Market overview
Overall market overview: This week, the crypto market is showing a downward trend due to the influence of the Christmas holiday. The market sentiment index rose slightly from 7% to 10%, but it remains in an extreme panic zone. Notably, despite the overall market softness, USDC, which is primarily focused on the US market, still achieved a growth of 1.91%, indicating that institutional funds are still entering the market, injecting some confidence.
DeFi ecosystem development: The DeFi sector's TVL slightly decreased by 0.37% to $52.7 billion this week, but stablecoin yield projects like the machine gun pool performed well, and the overall supply of stablecoins continues to grow, indicating that despite market corrections, foundational liquidity is still flowing in, making stable yield projects popular.
AI Agent development: The AI Agent sector continues to receive high market attention, with a total scale reaching $10.9 billion. Particularly, the combination of TEE technology with the aipool model has become a new market focus, expected to be a new type of asset issuance method following "inscriptions," demonstrating the deep integration trend of AI and blockchain technology.
Meme coin trends: Affected by the holiday and the overall market decline, the Meme coin sector performed sluggishly this week, with a noticeable decrease in investor participation and capital inflow, temporarily shifting market heat to other sectors, highlighting the high volatility characteristics of this sector.
Public chain performance analysis: The public chain sector demonstrated strong resilience to declines, with Stacks achieving important milestones with sBTC, BOB advancing BitVM Bridge development, and Taiko launching a new round of ecological programs, indicating that major public chains continue to push for technological innovation and ecological construction.
Future market outlook: Looking ahead, the market is expected to continue its lackluster performance during the New Year holiday. It is recommended that investors maintain defensive allocations, increase the proportion of leading asset allocations, while moderately participating in high-yield machine gun pool projects. In the long run, the market generally expects a bullish trend in the first quarter of 2025, with AI Agent and DeFi machine gun pool projects worthy of special attention.
Market sentiment index analysis
The market sentiment index rose from 7% last week to 10%, still in the extreme panic zone.
Altcoin performed weaker than the benchmark index this week, showing a significant downward trend. Due to the Christmas holiday, liquidity sharply declined, leading to increased volatility in market prices, resulting in rapid fluctuations. Consequently, market sentiment is not optimistic. Given the current market structure, it is expected that Altcoin will remain synchronized with the benchmark index in the short term, with a low probability of independent market trends.
When Altcoin is in a state of extreme panic, the market often reaches a temporary bottom and may flip upwards at any time.
Overview of overall market trends
The cryptocurrency market is in a downward trend this week, with the sentiment index still in extreme panic.
DeFi-related crypto projects performed prominently, indicating the market's ongoing focus on enhancing foundational yields.
The AI Agent sector's projects have garnered high public sentiment this week, indicating that investors are starting to actively seek the next market breakout point.
Hot sectors
AI Agent
This week, the market is in a downward trend, with all sectors experiencing declines. Although most tokens in the AI Agent sector also faced price drops this week, they are the most discussed in the market. The discussions mainly focus on the development of the AI Agent + TEE model in the future of Crypto and its impact on Defi.
One of the catalysts for each cycle of significant rises in the crypto market is the emergence of new asset issuance methods. For example, previous methods like ICO (Initial Coin Offering), IEO (Initial Exchange Offering), INO (Initial NFT Offering), IDO (Initial Decentralized Exchange Offering), and inscriptions have rapidly propelled market development and price increases. With the rapid integration of AI and Crypto, the current aipool has become a highly discussed asset issuance method, and is also a continuation of the “money-printing FI” in early 2024. If the aipool asset issuance method is widely accepted by the market, a small wave of asset issuance driven by the aipool model will soon emerge. Therefore, we should pay close attention to aipool-type projects.
Top five AI Agent projects by market capitalization:
DeFi sector
TVL growth ranking
The top five market projects with the most TVL growth in the past week (excluding projects with small TVL, standard above $30 million), data source: Defilama.
Resolv (not yet issued): (Recommendation Index: ⭐️⭐️⭐️)
Project overview: Resolv is a Delta-neutral stablecoin project focused on the tokenization of market-neutral investment portfolios. The architecture is based on economically viable and fiat currency-independent sources of income, allowing competitive returns to be allocated to liquidity providers of the protocol.
