ArkStream Capital: 2024 Q4 Quarterly Report

Industry Overview

On December 5, Bitcoin broke through the $100,000 mark, creating history as the market expected. At this historic moment, the global financial industry has focused its attention on this. This new high of Bitcoin is a new milestone in the field of 暗号currency, which significantly proves the expansion of the influence and recognition of the cryptocurrency market, and also indicates huge growth potential in the future. This not only marks the realization of ArkStream Capitals long-standing beliefs and expectations, but also symbolizes that the faith of the entire cryptocurrency industry has been verified. For the industry, whether it is the primary market where risks and opportunities coexist, the efficient and diversified secondary market, or the colorful on-chain, they are all full of vitality due to Bitcoins breakthrough, and the entire market has brought good performance in the fourth quarter.

Bitcoin price chart, source: LSEG Workspace

Bitcoin successfully crossed the $100,000 mark thanks to the joint promotion of multiple factors, the most critical of which were the macro-environmental expectations of interest rate cuts and Trumps victory in the US presidential election.

The two interest rate cuts by the Federal Reserve this quarter have had a profound impact on the market and further stirred up the market. On the one hand, the interest rate cuts have reduced borrowing costs, stimulating investors to look for higher-yielding assets and prompting more funds to flow into the cryptocurrency market. On the other hand, the interest rate cuts will further improve market liquidity and help support asset prices. In addition, the stablecoin market has benefited from the macro interest rate cuts, with the issuance scale hitting a record high, the market liquidity has greatly increased, and the market vitality has been stimulated again. ArkStream Capital expects that with the implementation of quantitative easing policies in 2025, liquidity will be further enhanced, cryptocurrency assets will usher in significant gains, and the market will be further expanded.

During the US presidential campaign, Trump clearly expressed his support for the development of Bitcoin and the cryptocurrency sector and made a series of positive promises. Specifically, he proposed to establish a national strategic Bitcoin reserve, planned to incorporate Bitcoin into the framework of the national financial strategy, and ensure that the government holds a certain amount of Bitcoin. In addition, Trump promised to take positive measures in regulatory policies and support for start-ups to promote the healthy development of the crypto sector. After his successful election, Trump took two important actions to support the development of the cryptocurrency sector: First, he nominated Paul Atkins, a consultant at Reserve Rights who has deep experience in the cryptocurrency field, as chairman of the SEC. Second, he created a new position of White House Director of Artificial Intelligence and Cryptocurrency Affairs and appointed David Sacks, a former PayPal executive and expert with extensive knowledge in big data and cryptocurrency, to this role.

World Liberty Financial (WLFI), a project led by the Trump family, is committed to integrating DeFi by integrating innovative financial solutions and blockchain technology, so as to provide users with more fair, efficient and secure financial services. WLFI has actively invested and cooperated in key areas such as lending, RWA and stablecoins. The cooperation between WLFI and Aave provides a mature and reliable lending protocol platform, and integrates new stablecoin assets such as Ethenas sUSDe, which not only broadens the types of collateralizable assets, but also enriches the source of funds. In addition, according to Spot On Chain data, since November 2024, WLFIs main wallet address has purchased a large number of mainstream crypto assets such as ETH, cbBTC/wBTC, LINK, AAVE, ENA and ONDO. This has aroused the markets close attention to the movement of WLFIs assets and stimulated enthusiasm for buying WLFIs cooperative DeFi projects, especially those deep cooperation projects that bring real benefits. A notable example is the cooperation between WLFI and Ethena in mid-December 2024, which included Ethenas yield-based stablecoin sUSDe into the collateral asset system of its lending platform, adding a source of stablecoin deposits for the WLFI lending platform. Once the news of the cooperation was released, the ENA token rose by more than 10% in a short period of time. This market reaction highlights the markets recognition of WLFIs influence.

After Trumps victory, MicroStrategys investment in Bitcoin has increased significantly. According to the latest data, the company purchased nearly 150,000 new ビットコインs in Q4 2024, with a total cost of nearly $13.5 billion and an average cost of about $90,000 per bitcoin. In contrast, the total net asset value of the Bitcoin spot ETF increased from $60 billion at the end of Q3 to nearly $110 billion at the end of Q4, with new capital inflows of $50 billion, and MicroStrategys purchases alone accounted for nearly 25% of the net inflows of all Bitcoin spot ETFs. In addition, MicroStrategy also plans to propose up to $21 billion in equity financing and $21 billion in bond issuances through a special shareholders meeting to continue investing in Bitcoin. MicroStrategys CEO Michael Saylor has also actively promoted more traditional giants to invest in Bitcoin, such as Microsoft, although Microsoft shareholders voted against the proposal. The market is both looking forward to and concerned about MicroStrategys continued purchasing behavior. On the one hand, it expects it to work with traditional giants to promote the development of the crypto industry and new highs of Bitcoin. On the other hand, it is also worried that possible black swan events will cause market turmoil.

