The market is weak during the holidays, and the market may rise in Q1 next year | Frontier Lab Crypto Market Weekly Repo

سوق ملخص

Overall market overview: This week, the تشفير 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 a certain amount of confidence into the market.

Development of DeFi ecosystem: 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.

Development of AI Agent: The AI Agent track continues to receive high attention from the market, with a total scale of US$10.9 billion. In particular, the aipool model combined with TEE technology has become a new focus of the market and is expected to become a new asset issuance method after inscription, showing the development trend of deep integration of AI and blockchain technology.

Meme coin trend: Affected by the holidays and the overall market decline, the Meme coin track performed poorly this week, with investor participation and capital inflows significantly reduced. Market heat temporarily shifted to other tracks, showing the high volatility characteristics of this track.

Analysis of public chain performance: The public chain sector has shown strong resistance to declines. Stacks has completed an important milestone for sBTC, BOB has promoted the development of BitVM Bridge, and Taiko has launched a new round of ecological plans, indicating that major public chains continue to make efforts in technological innovation and ecological construction.

Future market outlook: Looking ahead, the market is expected to continue the sluggish trend during the New Years Day holiday. Investors are advised to maintain defensive allocations and increase the proportion of top asset allocations. At the same time, they can moderately participate in high-yield machine gun pool projects; in the long run, the market generally expects that the first quarter of 2025 may usher in an upward trend. AI Agent and DeFi machine gun pool projects deserve special attention.

Market Sentiment Index Analysis

• The market sentiment index rose from 7% last week to 10%, still in the extreme panic range.

• Altcoins performed weaker than the benchmark index this week, showing a sharp decline. Due to the Christmas holiday, liquidity dropped sharply, which increased the volatility of market prices, making it easy to see sharp rises and falls. As a result, market sentiment is not high. Given the current market structure, it is expected that Altcoins will keep pace with the benchmark index in the short term, and the probability of independent market movement is low.

• When Altcoin is in an extremely panic range, the market is often at a stage bottom and can reverse upward at any time.

Overview of overall market trends

• The cryptocurrency market is in a downtrend this week and sentiment indicators remain at extreme levels of panic.

• Defi-related crypto projects performed outstandingly, showing the markets continued focus on improving basic returns.

• The AI Agent track project has received high public sentiment this week, indicating that investors are beginning to actively look for the next market outbreak point.

Hot Tracks

AI Agent

The market is in a downward trend this week, and all tracks are in a downward trend. Although the prices of most tokens in the AI Agent track are also in a downward trend this week, it is the most discussed in the market. This week, the market discussed a lot about the AI Agent+TEE model such as aipool in the future development of Crypto and its impact on Defi.

A booster for every cyclical surge in the Crypto market is the emergence of new asset issuance methods. For example, the previous ICO (initial token offering), IEO (initial exchange offering), INO (first NFT offering), IDO (first decentralized exchange offering), inscription and other asset issuance methods have rapidly promoted the development of the market and the increase in Crypto market prices. With the rapid integration of AI and Crypto, aipool has become a relatively popular asset issuance method at this stage, and it is also a continuation of the financial FI in early 2024. If the asset issuance method of aipool is widely accepted by the market, then in the near future there will be a small wave of asset issuance brought by the aipool model, so we should focus on aipool-type projects.

The top five AI Agent projects by market value are:

مسار التمويل اللامركزي

TVL Growth Ranking

The top 5 TVL growth rates of market projects in the past week (excluding public projects with smaller TVL, the standard is more than 30 million US dollars), data source: Defilama

Resolv (no token issued): (Recommendation index: ⭐️⭐️⭐️)

• Project Introduction: Resolv is a Delta neutral stablecoin project that revolves around the tokenization of a market neutral portfolio. The architecture is based on an economically viable and fiat-independent source of income. This allows competitive returns to be distributed to the protocols liquidity providers.

• Latest developments: This week, Resolv completed an important technical upgrade and successfully transformed into an Omnichain project by integrating LayerZero and Stargate technologies. At the same time, the OFT standard it adopted has passed the security audits of many institutions. Resolv has performed outstandingly in ecological development this week. This week, Resolv attracted its second $100 million in capital inflow, with an ecological growth rate of 84%. Its USDC Vault offers an APY of up to 36.36% in Euler Finance, attracting $5.67 million in TVL this week. Resolv also launched the wstUSR pool on Pendle.fi and introduced a unified points structure.

USDX Money (unissued): (Recommendation index: ⭐️⭐️⭐️)

• Project Introduction: USDX Money is an emerging synthetic USD stablecoin protocol that aims 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 the next generation of stablecoin infrastructure and maintain the stability of USDX’s peg to the US dollar through a Delta neutral hedging strategy.