Latest developments: This week, Resolv completed significant technical upgrades by integrating LayerZero and Stargate technology, successfully transforming into an Omnichain project. The OFT standard it adopted passed security audits from multiple institutions. Resolv performed outstandingly in ecological development this week, attracting a second $100 million capital influx, achieving an ecological growth rate of 84%. Its USDC Vault offers up to 36.36% APY in 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): (Recommendation Index: ⭐️⭐️⭐️)
Project overview: The USDX Money project is an emerging synthetic dollar stablecoin protocol aimed at providing a new type of crypto-native stablecoin solution through multi-chain and multi-currency strategies. The core goal of this project is to build next-generation stablecoin infrastructure and maintain the stability of USDX's peg to the US dollar through Delta-neutral hedging strategies.
Latest developments: This week, USDX Money completed a brand new UI/UX upgrade to optimize the user interaction experience and launched USDX/USDT and sUSDX/USDX liquidity pools on Curve Finance, continuously expanding its ecological scale. Among them, sUSDX reached $170 million TVL through cooperation with Lista DAO. USDX Money also launched the X-Points incentive program, including content creation and angel plans, and held special Christmas events.
Usual (USUAL): (Recommendation Index: ⭐️⭐️⭐️⭐️⭐️)
Project overview: Usual is a stablecoin project supported by Binance, aiming to provide a new stablecoin solution through decentralization. The core mechanism of the project includes three main tokens: stablecoin USD 0, bond product USD 0++, and governance token USUAL.
Latest developments: Recently, Usual secured $10 million in Series A funding led by Binance Labs and KrakenVentures and collaborated with the M^0 Foundation to launch a new product, UsualM. It also became the largest USD 0/USD 0++ pool on Curve Finance, with UsualTVL surpassing $1.5 billion, ranking in the top five global stablecoins. The DAO treasury also doubled to $17 million. Additionally, Usual launched staking rewards of up to 18,000% APY for USUALx and initiated community airdrop activities.
Hashnote (not yet issued): (Recommendation Index: ⭐️⭐️)
Project overview: The Hashnote project is a solution focused on institutional cryptocurrency management, aiming to provide transparency and optimize asset management through blockchain technology. Hashnote combines digital assets and traditional finance to provide users with innovative yield-enhancing solutions, such as USYC.
Latest developments: This week, Hashnote reached a strategic partnership with CoreDAO and participated in its ecological group panel meeting, focusing on launching an innovative Bitcoin dual-staking model that combines BTC and Core Token to provide users with sustainable yield solutions. The project CEO shared new strategies during the meeting, garnering over 14,000 views, demonstrating strong market interest in this innovative model.
Spectra (SPECTRA): (Recommendation Index: ⭐️⭐️⭐️)
Project overview: Spectra is a protocol for the future tokenization of yields. DeFi users can deposit interest-bearing tokens from other protocols for a specified future term and trade the future yields that the asset will generate in advance. Spectra works by placing interest-bearing tokens (IBT) or any fixed-term yield assets in a smart contract and issuing future yield tokens (FYT) as a return.
Latest developments: This week, Spectra successfully launched new governance contracts on the Base mainnet and introduced Gauges and incentivize pages in the Spectra App. It also optimized the multi-locking feature for veSPECTRA holders, enabling more efficient participation in the Gauge voting mechanism, and completed adjustments to APW emissions, with a new emission mechanism executed at a ratio of 1:20.
In summary, we can see that the projects with rapid TVL growth this week are mainly concentrated in the stablecoin yield sector (machine gun pool).
Overall performance of sectors
The market capitalization of stablecoins is steadily growing: USDT decreased from $145.1 billion last week to $144.7 billion, a decline of 0.27%, while USDC increased from $42.1 billion last week to $42.9 billion, showing a growth of 1.91%. It can be seen that although the market is in a downward trend this week, USDC, which predominantly focuses on the US market, still experienced growth, indicating that the main purchasing force in the market continues to maintain capital inflow.
Liquidity is gradually increasing: The risk-free arbitrage rates in the traditional market have been continuously decreasing with the ongoing interest rate cuts, while the arbitrage rates in on-chain DeFi projects have been increasing due to the rising value of cryptocurrency assets. Returning to DeFi will be a very good choice.
DeFi sectors' TVL (data source: https://defillama.com/categories)
Funding situation: The TVL of DeFi projects increased from $52.9 billion last week to $52.7 billion now. Although it has seen negative growth for two consecutive weeks, the extent of the decline is small, at 0.37%. The main reason is that this week, the Western market led by the US is in the Christmas holiday, resulting in declines in both trading volumes of various tokens and on-chain activities. Next week, as it enters the New Year holiday, it is expected that there will not be significant changes. Therefore, attention should be focused on the overall changes in TVL in January and whether the downward trend continues.