MicroStrategys BTC holdings, source: https://treasuries.bitbo.io/microstrategy/

In the crypto market, as the market focus was once on Bitcoin itself and the speculative Meme on the chain, value investment focusing on infrastructure construction and application landing almost fell into a pessimistic trough. However, with the stabilization of the political environment in November, value investment began to see the dawn of recovery. The value of sectors such as DeFi, infrastructure, and emerging public chains has gradually been re-recognized by the market, and investors who stick to them have received stable returns one after another, and value investment has regained everyones attention. From the perspective of specific projects, the popularity of Ethena and Usual reflects that the markets preference for RWA and stablecoins is increasing. At the same time, protocols such as Curve have also performed well due to their low slippage characteristics in stablecoin exchange. This quarter, projects with strong fundamentals that conducted TGE, such as HypeLiquid and Morpho, and projects that insisted on product application landing, such as Virtuals, have not only performed strongly at the data level, but the corresponding token prices have also continued to hit new highs. These trends show that value investment is returning, innovation is still one of the core driving forces for the development of the cryptocurrency industry, and the focus of funds is also shifting to these areas.

But everything has two sides. Recently, the financing activities in the primary market have shown a downward trend in quantity and amount, which is out of touch with the market in the secondary market. In addition, the projects that have raised funds in the past two years are facing the phenomenon of queuing for listing on first-tier exchanges, while second-tier exchanges have always had insufficient liquidity. In addition, the on-chain speculation boom in early Q4 and the rise of anti-traditional venture capital sentiment in the market have had an adverse impact on the pricing of primary market projects after listing, further compressing the investment return space. In the process of turning to the secondary market, primary market projects not only have to deal with the challenges of the liquidity window period, but also face fierce competition in the same track and limited exchange resources. The combination of these factors has led to unprecedented challenges in the investment and financing activities of the primary market.

Primary market financing finance every quarter, source: https://www.rootdata.com/

In the secondary market, in order to pursue returns that exceed the gains of Bitcoin, investment opportunities are usually sought in the altcoin market. However, in the severe market environment of Q2 and Q3, although Bitcoin remained at a high price, many altcoins with solid fundamentals performed poorly. This shows that timing is crucial. Even if the fundamentals of the target are good, if the timing of the layout is not right, it may face unfavorable entry prices or long-term capital occupation costs. In addition, the secondary market also needs to deal with challenges such as position management and risk control. The slightest carelessness may lead to capital withdrawal or loss. Therefore, although the secondary market trading strategy does not need to consider the listing and liquidity issues of tokens, it has to face the difficulties of target selection and timing selection. Overall, the strategy certainty of the secondary market is low, the risk-return is relatively high, and the scale of funds is difficult to expand.

Altcoin overall performance, source: https://www.tradingview.com/symbols/TOTAL3/

Focus on the track

DeFi

In 2024, the DeFi sector has seen a strong recovery. As an important force in disrupting the development of the industry in the previous cycle, DeFi has still been widely recognized within the industry. At the same time, with the rise of BTC and altcoin ETFs, as well as the massive inflow of funds that may be brought about by US policies, new users demand for lending, DEX and stablecoin transactions continues to grow, which provides great potential for the steady increase of DeFis TVL and asset size.

The market trend after the election has initially verified this. According to data from DeFiLlama, from November 6 to December 15, the increase in incremental funds and lending demand brought by new and old investors pushed the TVL in the DeFi field from US$87 billion to US$130 billion, an increase of more than 50%.

