During the double festival period, the market is weak, and Q1 next year may welcome a pump | Crypto market weekly report

Market Overview

This week, the crypto market has shown a declining trend under the influence of the Christmas holiday. Although the market sentiment index has slightly risen from 7% to 10%, it remains in the extreme fear zone. It is worth noting that despite the overall market weakness, USDC, which is primarily based on the US market, has still achieved a 1.91% rise, indicating that institutional funds are continuously entering the market, injecting a certain level of confidence.

The DeFi sector's TVL fell slightly by 0.37% this week to $52.7 billion, but projects like the Gun Pool that offer stablecoin yields performed well. The overall supply of stablecoins continues to grow, indicating that despite market corrections, the underlying liquidity is still flowing in, and stable yield projects like the Gun Pool are in high demand.

The AI Agent track continues to attract significant market attention, with a total scale reaching 10.9 billion USD. In particular, the aipool model that combines TEE technology has become a new focus in the market, and is expected to become a new asset issuance method following "minting inscriptions", showcasing the deep integration trend of AI and blockchain technology.

Due to the impact of the holidays and the overall decline in the market, the Meme coin sector performed poorly this week, with a noticeable decrease in investor participation and capital inflow, while market enthusiasm has temporarily shifted to other sectors.

The public chain sector demonstrates strong resilience against downturns. Stacks has achieved an important milestone with sBTC, BOB is advancing the development of BitVM Bridge, and Taiko has launched a new round of ecological plans, indicating that major public chains continue to focus on technological innovation and ecological development.

Looking ahead, the market is expected to continue its sluggish trend during the New Year's holiday. Investors are advised to maintain a defensive allocation, increasing the proportion of top assets, while also moderately participating in high-yield gun pool projects. In the long term, the market generally anticipates a rise in the first quarter of 2025, with AI Agent and DeFi gun pool projects being worthy of special attention.

Market Sentiment Index Analysis

• The market sentiment index has risen from 7% last week to 10%, still in the extreme fear range.
• Altcoin performed weaker than the benchmark index this week, showing a significant downtrend. The sharp decline in liquidity due to the Christmas holiday has increased market price volatility, making it prone to sudden rises and falls. It is expected that Altcoin will closely follow the benchmark index in the short term, with a low probability of independent market movements.
• When altcoins are in a state of extreme panic, the market is often at a temporary bottom, and a reversal to the upside can occur at any time.

Overview of Overall Market Trends

• The crypto market has been in a downward trend this week, with the sentiment index still in extreme fear.
• DeFi-related encryption projects have performed outstandingly, showing that the market continues to focus on improving basic yields.
• The AI Agent track project has high public sentiment this week, indicating that investors are starting to actively look for the next market explosion point.

Hot Tracks

AI Agent

This week, the market is in a downward trend, and various sectors are also in a declining state. Although most tokens in the AI Agent sector have also been in a downtrend this week, they have generated the highest level of discussion in the market. The topic of discussion this week is the development of the aipool model, which combines AI Agent and TEE, and its impact on Defi in the future crypto market.

One of the boosters for the cyclical rise in the crypto market is the emergence of new asset issuance methods. For example, past asset issuance methods such as ICO, IEO, INO, IDO, and engraving have quickly driven market development and the rise 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 "打钱FI" at the beginning of 2024. If the aipool asset issuance method is widely accepted by the market, we will soon witness a small wave of asset issuance driven by the aipool model, so we should pay close attention to aipool-type projects.

Top five AI Agent projects by market capitalization:

• Worldcoin(WLD)
• Fetch.ai(FET)
• SingularityNET(AGIX)
• Oasis Network(ROSE)
• Ocean Protocol(OCEAN)

DeFi track

TVL rise ranking

The top 5 projects by TVL increase in the past week (TVL over 30 million USD), data source: Defilama

| Project Name | Weekly Rise | TVL (million) | |---------|----------|----------------| | Resolv | 82.04% | 239.01 | | USDX Money | 74.25% | 446.42 | | Usual | 55.56% | 1599.36 | | Hashnote | 52.54% | 1652.47 | | Spectra | 51.81% | 122.55 |

Resolv (Token not issued): (Recommendation Index: ⭐️⭐️⭐️)

• Project Introduction: Resolv is a Delta-neutral stablecoin project that revolves around the tokenization of a market-neutral investment portfolio. The architecture is based on economically viable and fiat-independent sources of income, allowing for competitive returns to be distributed to the protocol's liquidity providers.

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

USDX Money (not yet issued): (Recommendation Index: ⭐️⭐️⭐️)

• Project Introduction: The USDX Money project is an emerging synthetic dollar stablecoin protocol that aims to provide a new type of crypto native stablecoin solution through a multi-chain and multi-currency strategy. The core objective of the project is to build the next generation stablecoin infrastructure and maintain the peg stability of USDX to the US dollar through a Delta neutral hedging strategy.

