Market Weekly Report: The market is weak during the double festival period, and a rise may come in Q1 next year.

Market Overview

This week, the cryptocurrency market is showing a downward trend due to the impact 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 noteworthy that despite the overall market weakness, USDC, which is primarily focused on the US market, still achieved a 1.91% rise, indicating that institutional funds continue to enter the market, injecting a certain level of confidence.

The DeFi sector's TVL slightly decreased by 0.37% this week to $52.7 billion, but projects like liquidity mining pools for stablecoins performed well. The overall supply of stablecoins continues to grow, indicating that despite the market correction, underlying liquidity is still flowing in, and stable yield projects like liquidity mining pools are in high demand.

The AI Agent sector continues to garner significant market attention, with a total scale reaching $10.9 billion. In particular, the aipool model combined with TEE technology has become a new focal point in the market, expected to become a new type of asset issuance method following the "inscription" trend, showcasing the development trend of deep integration between AI and blockchain technology.

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

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

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

Market Sentiment Index Analysis

The market sentiment index has risen from 7% last week to 10%, still in the extreme fear range.

Altcoins performed worse than the benchmark index this week, showing a significant downtrend. Due to the Christmas holiday, liquidity has sharply decreased, leading to increased price volatility in the market, making it easy for sudden pumps and dumps to occur. Given the current market structure, it is expected that Altcoins will remain in sync with the benchmark index in the short term, with a low probability of independent market movements.

When altcoins are in the extreme fear zone, the market is often at a temporary bottom, and a reversal to the upside can happen at any time.

Overview of Overall Market Trends

• The cryptocurrency market is in a downtrend this week, with the sentiment index still in extreme fear.

• Defi-related crypto projects have performed outstandingly, showing the market's continued focus on enhancing fundamental yields.

• The AI Agent track project has seen high public sentiment this week, indicating that investors are actively seeking the next market breakout point.

Hot Tracks

AI Agent

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

One of the boosters for the crypto market during each periodic surge is the emergence of new asset issuance methods. Past methods such as ICOs, IEOs, INOs, IDOs, and engraving quickly propelled market development and boosted crypto market prices. In the context of the rapid integration of AI and crypto, aipool has become a highly popular asset issuance method at present, and it is also a continuation of the "Money FI" trend from early 2024. If the aipool asset issuance method is widely accepted by the market, we can expect a small wave of asset issuance frenzy brought about by the aipool model in the near future, so we should pay close attention to aipool-type projects.

The top five AI Agent projects by market capitalization:

| Project Name | Market Cap | Weekly Rise/Drop Rate | |---------|------|---------| | WorldCoin | $572,512,912 | -16.47% | | Render | $503,727,350 | -7.94% | | Fetch.ai | $473,814,878 | -14.34% | | SingularityNET | $416,764,642 | -12.96% | | Ocean Protocol | $238,958,013 | -7.01% |

DeFi track

TVL rise ranking

The top 5 projects by TVL rise in the market over the past week (excluding projects with a smaller TVL, with a standard of over 30 million USD):

| 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): (Recommended Index: ⭐️⭐️⭐️)

Resolv is a delta-neutral stablecoin project that revolves around the tokenization of a market-neutral investment portfolio. This architecture is based on economically viable and fiat-independent sources of yield. This allows for competitive returns to be distributed to the liquidity providers of the protocol.

Latest developments: This week, Resolv completed an important technical upgrade, successfully transforming into an Omnichain project by integrating LayerZero and StarGate technologies. Meanwhile, the OFT standard it adopted passed security audits from multiple institutions. Resolv has shown outstanding performance in ecological development this week, attracting a second influx of 100 million USD within the week, with an ecological growth rate of 84%. Its USDC Vault offered up to 36.36% APY in Euler Finance, attracting 5.67 million USD in TVL within the week. Resolv also launched the wstUSR pool on Pendle.fi and introduced a unified points structure.

USDX Money (Unissued Token): (Recommendation Index: ⭐️⭐️⭐️)

The USDX Money project is an emerging synthetic dollar stablecoin protocol aimed at providing 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 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 has completed a brand new UI/UX upgrade this week to optimize user interaction experience, while launching USDX/USDT and sUSDX/USDX liquidity pools on Curve Finance, continuously expanding the ecosystem scale. Among them, sUSDX reached a TVL of 170 million USD through collaboration with Lista DAO. USDX Money has also launched the X-Points incentive program, which includes content creation and angel program, and is hosting a special Christmas event.

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

Usual is a stablecoin project supported by a well-known exchange, aimed at providing a new stablecoin solution through decentralization. The core mechanism of this project includes three main tokens: the stablecoin USD0, the bond product USD0++, and the governance token USUAL.

Latest developments: Recently, Usual secured $10 million in Series A funding led by a well-known institution and partnered with the M^0 Foundation to launch a new product, UsualM. At the same time, it became the largest USD0/USD0++ pool on a well-known DEX, with Usual's TVL surpassing $1.5 billion, making it one of the top five stablecoins globally. The DAO treasury also doubled to $17 million. The Usual project has launched staking rewards of up to 18,000% APY for USUALx and initiated a community airdrop event.

Hashnote (Token Not Issued): (Recommended Index: ⭐️⭐️)

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 developments: Hashnote has reached a strategic partnership with CoreDAO this week and participated in its ecosystem panel meeting, focusing on the launch of an innovative Bitcoin dual-staking model that combines BTC and Core Token, aimed at providing users with sustainable yield solutions. Meanwhile, the project's CEO shared new strategies at the meeting, garnering over 14,000 views, demonstrating strong market interest in this innovative model.

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

Spectra is a protocol for the tokenization of future yield. DeFi users can deposit interest-bearing tokens from other protocols within a specified future timeframe and trade the future earnings generated by that asset in advance. The way Spectra works is by placing interest-bearing tokens (IBT) or any yield-generating asset with a fixed term 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 introduced the Gauges and incentivize pages in the Spectra App, while optimizing the multi-locking feature for veSPECTRA holders to participate more efficiently in the Gauge voting mechanism. Spectra completed the APW emission adjustment, and the new emission mechanism is 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 increases: USDT dropped from $145.1 billion last week to $144.7 billion, a decrease of 0.27%. USDC grew 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 primarily based in the US market, still showed growth, indicating that the buying power in the market is still maintaining a continuous influx of funds.

• Liquidity is gradually increasing: The risk-free arbitrage rates in traditional markets continue to decline with the ongoing interest rate cuts, while the arbitrage rates of on-chain DeFi projects are rising due to the appreciation of cryptocurrency assets, making a return to DeFi a very good choice.

• Funding situation: The TVL of Defi projects has risen from $52.9 billion last week to $52.7 billion now. Although there has been 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 market, is in the Christmas holiday, resulting in a decrease in both the trading volume of various tokens and on-chain activities. Additionally, next week marks the New Year's holiday, and it is expected that there will not be much change. 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 driving force:

The core driving factors of this round of pump can be summarized as follows: Due to the recent downtrend in the market, the APY of various DeFi protocols has decreased, while stablecoin yield projects have boosted their yields through token/point rewards, giving the gun pool projects a clear advantage in terms of APY from the overall market perspective. Specifically:

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

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

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

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

Potential risks:

Due to the recent upward trend in the market, investors are focusing more on returns 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, leading to selling pressure without enough liquidity to absorb it, resulting in continuous price drops and triggering liquidations of long positions in the market, causing losses for investors. The chain reaction caused by this liquidation...