DeFi’s TVL, source: https://デフィllama.com/

As the mainstay of the DeFi field, the lending track performed particularly well in Q4 2024. The TVL of the decentralized lending market has reached US$55 billion, surpassing the peak of US$51.2 billion in the previous cycle. AAVE has maintained its market leadership in this quarter, occupying more than 40% of the market share, controlling nearly 70% of the DeFi lending market, and managing active loans of between US$7 billion and US$8 billion. Aaves TVL growth is mainly due to several factors: first, the improvement in market conditions after the US election prompted investors to seek higher yields, leading to an increase in loan demand; second, investors interest in leveraged trading in the easy money market has increased, further promoting lending activities. Data shows that ETH, as a core lending asset, has an annualized supply yield (Supply APY) of 1.8% in early September to 2.5% in mid-December, while the annualized supply yields of stablecoins USDT and USDC have risen from 3% and 4% to a maximum of 15% and 17%, respectively, indicating that the market demand for high-yield assets has increased significantly. At the same time, LTV has risen from $7.5 billion in early September to $16 billion in mid-December, showing a significant expansion in the scale of borrowing. At present, AAVEs TVL has reached about $21 billion, surpassing the highest point of $19 billion in the previous cycle by about 11%; the price of the currency has reached $370, which is still about 80% higher than the highest price of $665 in the previous cycle. The expectation of lower lending rates of US banks in the future may further drive funds into the Defi lending market and increase Aaves TVL.

As a new project for the Q4 Listing in 2024, Morpho inherits the advantages of the leading lending protocols in terms of security and credibility. As the market demand for lending recovers, Morpho has quickly attracted a lot of liquidity. Morpho Blue is Morphos lending layer, which allows the creation of independent markets without permission to meet the diverse risk preferences and use case requirements in the market. MetaMorpho is designed based on the Morpho Blue protocol. Different types of lenders can create vaults in MetaMorpho without permission, customize risk exposure, and allocate deposits to one or more Morpho Blue markets.

Morpho architecture, source: https://docs.morpho.org/

Morphos design provides whale holders of stablecoins and stablecoin-like assets with an efficient interest-earning solution, meeting their demand for safe and high-yield investments. At the same time, Morpho provides lenders with Morpho tokens as incentives, which increases the net annualized rate of return (Net APY) to 110% -120% of the base APY. Morpho integrates rewards from emerging stablecoin protocols including Usual and ENA, further increasing the platforms attractiveness and providing users with more diverse income opportunities. At the time of TGE, Morphos market value was only $50M. However, as the market gradually recognized the excellence of its products, investors showed strong confidence in Morpho in the secondary market, driving its market value up to $460M in Q4. As of now, Morphos TVL has reached $3.2 billion. Considering the continued market demand for DeFi lending and Morphos ability to continue to innovate and optimize its products in a highly competitive market, its growth trend is expected to continue in the future. The Morpho case shows that even in the mature DeFi track, there is still huge room for growth in protocol layer innovation based on user needs.

In terms of trading and liquidity services, decentralized exchanges (DEX) remain an important pillar of the DeFi ecosystem. The main value of Curve lies in providing ultra-low slippage exchange depth for stable assets, meeting the needs of fast and low-cost swaps between a large number of stablecoins. However, the founder of Curve used CRV for high leverage operations, but had to be liquidated due to the decline in token prices, which led to a slump in its market value and underestimated its value. According to DefiLlama data, at the beginning of the fourth quarter of 2024, Curves TVL was only US$2 billion, and it grew to US$2.5 billion by the end of the quarter, with a relatively limited increase. However, the stablecoin market continued to be active in the quarter. Tether alone issued 3 billion USDT in a short period of time from October 30 to November 14. At the same time, the addition of popular real-world assets (RWA) and stablecoin protocols such as emerging stablecoins such as sUSDe, USDe, and USD 0 significantly increased trading volume. This is reflected in fees and revenues. Curves monthly fee revenue is about $1.5 million, which still has a lot of room for growth compared to its all-time high of $11.5 million in January 2022, but it has improved compared to the previous period. Its coin price has rebounded from the low of $0.23 in September-October 2024 to about $1, an increase of 330%, but there is still room for growth compared to the highest point of $6.4 in the previous cycle.

Hyperliquid is an innovative decentralized platform focused on efficient perpetual contract trading, using an order book trading mechanism. It provides perpetual contracts and spot trading, and implements a low-latency and high-throughput trading environment on the Layer 1 chain. The platform consists of the consensus layer HyperBFT and the execution layer RustVM. HyperBFT is a consensus algorithm modified based on LibraBFT, capable of supporting up to 2 million TPS. After continuous optimization, Hyperliquid has been able to provide a smooth trading experience comparable to centralized exchanges. Its HIP-1 mechanism allows the deployment of native tokens and on-chain spot order books, thereby reducing risks and delays; the HIP-2 mechanism (permanent liquidity commitment) is different from the traditional AMM model. It does not use a fixed xy=k formula, but dynamically adjusts liquidity according to market conditions. In addition, no KYC is required and the handling fee is low, making it an ideal choice for arbitrage traders. Compared with GMX, which relies on Chainlink oracles, Hyperliquid does not need to worry about oracle data being manipulated or having problems; and compared with dYdX, which also uses an order book, Hyperliquid is not limited by performance, avoiding slippage caused by network congestion and transaction confirmation time. In addition, Hyperliquid incentivizes community participation through the airdrop of HYPE tokens, which enhances the communitys confidence and enthusiasm for its continued construction.