• Latest development: USDX Money completed a new UI/UX upgrade this week to optimize the user interaction experience. At the same time, USDX/USDT and sUSDX/USDX liquidity pools were launched on Curve Finance. The ecological scale continues to expand. sUSDX has reached 170 million US dollars TVL through cooperation with Lista DAO. USDX Money also launched an X-Points incentive plan including content creation and angel plan, and held a special Christmas event.

Usual（USUAL）：（Recommendation index: ⭐️⭐️⭐️⭐️⭐️）

• Project Introduction: Usual is a stablecoin project supported by Binance, which aims to provide a new stablecoin solution in a decentralized way. The core mechanism of the project includes three main tokens: stablecoin USD 0, bond product USD 0++ and governance token USUAL.

• Latest development: Usual recently received a $10 million Series A funding led by Binance Labs and KrakenVentures, and cooperated with the M^0 Foundation to launch a new product UsualM. At the same time, it became the largest USD 0/USD 0++ pool on Curve Finance. As UsualTVL exceeded $1.5 billion, it ranked among the top five stablecoins in the world. The DAO treasury also doubled to $17 million. The Usual project launched the USUALx staking income of up to 18,000% APY and launched a community airdrop event.

Hashnote (no token issued): (Recommendation index: ⭐️⭐️)

• Project Introduction: 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 development: Hashnote reached a strategic cooperation with CoreDAO this week and participated in its ecological group panel meeting, focusing on the launch of an innovative Bitcoin dual-staking model, which combines BTC and Core رمز مميز to provide users with a sustainable income solution. At the same time, the project CEO shared the new strategy at the meeting, which received more than 14,000 views, showing the market’s strong interest in this innovative model.

Spectra (SPECTRA): (Recommendation index: ⭐️⭐️⭐️)

• Project Introduction: Spectra is a protocol for tokenizing future yields. DeFi users can deposit interest-bearing tokens of other protocols within a specified future period and trade in advance the future yield that the asset will generate. Spectra works by placing interest-bearing tokens (IBT) or any fixed-term yield asset in a smart contract and issuing future yield tokens (FYT) in return.

• Latest developments: This week, Spectra successfully launched a new governance contract on the Base mainnet, and launched the Gauges and ncentivize pages in the Spectra App. At the same time, it optimized the multi-lock function of veSPECTRA holders so that they can participate in the Gauge voting mechanism more efficiently. Spectra also completed the APW emission adjustment, and the new emission mechanism is implemented at a ratio of 1:20.

To sum up, we can see that the projects with faster TVL growth this week are mainly concentrated in the stablecoin income sector (machine gun pool).

Overall performance on the track

• The market value of stablecoins has grown steadily: USDT has dropped from $145.1 billion last week to $144.7 billion, a drop of 0.27%, and USDC has increased from $42.1 billion last week to $42.9 billion, an increase of 1.91%. It can be seen that although the market is in a downward trend this week, USDC, which is mainly in the US market, has still increased, indicating that the main buyers of the market are still maintaining a continuous entry of funds.

• Liquidity gradually increases: The risk-free arbitrage rate in the traditional market continues to decline as interest rates continue to fall, while the arbitrage rate of on-chain Defi projects continues to increase due to the increase in the value of cryptocurrency assets. Returning to Defi will be a very good choice.

Defi TVL of each track (data source: https://تحديllama.com/categories)

• Funding situation: The TVL of Defi projects has increased from $52.9 billion last week to $52.7 billion now. Although it has experienced negative growth for two consecutive weeks, the negative growth rate is relatively small, at 0.37%. The main reason is that the Western markets, led by the US market, are on Christmas holiday this week. Both the transaction volume of various tokens and on-chain activities have declined. And next week is the New Years Day holiday, and it is expected that there will not be much change. Therefore, we should focus on the overall TVL changes in the market in January and pay attention to whether the downward trend continues.

Deep analysis

Driving force for growth:

The core driving factors of this round of increase can be summarized as the following transmission path: Due to the recent downward trend of the market, the APY of various Defi protocols has declined, and the stablecoin income project has increased the yield through token/point rewards. From the overall market perspective, the APY of the machine gun pool project has a clear advantage. Specifically:

• Market environment: Although it is in a bull market cycle, the market has been in a downward trend recently, which has caused a sharp drop in the market base interest rate.

• Interest rate: The base lending rate has risen, reflecting the markets pricing expectations for funds.

• Income side: The yield of stablecoin-based income projects is higher than other projects, thus attracting more users to participate.

This transmission mechanism strengthens the value support of stablecoin income projects and forms a healthy growth momentum.

