Market Overview

Overall Market Situation: This week, the cryptocurrency market showed a downward trend influenced by the Christmas holiday. The market sentiment index rose slightly from 7% to 10%, but it remains in the extreme fear zone. Notably, despite the overall market weakness, USDC, which is primarily based in the U.S. market, achieved a growth of 1.91%, indicating that institutional funds are still entering the market, injecting some confidence.

DeFi Ecosystem Development: The DeFi sector saw a slight decrease in TVL of 0.37% to $52.7 billion this week, but stablecoin yield projects like the machine gun pool performed well. The overall supply of stablecoins continues to grow, indicating that despite the market correction, foundational liquidity is still flowing in, and stable yield projects like the machine gun pool are in high demand.

AI Agent Development: The AI Agent sector continues to receive significant market attention, with a total scale reaching $10.9 billion. In particular, the aipool model, which combines TEE technology, has become a new focus in the market, expected to become a new asset issuance method following "inscription," demonstrating the deep integration trend of AI and blockchain technology.

Meme Coin Trend: Affected by 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.

Public Chain Performance Analysis: The public chain sector demonstrated strong resilience against declines, with Stacks achieving an important milestone with sBTC, BOB advancing the development of 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.

Future Market Outlook: Looking ahead, the market is expected to continue its sluggish trend during the New Year's holiday. Investors are advised to maintain defensive allocations, increase the proportion of top asset allocations, and moderately participate in high-yield machine gun pool projects. In the long term, the market generally anticipates a potential upward trend in the first quarter of 2025, with AI Agent and DeFi machine gun pool projects worthy of close attention.

Market Sentiment Index Analysis

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

• Altcoins performed worse than the benchmark index this week, showing a significant downward trend. Due to the Christmas holiday, liquidity sharply decreased, leading to increased price volatility in the market, making sudden price spikes and drops more likely. This resulted in low market sentiment. 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 Altcoins are in the extreme fear zone, the market often reaches a phase bottom, and an upward reversal can occur at any time.

Overall Market Trend Overview

• The cryptocurrency market was in a downward trend this week, with the sentiment index still in extreme fear.

• DeFi-related cryptocurrency projects performed prominently, showing the market's continued focus on enhancing foundational yields.

• AI Agent sector projects had high public sentiment this week, indicating that investors are actively seeking the next market breakout point.

Hot Sectors

AI Agent

This week, the overall market was in a downward trend, with all sectors declining. Although most tokens in the AI Agent sector also experienced price drops this week, it had the highest discussion volume in the market. The focus of discussions this week was on the development of the aipool model, which combines AI Agent and TEE, and its impact on DeFi in the future.

A key driver for periodic surges in the Crypto market is the emergence of new asset issuance methods. For example, past methods like ICO (Initial Coin Offering), IEO (Initial Exchange Offering), INO (Initial NFT Offering), IDO (Initial Decentralized Exchange Offering), and inscriptions have rapidly propelled market development and increased Crypto market prices. With the rapid integration of AI and Crypto, the aipool model has become a highly discussed asset issuance method and is 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 may soon see a 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 Cap:

DeFi Sector

TVL Growth Ranking

The top 5 projects by TVL growth in the past week (excluding projects with low TVL, defined as above $30 million), data source: Defilama

Resolv (Token Not Yet Issued): (Recommended Index: ⭐️⭐️⭐️)

• Project Introduction: Resolv is a delta-neutral stablecoin project focused on tokenizing market-neutral investment portfolios. The architecture is based on economically viable and fiat-independent sources of yield. This allows 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 passed security audits from multiple institutions. Resolv performed outstandingly in ecological development this week, attracting a second $100 million capital inflow, with an ecological growth rate of 84%. Its USDC Vault in Euler Finance offers up to 36.36% APY, 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 (Token Not Yet Issued): (Recommended Index: ⭐️⭐️⭐️)

• Project Introduction: The USDX Money project is an emerging synthetic dollar stablecoin protocol aimed at providing a new type of crypto-native stablecoin solution through multi-chain and multi-currency strategies. The core goal of the project is to build next-generation stablecoin infrastructure and maintain the peg stability of USDX to the dollar through delta-neutral hedging strategies.