Hyperliquid has maintained a large open interest (OI) through the HIP-1 and HIP-2 mechanisms, with major trading pairs including ETH-USD, BTC-USD, SOL-USD, etc. At present, Hyperliquids trading volume accounts for more than 50% of the perpetual contract DEX, and it is in an absolute leading position. According to data from Coinalyze and CVI.Finance, its open interest is about 10% of Binance. In December 2024, Hyperliquid generated approximately $30 million in USDC revenue, with an annualized revenue of more than $360 million, second only to Ethereum, Solana, and TRON. The price of the HYPE token has exceeded $30 from $3 at the time of launch, an increase of nearly 10 times in one month, further consolidating its position as a market leader. Although Hyperliquids market capitalization is still lower than other L1 and L2 platforms, its ratio of annualized revenue to circulating market capitalization is far ahead.

Hypeliquid’s revenue, source: https://defillama.com/protocol/hyperliquid?tvl=falsefees=truegroupBy=daily

Overall, the recovery of the DeFi sector in Q4 2024 is mainly driven by products that provide real returns, and the ease of use and security of the products have become key competitive advantages. For example, Aave and Morpho have attracted a large number of users in the lending field by providing reliable and efficient services. Curve continues to play an important role in stablecoin exchange, meeting the markets demand for fast and low-cost transactions. In addition, emerging decentralized exchanges such as Hyperliquid have rapidly emerged in derivatives trading, further enriching the DeFi ecosystem. The Web3 wallets of large exchanges also continue to attract users to the DeFi ecosystem, driving the growth of this field. Overall, DeFi has expanded steadily under the multi-party interaction of lending, DEX and stablecoins, and its future large-scale outbreak will benefit from policy support and continuous innovation.

RWA and Stablecoins

RWA covers a wide range of asset classes, including stablecoins, private credit, U.S. Treasuries, commodities, and stocks. Among these assets, stablecoins can be regarded as an independent track due to their uniqueness and importance. For non-stablecoin RWAs, due to the complexity of asset standardization and the imperfection of policies and regulations, the scale is relatively small. We will focus on the stablecoin field.

In the cryptocurrency market, stablecoins anchored to the US dollar have played a key role since 2018. They are not only the base currency unit for transactions, but also play the role of shadow US dollar assets, active in multiple scenarios such as transfer payments. As of December 1, 2024, the total market value of stablecoins increased to US$193 billion, a year-on-year increase of 48%. Taking the average daily transfer volume on the chain as an example, the current daily transfer volume is stable in the high range of US$25 billion to US$30 billion, and even in the market downturn, the data is not less than US$10 billion. In terms of trading volume, referring to the industry data of Coin市場Cap, the monthly trading volume in November reached US$6 trillion, which means that stablecoins account for 30% of the industrys trading volume in centralized trading volume. This proportion does not include the trading volume of stablecoins on the chain, which means that its actual proportion may be higher. In addition to the three core indicators of issuance, transaction volume and transfer volume, stablecoins also provide stable and sustainable returns by introducing stable-yield assets such as U.S. Treasury bonds as underlying assets, bringing positive externalities to the industry and further promoting the connectivity and integration of Web3 with reality.

Stablecoin daily transaction volume, source: https://studio.glassnode.com/charts/usd-transfer-volume

In the stablecoin market, with the increase in market demand, various types of stablecoins have gradually emerged, including fiat-backed stablecoins, decentralized collateralized stablecoins, algorithmic stablecoins, etc. Among them, fiat-backed stablecoins have occupied most of the market and the market size is growing, but due to the continuous emergence of transaction needs in the market, decentralized stablecoins have been exploring new paths.

Among them, Ethena has stood out as a leader. USDe, issued by Ethena, as a synthetic dollar, has occupied a place in the DeFi field with its innovative financial solutions. USDe is characterized by the use of advanced Delta hedging strategies to maintain its peg to the US dollar, which makes it stand out among traditional stablecoins. In just over a year, the issuance scale of USDe has grown steadily, successfully withstood the test of the market downturn in Q2 and Q3, and has now jumped to third place, second only to USDT and USDC, and has once again entered a rapid development stage.