المخاطر المحتملة:

As the market has been on an upward trend recently, investors are more concerned about yields and lending leverage, but ignore the risk of downside. In addition, due to the Christmas holiday this week, liquidity in the market has dropped sharply, resulting in insufficient liquidity to take over the selling pressure in the market, causing prices to continue to fall and leading to liquidations of long contracts in the market, causing losses to investors. The risk of chain liquidations caused by such liquidations has greatly increased, causing prices to further drop and liquidate more assets.

Other track performance

سلسلة عامة

The top 5 public chains with the highest TVL growth in the past week (excluding public chains with smaller TVL), data source: Defilama

Stacks: This week, 922 BTC were transferred to the Stacks network, completing the deposit limit of 1,000 BTC in the first phase of sBTC. In terms of DeFi applications, 35% of sBTC have generated income on Zest Protocol. The ALEX community also voted to allocate 12 million ALEX tokens for the Surge plan. Stacks has realized L1/L2 asset exchange functions through Bitflow Finance and AI console. At the same time, Stacks also incentivizes developer contributions through the Stackies community reward program.

BOB: This week, BOB worked with Fiamma Labs to develop and release the BitVM Bridge prototype based on zero-knowledge technology, which is scheduled to be launched on the testnet in early 2025. It also reached a cooperation with Lombard Finance and successfully deployed Lombard Finance on the BOB chain. At the same time, it conducted preliminary governance discussions with Aave and planned to introduce its protocol to the BOB network. In addition, BOB launched a 6-week DeFi incentive campaign, incentivizing LST holders to participate through Babylon Points, and carried out a number of community education tasks and Spaces activities.

Taiko: This week, Taiko launched the Trailblazers Season 3 plan, established a reward pool of 6 million TAIKO tokens, and launched the Liquidity Royale event to provide 12,000 TAIKO tokens as rewards to the top 100 liquidity providers; the number of projects in the Taiko chain ecosystem has grown to 130, and Symmetric has been added as an important DEX partner. It also held its first community meeting in Turkey with ITU Blockchain and Node 101, and strengthened community building through holiday gift activities and Meme competitions.

Cardano: This week, Cardano highlighted the technical advantages of the slashing mechanism to ensure the security of users’ ADA assets, launched a convenient web application development tool, deepened cooperation with hardware wallet service provider Ledger, and promoted the decentralization of community governance through the DReps (representative) voting decision-making model.

Sei: This week, Sei released a major technological breakthrough called Giga, which successfully expanded the EVM to a processing capacity of 5 gigagas per second, improving performance by 50 times. It also released the Giga Roadmap through Developer Office Hours, setting a clear roadmap for future technological development, and launched the EVM Wrapped function, allowing users to view their activity records on multiple EVM chains and enhance cross-chain interoperability. At the same time, Sei launched the 12 Days of Christmas holiday event and reached cooperation with PythNetwork, Silo and Nansen.

Overview of the Rising Stars

The top 5 tokens with the highest growth in the past week (excluding tokens with small trading volume and meme coins), data source: Coinmarketcap

ZEN: This week, Horizen successfully deployed the Horizen 2.0 Devnet testnet, launched an optimized version of the zero-knowledge verification (ZK) solution to reduce technical complexity and costs, and established a strategic partnership with Automata Network to promote the development of Web3. At the same time, it has been recognized by institutional investors through Grayscales Horizen Trust. This week, Horizen completed the final halving of ZEN and was launched on the Bitvavo exchange. Horizen is also actively preparing the token distribution plan for the zkVerify project.

MOCA: This week, Moca Network successfully integrated with SK Planets OK Cashbag app. The collaboration brought significant user growth, including 1.5 million page visits and 800,000 wheel draw interactions. Moca Network remained active in community operations, enhancing user stickiness through Christmas marketing activities (#MocaFam), and paid special attention to user safety education, issuing anti-fraud reminders many times.

PHA: This week, Phala Network officially launched Phala 2.0, which integrates GPU TEE technology and Ethereum Layer 2 extension functions. It also cooperated with NVIDIA. Joint testing showed that TEE achieved nearly 99% efficiency on H100/H200. At the same time, it announced the decision to migrate the Khala chain to the Ethereum mainnet. Phala Networks TEE-as-a-Service has been adopted by multiple projects such as Flashbots. The data for the whole year showed that the number of AI Agent contract executions increased significantly to 4,500 times, and the number of active TEE Workers reached 37,650, showing Phala Networks leading position in the field of decentralized AI infrastructure.