• Latest Developments: This week, USDX Money completed a new UI/UX upgrade to optimize user interaction experience, and launched USDX/USDT and sUSDX/USDX liquidity pools on Curve Finance, continuously expanding its ecological scale. sUSDX reached $170 million TVL through collaboration with Lista DAO. USDX Money also launched an X-Points incentive program, including 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 means. 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 collaborated with the M^0 Foundation to launch a new product, UsualM. It also became the largest USD0/USD0++ pool on Curve Finance. With Usual TVL surpassing $1.5 billion, it ranks among the top five stablecoins globally, and the DAO treasury doubled to $17 million. Additionally, the Usual project launched staking rewards of up to 18,000% APY for USUALx and initiated a community airdrop event.

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

• Project Introduction: The Hashnote project focuses on providing solutions for institutional cryptocurrency management, aiming to offer transparency and optimize asset management through blockchain technology. Hashnote combines digital assets and traditional finance to provide users with innovative yield enhancement solutions, such as USYC.

• Latest Developments: This week, Hashnote reached a strategic cooperation with CoreDAO and participated in its ecological group panel meeting, focusing on launching an innovative Bitcoin dual-staking model that combines BTC and Core Token, aimed at providing users with sustainable yield solutions. The project CEO shared new strategies at the meeting, garnering over 14,000 views, indicating strong market interest in this innovative model.

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

• Project Introduction: Spectra is a protocol for future yield tokenization. DeFi users can deposit interest-bearing tokens from other protocols for a specified future period and trade the future yields generated by that asset in advance. Spectra works 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 Gauges and incentivize pages in the Spectra App. It also optimized the multi-locking feature for veSPECTRA holders, enabling them to participate more efficiently in the Gauge voting mechanism. Additionally, Spectra completed APW emission adjustments, with the new emission mechanism executed 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 Sector Performance

• Stablecoin market cap steadily growing: USDT decreased from $145.1 billion last week to $144.7 billion, a drop of 0.27%, while USDC increased from $42.1 billion to $42.9 billion, a growth 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 inflow of funds.

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

DeFi TVL across various sectors (data source: https://defillama.com/categories)

• Funding situation: The TVL of DeFi projects decreased from $52.9 billion last week to $52.7 billion now. Although there has been negative growth for two consecutive weeks, the decline is relatively small at 0.37%. The main reason is that the Western markets, led by the U.S., are in the Christmas holiday, resulting in decreased trading volumes and on-chain activities for various tokens. Next week marks the New Year's holiday, and it is expected that there will not be significant changes. Therefore, attention should be focused on the overall TVL changes in January and whether the downward trend continues.

In-Depth Analysis

Driving Forces for Growth:

The core driving factors for this round of growth can be summarized in the following transmission path: Due to the recent downward trend in the market, the APY of various DeFi protocols has decreased, while stablecoin yield projects have raised their yields through token/point rewards, giving machine gun pool projects a significant advantage in APY from an overall market perspective. Specifically:

• Market environment: Although in a bull market cycle, the recent downward trend has led to a significant decrease in the market's base interest rates.

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

• Yield side: The yields of stablecoin yield projects have expanded compared to other projects, attracting more user participation.

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

Potential Risks:

Due to the recent upward trend in the market, investors have been more focused on yields and borrowing leverage, while neglecting the risks of decline. Additionally, this week, the Christmas holiday caused a sharp reduction in market liquidity, leading to selling pressure without sufficient liquidity to absorb it, resulting in continuous price declines. This also triggered liquidations of long contracts in the market, causing losses for investors and significantly increasing the risk of cascading liquidations, further driving down prices and liquidating more assets.

Other Sector Performances

Public Chains

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

Stacks: This week, 922 BTC were transferred to the Stacks network, completing the first phase deposit cap of 1,000 BTC for sBTC. In DeFi applications, 35% of sBTC is already generating yields on Zest Protocol. The ALEX community voted to allocate 12 million ALEX tokens for the Surge plan, and Stacks achieved L1/L2 asset exchange functionality through Bitflow Finance and the AI console. Additionally, Stacks incentivized developers through the "Stackies" community rewards program.

BOB: This week, BOB collaborated with Fiamma Labs to develop and release a prototype of the BitVM Bridge based on zero-knowledge technology, with plans to launch a testnet in early 2025. BOB also partnered with Lombard Finance, successfully deploying Lombard Finance on the BOB chain, and held preliminary governance discussions with Aave to introduce its protocol to the BOB network. Furthermore, BOB launched a 6-week DeFi incentive campaign, encouraging LST holders to participate through Babylon Points, and conducted several community education tasks and Spaces events.