• Latest Developments: USDX Money completed a brand new UI/UX upgrade this week to optimize user interaction experience, while launching the USDX/USDT and sUSDX/USDX liquidity pools on Curve Finance, continuously expanding the ecosystem scale. Among them, sUSDX reached a TVL of $170 million through collaboration with Lista DAO. USDX Money also launched the X-Points incentive program, which includes content creation and angel plans, and held a special Christmas event.

Usual (USUAL): (Recommendation Index: ⭐️⭐️⭐️⭐️⭐️)

• Project Introduction: Usual is a stablecoin project supported by Binance, aimed at providing a new stablecoin solution through a decentralized approach. The core mechanism of the project includes three main tokens: stablecoin USD0, bond product USD0++, and governance token USUAL.

• Latest Developments: Recently, Usual secured $10 million in Series A funding led by Binance Labs and Kraken Ventures, and launched a new product UsualM in collaboration with the M^0 Foundation. Meanwhile, it has become the largest USD0/USD0++ pool on Curve Finance. With Usual's TVL surpassing $1.5 billion, it has entered the top five global stablecoins, and the DAO treasury has also doubled to $17 million. The Usual project has launched USUALx staking rewards of up to 18,000% APY and initiated a community airdrop event.

Hashnote (Not Issued): (Recommendation Index: ⭐️⭐️)

• Project Introduction: The Hashnote project is a solution focused on institutional cryptocurrency management, aimed at providing transparency and optimizing asset management through blockchain technology. Hashnote combines digital assets and traditional finance to offer users innovative yield enhancement solutions, such as USYC.

• Latest Development: Hashnote has reached a strategic cooperation with CoreDAO this week and participated in its ecosystem panel meeting, focusing on the launch of an innovative Bitcoin dual-staking model. This model combines BTC and Core Token, aiming to provide users with sustainable yield solutions. At the meeting, the project CEO shared the new strategy, which garnered over 14,000 views, demonstrating strong market interest in this innovative model.

Spectra (SPECTRA): (Recommended Index: ⭐️⭐️⭐️)

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

• Latest developments: This week, Spectra successfully launched a new governance contract on the Base mainnet and introduced the Gauges and Incentivize pages in the Spectra App. At the same time, the multi-lock function for veSPECTRA holders has been optimized to allow for more efficient participation in the Gauge voting mechanism. Spectra has completed the APW emission adjustment, with the new emission mechanism implemented 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 the track

• Stablecoin market capitalization steadily grows: USDT decreased from $145.1 billion last week to $144.7 billion, a drop of 0.27%. USDC 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, the USDC, which is mainly based in the US market, has still shown growth, indicating that the purchasing power in the market continues to maintain a steady influx of funds.

• Liquidity is gradually increasing: The risk-free arbitrage rates in traditional markets are continuously declining due to the ongoing interest rate cuts, while the arbitrage rates of on-chain Defi projects are continuously increasing due to the rising value of encryption assets. Returning to Defi will be a very good choice.

• Funding Situation: The TVL of Defi projects decreased from 52.9 billion to 52.7 billion last week. Although there has been negative growth for two consecutive weeks, the magnitude of the decline is small, at 0.37%. The main reason is that the Western market, led by the US market, is in the Christmas holiday this week, resulting in a decrease in both trading volume of various tokens and on-chain activity. Additionally, next week marks the New Year's holiday, and it is expected that there will not be much improvement. Therefore, attention should be focused on the overall TVL changes in the market in January and whether the downward trend continues.

In-depth Analysis

Pump Driver:

The core driving factors of this round of pump can be summarized as follows: Due to the recent downward trend in the market, the APY of various Defi protocols has decreased. However, stablecoin yield projects have raised their yields through token/point rewards, which, from the overall market perspective, gives gun pool projects a clear advantage in APY. Specifically:

• Market Environment: Although we are in a bull market cycle, the recent market has been in a downtrend, causing a significant decrease in the market's base interest rate.

• Interest rate side: The base lending rate has increased, reflecting the market's pricing expectations for funds.

• Earnings side: The return rate of stablecoin yield projects has expanded compared to other projects, thereby attracting more users to participate.

This transmission mechanism strengthens the value support of stablecoin yield projects, forming a positive growth momentum.

Potential Risks:

Due to the recent upward trend in the market, investors are more focused on yields and borrowing leverage, while neglecting the risk of decline. Moreover, this week, due to the Christmas holiday, there has been a sharp reduction in market liquidity, resulting in selling pressure without enough liquidity to absorb it, causing prices to continuously fall and leading to liquidations of long positions in the market, resulting in losses for investors. The chain reaction caused by these liquidations.