Stablecoin data, source: https://app.rwa.xyz/stablecoins

In addition, relying on BUIDL of BlackRock, the worlds largest asset management company, Ethena has issued a new institutional-grade stablecoin USDtb. As a product independent of USDe, USDtb provides users with a new option with very different risk characteristics. Its existence enables USDe to respond to market challenges more effectively, especially during periods of negative funding rates, when Ethena can close USDes hedging positions and reallocate assets to USDtb, thereby mitigating related risks and enhancing the stability and risk resistance of the entire system.

USDtb data, source: https://usdtb.money/transparency

In addition to Ethena, USD 0 issued by Usual is also worth noting. This stablecoin deeply integrates the robustness of traditional financial instruments with the transparency, efficiency and composability of DeFi by introducing RWA as the underlying support. USD 0, with its permissionless and compliant framework, directly returns the real income from RWA to community users, demonstrating the competitiveness of new stablecoins in the market. The emergence of these emerging stablecoins not only enriches the diversity of the market, but also brings more choices and investment opportunities to users.

ArkStream Capital believes that stablecoins can play a vital role in the crypto industry to cross the bull and bear cycles of the market. Its growth momentum will not stagnate, and various data indicators of stablecoins will continue to grow in both payment and trading fields. Decentralized stablecoins are significantly superior to traditional stablecoins in terms of transparency, decentralization and yield, so they are worthy of long-term attention and investment. At present, Ethena has shown its kingly appearance, and Usual is also actively trying to expand its market share. In the future, decentralized stablecoins will not only grow with the growth of the entire sector, but also have great potential to grab more market share from traditional centralized stablecoins.

AIエージェント

In Q4 2024, the field of AI Agent in the crypto industry has ushered in unprecedented attention and rapid growth. AI Agent has evolved from the auxiliary function of the original traditional AI model to the core driving force of the community ecology, breaking away from the single tool attribute positioning. In this quarter, whether it is ai16z and ELIZA on the Solana chain, or VIRTUAL and AIXBT on the Base chain, their market value has increased several times with the heat of the market. At the same time, the performance of traditional AI Agents in the industry is relatively flat. In the process of alternating between the old and the new, the positioning of AI Agent has changed. In the past, AI Agents in the crypto market were mainly used to assist the update and iteration of existing products, such as FET, OLAS, etc. They focused more on the combination of blockchain and AI model training, or building practical application scenarios such as workflow assistance and emotional companionship (similar to the original intention of humans to create robots to assist in daily life). However, the current development model has changed from product-oriented to community-oriented, focusing more on the growth of AI Agent itself and the construction of the ecosystem (similar to creating an autonomous community composed entirely of robots).

AI Agent market value and share, source: https://www.cookie.fun/

In the current community-oriented development model, ai16z and Virtuals are undoubtedly the two most outstanding representative projects. According to the latest data from Cookie.fun, the overall market value of AI Agent has approached $16.7 billion, with an increase of nearly 37% in the last week of 2024 Q4. The combined market value of ai16z and Virtuals accounts for nearly 50% of the AI Agent market share. ai16z is essentially a decentralized DAO that uses AI for investment management. Its core component is the open source AI agent framework ElizaOS, which is used to create, deploy and manage AI agents. Under this framework, there are two core applications: ai16z and degenai. ai16z is a governance token, and holders can participate in voting on investment proposals and the distribution of fund returns. degenai is an autonomously trading AI agent chatbot that plays the role of an AI trader in ai16z. Users can interact with degenai and influence its trading decisions.

Similar to the ElizaOS framework, Virtuals Protocol is committed to promoting the development of the AI agent field. Its predecessor was the gaming guild Path DAO, which underwent a strategic transformation and changed its name to Virtuals Protocol in 2023. By launching the fun.virtuals platform, Virtuals Protocol enables users to easily build and deploy their own AI agents and supports one-click deployment capabilities. Virtuals provides a complete AI agent creation and token issuance platform similar to the Apple system, forming a closed-loop ecosystem. ai16z emphasizes open source frameworks and decentralized governance, both of which have their own characteristics in technical architecture, token economy, and market strategy to meet the needs of different users.

The source of the wave has to be the two AI Agent Memes GOAT and ACT. Although they have no practical utility, they were the first to break the single technical positioning of traditional AI Agents, combining them with Meme culture, and quickly attracted the attention of users and capital. Subsequently, the markets pursuit of AI Agents shifted from pure Memes to infrastructure projects dominated by prospect narratives. Virtuals launched its unique IAO (Initial Agent Offering) model, combining AI Agent function + トークン + Meme to a new height. In the Virtuals ecosystem, these AI Agents not only have tool functions such as virtual people and value analysis, but also play the role of Meme. AI Agents are no longer just service providers in the crypto industry, but have become core roles in the ecosystem and the main driving force for user interaction and community ecological development.