AGLD: This week, Adventure Gold engaged with the community through a Christmas-themed marketing campaign, with a Christmas greeting tweet that received high community engagement (27 favorites, 14 retweets). Adventure Gold also collaborated with BladeGamesHQ on an AI Agent-driven on-chain economy, showcasing the project’s exploration of the integration of gaming ecology and AI technology.

MOVE: This week, Movement launched several innovative products based on its technology stack, including the multi-chain-enabled Puffpaw Vape (with usage tracking and rewards), 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 improved performance through Block-STM parallelization optimization and Rollup architecture, and expanded its on-chain DeFi scenarios through cross-chain integration with WBTC.

Meme Token Gainer List

Data source: coinmarketcap.com

This week, the Meme project was greatly affected by the overall market decline. Since this week is the Christmas holiday, there are fewer users participating in market transactions, and funds in the market have been withdrawn this week. Therefore, the number of investors participating in the Meme coin project has decreased significantly this week, resulting in the current market attention and funds not being in the Meme coin track.

Social Media Hotspots

Based on the top five daily growth in LunarCrush and the top five AI scores in Scopechat, the statistics for this week (12.21-12.27) are as follows:

The most frequently appearing theme is L1s, and the tokens on the list are as follows (tokens with small trading volumes and meme coins are not included):

Data source: Lunarcrush and Scopechat

According to data analysis, the L1s project received the most attention on social media this week. As this week is the Christmas holiday, the market dominated by the United States has entered the holiday stage this week, so all market makers and institutions are on holiday, causing a sharp decline in liquidity in the market, and most ordinary investors have reduced their investment activities on the chain and accompanied by selling, causing a significant decline in the market, among which the decline of each public chain is relatively small. When the entire market falls, the performance of each public chain is often better than other tracks. In addition to buying BTC and ETH for risk hedging, most market investors still invest in various public chains. When the decline ends and the price rises, each public chain generally rises before other projects.

Overall overview of market themes

Data source: SoSoValue

In terms of weekly returns, the SocialFi track performed best, while the RWA track performed worst.

• SocialFi track: The absolute main force of the SocialFi track is still TON, accounting for 91.07% of the market value of the SocialFi track. This week, TON did not follow the decline of the market, but rose against the trend by 6.3%, making the SocialFi track the best performer. This week, Toncoin and GMX cooperated to promote the development of high-frequency DeFi transactions.

• RWA track: OM, ONDO and MKR account for a large proportion of the RWA track, 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% respectively, which is a larger decline than other track projects, so the RWA track performed the worst this week.

Crypto Events Next Week

• On Monday (December 30), the European Securities and Markets Authority published the implementation of the MiCA crypto regulation

• Thursday (January 2) U.S. weekly jobless claims

• On Friday (January 3), the court approved FTXs Chapter 11 reorganization plan to take effect.

Outlook for next week

• Macroeconomic factors analysis

  Next week will be the New Years Day holiday, and there will be few macro data released

  In previous years, when the New Years Day holiday came, the US-dominated market would continue to have low purchasing power during the Christmas period, and market volatility would increase.

• Sector rotation trend

  DeFi track: Although the current market environment is poor, investors generally expect that the market will rise in the first quarter of next year, so most investors are still reluctant to sell their tokens. At the same time, in order to increase the income from holding coins, they have participated in the machine gun pool project to increase their income.

• AI Section

  The AI Agent track has received continuous attention from the market, and the market size has reached US$10.9 billion

  The asset issuance model of aipool based on AI Agent + TEE has attracted widespread attention from the market.

• Investment strategy advice

Maintain defensive allocation, increase the allocation of top assets BTC and ETH, and enhance the risk-averse properties of assets

While hedging risks, you can participate in some high-yield machine gun pool Defi projects

Investors are advised to remain cautious, strictly control their positions, and do a good job of risk management.

This article is sourced from the internet: The market is weak during the holidays, and the market may rise in Q1 next year | Frontier Lab Crypto Market Weekly Report

Related: Dialogue with Solana Node: Who is making a fortune in silence behind Memecoin?

Compiled by: Wu Talks about Blockchain In this podcast, host Shang and Solana ecosystem deep cultivator Leo had an in-depth discussion on Solanas success factors, technical comparisons with Ethereum, and how Solana uses its unique infrastructure and low-cost advantages to attract users and transaction volume, especially to gain huge benefits in the Memecoin market boom. Leo shared how Solanas innovative mechanisms, including POH (Proof of History) and Solanas Layer 2 solution Sonic, can promote the future development of games and DeFi. In addition, Leo also explained in detail how the infrastructure in the Solana ecosystem, such as Jito and RPC service providers, make profits through liquid staking (LST) and MEV (maximum extractable value), and how they can use network effects to improve transaction efficiency and reduce costs. Please note: The…