In-depth analysis
Driving forces behind the rise:
The core driving factors behind this round of increases can be summarized as follows: Due to the recent downward trend in the market, the APY of various DeFi protocols has decreased, while stablecoin yield projects have raised yields through token/points rewards, giving machine gun pool projects a clear advantage in APY from the overall market perspective. Specifically:
Market environment: Although in a bull market cycle, the recent market is in a downward trend, significantly reducing the market's base interest rates.
Interest rate side: Base lending rates are rising, reflecting market expectations for capital pricing.
Yield side: The yields of stablecoin yield projects have expanded compared to other projects, attracting more users to participate.
This transmission mechanism reinforces the value support of stablecoin yield projects, creating a positive growth momentum.
Potential risks:
Due to the recent upward trend in the market, investors are focusing more on yields and borrowing leverage, while neglecting downside risks. Additionally, this week, due to the Christmas holiday, market liquidity sharply decreased, resulting in a lack of sufficient liquidity to absorb selling pressure, thus causing continuous price declines and leading to a liquidation of long contracts in the market, causing losses to investors. The risk of cascading liquidations caused by these liquidations has greatly increased, further lowering prices and liquidating more assets.
Other sector performance
Public chains
In the past week, the top five public chains in TVL growth (excluding public chains with small TVL), data source: Defilama.
Stacks: This week, 922 BTC were transferred to the Stacks network, completing the first phase of the sBTC deposit cap of 1,000 BTC. In terms of DeFi applications, 35% of sBTC is already generating returns on Zest Protocol. The ALEX community also voted to allocate 12 million ALEX tokens for the Surge program. Meanwhile, Stacks achieved L1/L2 asset exchange functionality through Bitflow Finance and AI console, and incentivized developers through the "Stackies" community reward program.
BOB: This week, BOB collaborated with Fiamma Labs to develop and release the BitVM Bridge prototype based on zero-knowledge technology, aiming to launch the test net in early 2025. It also partnered with Lombard Finance, successfully deploying Lombard Finance on the BOB chain and initiating preliminary governance discussions with Aave, planning to introduce its protocol into the BOB network. Additionally, BOB launched a six-week DeFi incentive campaign, incentivizing 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, establishing a reward pool of 6 million TAIKO tokens, and introduced the Liquidity Royale event to reward the top 100 liquidity providers with 12,000 TAIKO tokens. The number of projects on the Taiko chain has grown to 130, with Symmetric added as an important DEX partner, and the first community meetup was held in Turkey with ITU Blockchain and Node 101, strengthening community building through holiday gift activities and meme competitions.
Cardano: This week, Cardano highlighted the technical advantages of its slashing mechanism to ensure user ADA asset safety, launched convenient web application development tools, deepened cooperation with hardware wallet provider Ledger, and advanced the decentralization process of community governance through the DReps (representatives) voting decision-making model.
Sei: This week, Sei launched a significant technological breakthrough named "Giga," successfully extending EVM to a processing capacity of 5 gigagas per second, achieving a 50-fold performance improvement. The Giga Roadmap was released through Developer Office Hours, providing a clear roadmap for future technological development, and launching the EVM Wrapped feature, allowing users to view their activity records across multiple EVM chains, enhancing cross-chain interoperability. At the same time, Sei launched the "12 Days of Christmas" holiday event, collaborating with PythNetwork, Silo, and Nansen.
Growth leaderboard overview
In the past week, the top five tokens in market growth (excluding tokens with low trading volume and meme coins), data source: Coinmarketcap.
ZEN: This week, Horizen successfully deployed the Horizen 2.0 Devnet test net, launched an optimized version of zero-knowledge verification (ZK) solutions to reduce technical complexity and costs, and established a strategic partnership with Automata Network to promote Web3 development. Simultaneously, through Grayscale's Horizen Trust, it gained recognition from institutional investors. This week, Horizen completed the final halving of ZEN and was listed 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, resulting in significant user growth, including 1.5 million page views and 800,000 lottery interactions. Moca Network remains active in community operations, enhancing user engagement through Christmas marketing activities (#MocaFam) and placing special emphasis on user safety education, issuing multiple scam prevention reminders.