At present, the AI Agent market is mainly divided into two categories of projects: one is the technical support layer, which focuses on providing underlying technology and infrastructure support for AI Agents; the other is the scenario implementation layer, which is committed to applying AI Agents to specific business scenarios to realize their actual application value.

In the rapid development and evolution of AI Agent, its development trajectory is similar to the early craze of the blockchain industry. For example, the current competition situation of distribution platforms such as Virtuals, vvaifu, Zerebro, and ElizaOS, ARC, Swarms, etc. that provide different frameworks is similar to the early Layer 1 public chain competition. According to the time machine theory, it can be inferred that compared with application projects, AI Agent infrastructure projects are more concerned by mainstream market funds in terms of survival cycle and market value due to their strategic importance, and enjoy a premium due to scarcity.

As infrastructure matures and approaches saturation, the coordinated development of infrastructure and applications will become the core theme of the next stage, pushing the field into a period of deep integration. Unlike traditional project development, AI Agent applications focus more on pre-verifying market demand after Roadmap and TGE, and continue to promote innovation and development of the ecosystem with the help of mechanisms such as ecological tokens or associated tokens. Its overall market value has increased several times this quarter. With the emergence of the wealth effect, more and more new projects have emerged, and AI Agent has shown great potential in multiple segments, with breakthroughs in market analysis, on-chain operations, and intention execution. For example, Aixbts Twitter robot can answer user questions online around the clock and analyze market dynamics in real time, which can be called an AI version of an analytical opinion leader; AVA focuses on the social field and provides emotional companionship and personalized services through AI virtual people; CGPT integrates functions such as trading, market analysis, and NFT generation, becoming a comprehensive AI Agent tool.

ArkStream believes that the current enthusiasm of the track is obvious. Driven by FOMO sentiment, various funds have poured in to try to get a piece of the pie. This rapid expansion has led to the emergence of projects like mushrooms after rain, but no single project has a market value of over 10 billion. This stage can be regarded as the primary stage of the Web3 AI Agent track, and its core feature is time orientation: market participants generally have a speculative mentality and rush to enter the track as quickly as possible.

ArkStream Capital predicts that the second phase is coming, and the markets focus will shift to product quality, followed by a major reshuffle of survival of the fittest – low-quality, opportunistic projects will be quickly eliminated by mainstream funds. With the continuous iteration and upgrading of traditional AI technology, ArkStream Capital remains optimistic about the prospects of the entire track. The current popularity is enough to illustrate its potential for development. It is expected that the first batch of AI Agent projects with a market value of over 10 billion will become an important milestone in the development of the industry in the near future.

ミーム

Over the past three months, Meme has experienced significant growth and evolution, especially in terms of total market capitalization, trading activity, theme diversity, and exchange support. From October to early December, the total market capitalization of Meme coins has grown significantly, reaching a record high, and trading volume has also increased significantly. The market has witnessed the emergence of a variety of new Meme coins, including AI Agent Meme (GOAT, ACT), Art BAN linked to Sothebys art auction, Squirrel PNUT related to Trump and Elon Musk, and CHILLGUY, which attracts a large number of Tiktok fans. The rise of these emerging Memes has not only injected vitality into the market and stimulated the liquidity of on-chain funds, but also attracted a large number of new investors to enter the market, contributing to the prosperity and development of the Meme and crypto industries.

Compared with emerging memes, traditional memes such as DOGE, PEPE and WIF also performed strongly in the market. In particular, PEPE and WIF successfully landed on Robinhood in November 2024, which not only highlighted the recognition of Memes by North American compliant exchanges, but also further expanded the market influence of these old Memes.

Combined with the relevant data of the Meme track in the past year, as of the end of 2023, the number of Memes in the top 500 by market value is extremely limited, mainly including a few such as DOGE, SHIB, BONK, PEPE, FLOKI and ELON, and most Memes have low market value. However, by the end of 2024, the number of Memes in the top 500 by market value has increased significantly to 48, accounting for nearly 10%, and the total market value has reached approximately US$104.7 billion, with a 24-hour trading volume of up to US$7.4 billion. All of this shows that Memes recognition and market consensus are constantly breaking through.

