on Meme coins.
Social Media Hotspots
Based on the top five daily growth from LunarCrush and the top five AI scores from Scopechat, here are the results between December 21st and December 27th:
The L1s project is the most popular topic on social media this week. The main reason is that this week is the Christmas holiday. Most of the markets, mainly in the United States, have entered the holiday stage. There are fewer activities of institutions and market makers, which has led to a sharp decline in market liquidity. Many ordinary investors have also reduced their on-chain investment activities. Coupled with the market sell-off, the overall market has fallen. However, in this market-wide decline, the performance of public chains is relatively strong. In addition to investing funds in BTC and ETH for risk hedging, most investors still choose to invest in public chain projects. Usually, when the market recovers, the performance of public chains will rise before other projects.
Overall overview of market themes
SocialFi track: The SocialFi track performed well, among which TON is still the absolute main force, accounting for 91.07% of the SocialFi market value. This week, TON rose 6.3% against the trend and did not follow the decline of the market, further promoting the performance of the SocialFi track. The cooperation between TON and GMX also promoted the development of high-frequency DeFi transactions.
RWA track: The RWA track performed the worst this week, with OM, ONDO and MKR accounting for a large market share of 44.28%, 23.85% and 18.36% respectively. However, the prices of these three tokens generally fell this week, down 10.76%, 19.86% and 8.28% respectively, resulting in the worst overall performance of the RWA track.
Crypto Events Next Week
Monday, December 30: European Securities and Markets Authority publishes MiCA crypto regulation implementation.
January 2 (Thursday): The number of people applying for unemployment benefits in the United States at the beginning of the week.
Friday, January 3: Court-approved FTX’s Chapter 11 reorganization plan goes into effect.
Outlook for next week
Analysis of macro factors:
Next week will be the New Year's Day holiday, and there will be less macro data released. Usually during the New Year's Day holiday, the purchasing power of the market, mainly in the United States, is low, which may lead to greater market volatility.
Sector rotation trend:
Despite the current poor market environment, the DeFi track is still attracting attention from investors, especially with the expectation of a general rise in the first quarter of next year. Many investors choose not to sell their tokens, but instead increase their returns by participating in machine gun pool projects.
The AI Agent track of the AI sector continues to attract market attention, and the market size has reached US$10.9 billion. The AIPool asset issuance model based on AI Agent + TEE is gaining widespread attention.
Investment strategy recommendations:
Investors are advised to maintain a defensive configuration, increase the proportion of holdings of top assets BTC and ETH, enhance the risk-averse properties of assets and hedge risks. In the case of poor market sentiment, you can participate in some high-yield machine gun pool DeFi projects, but you must remain cautious, strictly control your positions, and do a good job of risk management.