PHA: This week, Phala Network officially launched Phala 2.0, integrating GPU TEE technology and Ethereum Layer 2 expansion capabilities, and collaborating with NVIDIA. Joint tests showed near 99% efficiency of TEE on H100/H200. Additionally, the decision to migrate the Khala chain to the Ethereum mainnet was announced. Phala Network's TEE-as-a-Service has been adopted by several projects, including Flashbots. Yearly data shows a significant increase in AI Agent contract execution, reaching 4,500 times, with active TEE Workers reaching 37,650, demonstrating Phala Network's leading position in decentralized AI infrastructure.
AGLD: This week, Adventure Gold engaged with the community through Christmas-themed marketing activities, where Christmas blessing tweets received a high level of community participation (27 likes, 14 retweets). Additionally, Adventure Gold collaborated with BladeGamesHQ in the AI Agent-driven on-chain economy, showcasing the project's exploration in the integration of gaming ecology and AI technology.
MOVE: This week, Movement launched multiple innovative products based on its tech stack, including the Puffpaw Vape with multi-chain support (with usage data tracking and reward features), 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 enhanced its performance through Block-STM parallel optimization and Rollup architecture, and expanded its on-chain DeFi scene through cross-chain integration with WBTC.
Meme token growth leaderboard
Data Source: coinmarketcap.com
This week, Meme projects were significantly impacted by the overall market downturn. Due to the Christmas holiday, fewer users participated in market trading, leading to capital withdrawal from the market, resulting in a noticeable decrease in the number of investors participating in Meme coin projects, indicating that, at this stage, market attention and funds are not focused on the Meme coin sector.
Social media hotspots
Based on data from LunarCrush's daily growth top five and Scopechat's top five AI scores, the statistics for this week (12.21-12.27):
The most frequently appearing theme is L1s, with the following tokens listed (excluding tokens with low trading volume and meme coins):
Data Source: Lunarcrush and Scopechat
According to data analysis, the L1s project received the most attention on social media this week. Due to the Christmas holiday, the market primarily driven by the US entered a holiday phase this week, resulting in many market makers and institutions being on holiday, causing a significant drop in market liquidity. Most ordinary investors have also reduced on-chain investment activities and engaged in selling behavior, leading to a significant drop in the market, with various public chains experiencing smaller declines. While the entire market is experiencing a general downturn, public chains often perform better than other sectors. In the event of an upward reversal after the downturn, public chains typically rise before other projects.
Overall overview of market themes
Data Source: SoSoValue
According to weekly return rate statistics, the SocialFi sector performed the best, while the RWA sector performed the worst.
SocialFi sector: The absolute leader in the SocialFi sector remains TON, accounting for 91.07% of the sector's market capitalization. This week, TON did not follow the market downturn and instead rose by 6.3%, making the SocialFi sector perform the best. This week, Toncoin collaborated with GMX to promote high-frequency DeFi trading development.
RWA sector: In the RWA sector, OM, ONDO, and MKR hold significant shares, accounting for 44.28%, 23.85%, and 18.36%, respectively, totaling 86.49%. This week, OM, ONDO, and MKR saw declines of 10.76%, 19.86%, and 8.28%, respectively, with greater declines than other sector projects, leading to the RWA sector's worst performance this week.
Next week's Crypto major event 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 jobless claims in the US for the week.
On Friday (January 3), the court approved the commencement of FTX's Chapter 11 reorganization plan.
Next week outlook
Macroeconomic factor assessment
Next week will enter the New Year holiday, with few macro data releases.
In previous years, during the New Year holiday, markets primarily driven by US purchases generally continued the lackluster purchasing power seen during the Christmas holiday, leading to increased market volatility.
Sector rotation trend
DeFi sector: Although the current market environment is poor, investors generally expect a market-wide rally in the first quarter of next year, so most investors are still reluctant to sell their tokens. Meanwhile, in order to increase holding returns, they are actively participating in machine gun pool projects to boost yields.
AI sector
The AI Agent sector continues to attract sustained market attention, with a market scale reaching $10.9 billion.
The asset issuance model based on AI Agent + TEE's aipool has received widespread market attention.
Investment strategy recommendations
Maintain defensive allocation, increase allocation to leading assets BTC and ETH to enhance asset hedging attributes.
While hedging risks, investors can participate in some high-yield machine gun pool Defi projects.
Investors are advised to remain cautious, strictly control positions, and manage risks effectively.