Meme sector market value, source: https://coinmarketcap.com/view/memes/

Especially in this quarter, Meme has become the focus of the cryptocurrency market and attracted a lot of attention from investors. With the return of the value investment trend in November, some funds began to divert from Meme, but some newly listed popular Memes were quickly listed on mainstream exchanges such as Binance and Upbit due to their good market performance and large user base. Although the lack of market relay funds has caused these Memes to experience a sharp correction from their highs, ArkStream Capital believes that this correction is the perfect embodiment of the market attention economy, which means that the inflow and outflow of Meme funds will change significantly with the fluctuation of market attention. Many Memes have rapidly grown to a market value of US$100 million or even higher in a short period of time, so it is reasonable to experience a correction and verification of time.

ArStream believes that the prosperity of Meme in the industry is not just a short-lived phenomenon. As a bridge connecting Gen Z and the Web3 world, they are expected to continue to exist and bring emotions and value to the market with their easy-to-understand and easy-to-participate characteristics. Therefore, ArkStream Capital actively seeks opportunities suitable for layout in the Meme sector. Among them, special attention and layout are paid to two types of areas: one is the portal platform that provides token information and transaction data, as well as Bot products that provide transaction convenience and strategy customization, and new Meme launch platforms such as Pump Fun. These are the core infrastructures with actual sustainable returns in the Meme field; second, Meme is gradually becoming a way of issuing assets that carries the concept of fairness. Many projects with actual value support are trying to use Meme to attract users. They adopt the concept of organic growth and open with a low market value. This relatively healthy growth method also reflects the active exploration and innovation of primary market projects on Meme.

Project Investment

エテナ

プロジェクト紹介

Ethena, as an innovator in the DeFi field, is committed to providing a variety of stable and scalable crypto-native currency solutions. Its first stablecoin is the crypto-native synthetic dollar USDe. The core innovation is to maintain the intrinsic stable value by holding spot and corresponding short positions of various mainstream crypto assets using Delta hedging strategies. This design does not rely on the US dollar assets provided by the traditional banking system infrastructure. As a result, USDe is not only comparable to stablecoins backed by US dollar assets (such as USDC and USDT) in terms of stability, but also has achieved significant improvements in capital efficiency and returns. The second stablecoin USDtb was jointly developed with Securitize, a well-known institution in the RWA field. Relying on BlackRock BUIDL, it connects traditional financial products such as the US dollar, short-term US Treasury bonds and repurchase agreements to create a digital dollar with stable returns supported by real-world assets. USDtb not only has the multiple advantages of high liquidity, low risk and stable returns, but also uses Web3 technology to achieve transaction transparency and high efficiency of settlement. The two stablecoins, USDe and USDtb, expand Ethenas presence in the stablecoin market and, through synergy effects, enhance the overall robustness and credibility of Ethenas stablecoin solutions.

Why invest in Ethena

Ethenas vision is to build a bridge between DeFi, CeFi and TradFi by reshaping the cryptocurrency system to promote the prosperity of the next generation of Internet finance. Its first stablecoin USDe has achieved deep integration in multiple key areas of DeFi, including money markets, leveraged collateral in derivatives markets, stablecoin infrastructure, interest rate swap agreements, and spot AMM DEX. In the exchange field, Ethenas liquidity pool not only supports existing centralized and decentralized trading platforms, but also helps emerging exchanges solve the liquidity problems in the early stages of their launch and become the markets leading deep and over-the-counter liquidity provider. For TradFi, Ethenas USDe is favored for its unique returns. The stablecoin combines the local real returns of two billion-dollar cryptocurrencies, and its returns are weakly negatively correlated with traditional financial interest rates. The underlying assets are held by TradFi-approved custodians. USDe provides a convenient way for large investors to obtain excess returns in the cryptocurrency market through a single asset.

The ENA token plays a key role in the Ethena ecosystem, both as a governance token that gives holders the right to participate in key decisions, such as electing risk committee members and shaping policy direction, and as an opportunity to stake sENA for additional returns. With ENA being used as a voting tool on the Ethereal Derivatives 交換 in the future, its importance in the Ethena development blueprint is becoming increasingly prominent. These features not only consolidate ENAs position as the core of the Ethena protocol, but are also essential to maintaining the decentralized governance of the protocol and incentivizing user participation. In terms of liquidity, ENA has performed well on mainstream exchanges and has continued to rank among the top in terms of trading volume, which not only proves the market activity of the Ethena protocol, but also shows that it has been widely recognized and accepted by the market.

Through in-depth cooperation with major well-known exchanges, Ethena has implemented a series of hedging strategies to deal with emergencies in the derivatives market such as contracts, ensuring the stability and security of USDe. In addition, the use of USDe as a trading denominated currency pair is also gradually being implemented, thanks to Ethenas efforts to increase liquidity to mitigate risks. In terms of resources, Ethena cooperates with many of the worlds top market makers, who provide it with liquidity and market depth, further enhancing USDes market adaptability and resilience.

