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

Market Overview

This week, the cryptocurrency market has shown a downward trend under the influence of the Christmas holiday. Although the market sentiment index rose slightly from 7% to 10%, it remains in the extreme fear zone. It is worth noting that despite the overall market weakness, USDC, which is mainly focused on the US market, still achieved a 1.91% rise, indicating that institutional funds continue to enter the market, injecting some confidence.

The DeFi sector saw a slight decline in TVL of 0.37% this week to $52.7 billion, but projects like the machine gun pool and other stablecoin yield programs 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 the machine gun pool are in high demand.

The AI Agent sector continues to attract significant market attention, with a total scale reaching 10.9 billion USD. In particular, the aipool model combined with TEE technology has become a new focal point in the market, expected to emerge as a new type of asset issuance method following "minting inscriptions", demonstrating the development trend of the deep integration of AI and blockchain technology.

Due to the impact of the holiday 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 development.

Looking ahead, the market is expected to continue its sluggish trend during the New Year holiday, and investors are advised to maintain a defensive allocation, increasing the proportion of top assets while moderately participating in high-yield liquidity pool projects. In the long term, the market widely expects a rise in the first quarter of 2025, with AI Agent and DeFi liquidity pool projects being worth paying special attention to.

Market Sentiment Index Analysis

The market sentiment index rose from 7% last week to 10%, remaining in the extreme fear zone. Altcoins performed weaker than the benchmark index this week, showing a significant downtrend. Due to the Christmas holiday, liquidity has sharply decreased, leading to increased market price volatility and making sudden rises and drops more likely. Therefore, the market sentiment is not optimistic. 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 trends.

When Altcoin is in a state of extreme panic, the market is often at a stage bottom and a rise can occur at any time.

Overview of Overall Market Trends

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

• DeFi-related crypto projects have shown outstanding performance, indicating that the market continues to focus on enhancing basic yields.

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

Hot Track

AI Agent

This week, the overall market is in a downtrend, and all sectors are experiencing a decline. Although most token prices in the AI Agent sector have also been in a downward trend this week, the level of discussion in the market is the highest. This week, there has been considerable discussion about the development of the aipool model, which combines AI Agent and TEE, in the future cryptocurrency market and its impact on DeFi.

One of the boosters for the periodic surges in the cryptocurrency market is the emergence of new asset issuance methods. For example, past asset issuance methods such as ICOs, IEOs, INOs, IDOs, and engraving have rapidly promoted market development and the increase in cryptocurrency prices. In the context of the rapid integration of AI and cryptocurrency, aipool has become a highly popular asset issuance method at this stage, and it is also a continuation of the "Money Printing FI" trend at the beginning of 2024. If the aipool asset issuance method is widely accepted by the market, we can expect a small wave of asset issuance frenzy driven 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 (Million USD) | |---------|---------------| | Worldcoin| 552.28 | | Fetch.ai| 548.84 | | SingularityNET| 462.40 | | Ocean Protocol| 251.91 | | Oasis Network| 239.94 |

DeFi track

TVL rise ranking

The top 5 projects with the highest TVL rise in the market over the past week (excluding projects with a smaller TVL, with a standard of over $30 million), 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 (unissued token): (Recommended Index: ⭐️⭐️⭐️)

• Project Introduction: Resolv is a Delta-neutral stablecoin project that revolves around the tokenization of market-neutral investment portfolios. This architecture is based on economically viable and fiat-independent sources of yield. This allows for competitive returns to be allocated to the protocol's liquidity providers.

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

USDX Money (Not Issued): (Recommendation Index: ⭐️⭐️⭐️)

• Project Overview: The USDX Money project is an emerging synthetic dollar stablecoin protocol designed to provide a new type of crypto-native stablecoin solution through a multi-chain and multi-asset strategy. The core objective of this 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 development: USDX Money 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 its ecosystem. Among them, sUSDX reached a TVL of 170 million USD through cooperation 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): (Recommended Index: ⭐️⭐️⭐️⭐️⭐️)

• Project Introduction: Usual is a stablecoin project supported by Binance, aimed at providing a new stablecoin solution through decentralized methods. 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 partnered with the M^0 Foundation to launch the new product UsualM. At the same time, it became the largest USD0/USD0++ pool on Curve Finance, with Usual's TVL surpassing $1.5 billion, ranking it among the top five stablecoins globally, and the DAO treasury also doubled to $17 million. In addition, the Usual project has launched staking rewards of up to 18,000% APY for USUALx and initiated a community airdrop event.

Hashnote (Not yet issued): (Recommended 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 partnership with CoreDAO this week and participated in its ecological panel meeting, focusing on the launch of an innovative dual staking model for Bitcoin. This model combines BTC and Core Token, aiming to provide users with sustainable yield solutions. Meanwhile, the project's CEO shared a new strategy during the meeting, which garnered over 14,000 views, indicating strong market interest in this innovative model.

Spectra (SPECTRA): (Recommendation 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 earnings generated by that asset in advance. The way Spectra works is by placing interest-bearing tokens (IBT) or any fixed-term yield-bearing 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 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. In addition, Spectra completed the adjustment of APW emissions, 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 (money 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 decline 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, USDC, which is primarily based in the U.S. market, still experienced 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 continue to decline as interest rates decrease, while the arbitrage rates of on-chain DeFi projects are continuously rising due to the increase in the value of cryptocurrency assets. Returning to DeFi will be a very good choice.

• Funding situation: The TVL of Defi projects has fallen from 52.9 billion USD last week to 52.7 billion USD now. Although there have been two consecutive weeks of negative growth, the extent of the negative growth is small at 0.37%. The main reason is that this week the Western markets, led by the US market, are in the Christmas holiday, resulting in a decline in both trading volumes of various tokens and on-chain activities. Furthermore, next week marks the New Year's holiday, and little change is expected. 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 APYs of various DeFi protocols have decreased. However, stablecoin yield projects have increased their yields through token/point rewards, which gives the machine gun pool projects a clear advantage in terms of APY from an overall market perspective. Specifically:

• Market Environment: Although it is in a bull market cycle, the market has recently been in a downtrend, resulting in a significant decrease in the base interest rate.

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

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

This conduction 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, market investors are more focused on yield and borrowing leverage, but have overlooked the decline.