ArkStream Capital believes that in the field of stablecoins, the competitive landscape is far from certain. Although USDT and USDC occupy a leading position, emerging competitors are fully capable of challenging their market position. The key is to choose stablecoin protocols that have unique mechanisms, can stabilize anchor value, increase market value and expand application scenarios. Just as DEX has occupied 10% of CEX trading volume, decentralized financial products are rapidly occupying market resources because of their verifiability and convenience. It is expected that by 2025, decentralized stablecoins represented by Ethena will continue to grow in market size and reach a market share of 10%, or US$20 billion. In addition, Ethena will become one of the important financial tools for the implementation of Trumps policies. The implementation of Trumps policies will also promote Ethenas strategic position in the US economic revival and global financial reshaping, and become an important support for the digital financial status of the United States and the world.

TRex

プロジェクト紹介

TRex is committed to building a publisher network in the blockchain industry that focuses on games and entertainment content projects. Its goal is to ガイド project owners through high-quality, scalable and sustainable development methods, and provide them with support in resource docking, token economic model design, strategic consulting, marketing and other aspects. Take the two recently incubated game projects as examples: Legend of Arcadia and Last Odyssey, both of which have attracted more than 100,000 active users. Legend of Arcadia is a multi-chain card mobile game that accounts for 7% of the total transaction volume on X Layer; while Last Odyssey is an MMOSLG strategy game that accounts for 1.2% of the total transaction volume on opBNB.

Why invest in TRex

Relying on the powerful EVG ecosystem, TRex has significant advantages in terms of funding and resources. EVG is one of the most successful Web3 project incubators and investment companies in the Asia-Pacific region. Its investment and incubation projects include well-known companies and funds such as Celestia, Wormhole, Berachain, Animoca Brands, The Sandbox, Yuga Labs and Kraken. In addition, TRex has established a deep cooperative relationship with Animoca Brands. As a pioneer in the metaverse field, The Sandbox under Animoca has been widely recognized by traditional Internet and luxury brands, which fully demonstrates Animocas outstanding ability in incubation. EVG and Animoca are both resource-rich, strong and experienced institutions in the Web3 field in the Asia-Pacific region. Most of their team members come from traditional financial capital backgrounds in Hong Kong. With these advantages, TRex can adopt a high-quality, scalable and sustainable development strategy to provide project parties with all-round support such as resource docking, token economic model design, strategic consulting and marketing promotion.

In addition, ArkStream Capital noticed that whether it is the Web3 game fund launched by the traditional game giant Nexon or the Layer 1 blockchain that Sony plans to launch, the continuous development of games in the Ton ecosystem and the development trend of entertainment content applications are becoming more and more obvious. From the popularity of Web2s Black Myth: Wukong to the popularity of Taptap games on the blockchain, the markets recognition and demand for such applications are growing. It can be foreseen that in the near future, more developers and project parties will actively participate in this field. The one-stop, customizable distribution and incubation services provided by TRex will help project parties develop projects at a lower cost and obtain better resources, which will undoubtedly provide a strong boost to the development of project parties.

ArkStream believes that TRex has the support of many senior Web2 and Web3 game and TMT industry experts with its excellent track record and high-quality team background. Its planned publisher network platform and gradually expanding ecosystem make TRex a high-quality project with investment value. With the diversification and large-scale development of on-chain applications, the TRex network and its platform token are expected to become an indispensable component of the GameFi field.

Research Report

ArkStream Capital: Why We Invested in Ethena After Trumps Victory

ArkStream Capital: The Meme Craze | A New Battlefield for VCs – Opportunity or Trap?

ArkStream Capital: How PayFi Unlocks a New Chapter in Crypto Payments

This article is sourced from the internet: ArkStream Capital: 2024 Q4 Quarterly Report

Related: a16z: Stablecoins will reshape the trillion-dollar payment industry

Original author: Sam Broner Original translation: TechFlow The current payments market is dominated by a few “gatekeepers” who charge high fees that cut into every business’s profits, justifying those fees with the pretext of ubiquity and convenience while stifling competition and limiting the creativity of innovators. Stablecoins may provide a better solution. Stablecoins offer lower fees, more competition among payment providers, and wider accessibility. Because stablecoins reduce transaction costs to almost zero, they can help businesses get rid of the friction of existing payment methods. The adoption of stablecoins will start with those businesses that are most affected by current payment methods, and this process will disrupt the entire payment industry. Stablecoins have become the cheapest way to send dollars. Last month, 28.5 million stablecoin users around the world completed…