Taiko: This week, Taiko launched the Trailblazers Season 3 plan, establishing a reward pool of 6 million TAIKO tokens and introduced the Liquidity Royale event, offering 12,000 TAIKO tokens to the top 100 liquidity providers. The number of projects in the Taiko chain ecosystem has grown to 130, with Symmetric added as an important DEX partner. Taiko also held its first community meetup in Turkey with ITU Blockchain and Node 101, strengthening community building through holiday gift activities and meme competitions.

Cardano: This week, Cardano emphasized the technical advantages of its slashing mechanism in ensuring the security of user ADA assets and launched convenient web application development tools. It deepened cooperation with hardware wallet provider Ledger and advanced the decentralization process of community governance through the DReps (Delegates) voting decision-making model.

Sei: This week, Sei announced a significant technological breakthrough named "Giga," successfully extending EVM to a processing capacity of 5 gigagas per second, achieving a 50-fold performance improvement. Sei also released the Giga Roadmap during Developer Office Hours, outlining a clear roadmap for future technological development, and launched the EVM Wrapped feature, allowing users to view their activity records across multiple EVM chains, enhancing cross-chain interoperability. Additionally, Sei conducted a "12 Days of Christmas" holiday event and partnered with PythNetwork, Silo, and Nansen.

Top Gainers Overview

The top 5 tokens by growth in the past week (excluding tokens with low trading volumes and meme coins), data source: Coinmarketcap

ZEN: This week, Horizen successfully deployed the Horizen 2.0 Devnet testnet, launching an optimized zero-knowledge (ZK) verification solution to reduce technical complexity and costs. It established a strategic partnership with Automata Network to promote Web3 development and gained recognition from institutional investors through Grayscale's Horizen Trust. This week, Horizen completed the final halving of ZEN and listed it on Bitvavo exchange. Horizen is also actively preparing for the token distribution plan of the zkVerify project.

MOCA: This week, Moca Network successfully integrated with SK Planet's OK Cashbag application, resulting in significant user growth, including 1.5 million page views and 800,000 spin-the-wheel interactions. Moca Network remains active in community operations, enhancing user engagement through the Christmas marketing campaign (#MocaFam) and placing special emphasis on user safety education, issuing multiple anti-fraud reminders.

PHA: This week, Phala Network officially launched Phala 2.0, integrating GPU TEE technology and Ethereum Layer 2 scaling capabilities. It partnered with NVIDIA to jointly test TEE efficiency on H100/H200, achieving nearly 99% efficiency. Phala Network also announced the decision to migrate the Khala chain to the Ethereum mainnet. Its TEE-as-a-Service has been adopted by multiple projects, including Flashbots, and annual data shows a significant increase in AI Agent contract execution volume to 4,500 times, with active TEE Workers reaching 37,650, demonstrating Phala Network's leading position in decentralized AI infrastructure.

AGLD: This week, Adventure Gold engaged with the community through a Christmas-themed marketing campaign, where Christmas blessing tweets received high community engagement (27 likes, 14 retweets). Adventure Gold also collaborated with BladeGamesHQ in the AI Agent-driven on-chain economy, showcasing the project's exploration in the integration of gaming ecosystems and AI technology.

MOVE: This week, Movement launched several innovative products based on its technology stack, including the Puffpaw Vape with multi-chain support (featuring usage data tracking and rewards), the Vomeus smart vape with a high-definition screen, and the Sentimint project that allows users to tag emotions and memories on items. Movement enhanced performance through Block-STM parallel optimization and Rollup architecture, and expanded its on-chain DeFi scenarios through cross-chain integration with WBTC.

Meme Token Growth Ranking

Data source: coinmarketcap.com

This week, meme projects were significantly affected by the overall market decline. Due to the Christmas holiday, there were fewer users participating in market trading, leading to capital withdrawals from the market. Consequently, the number of investors participating in meme coin projects noticeably decreased, resulting in a lack of attention and funds in the meme coin sector at this stage.

Social Media Hot Topics

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

The most frequently mentioned topic is L1s, with the following tokens making the list (excluding tokens with low trading volumes and meme coins):

Data source: Lunarcrush and Scopechat

According to data analysis, the most关注度 on social media this week is on L1s projects. Due to the Christmas holiday, the U.S.-dominated market has entered a holiday phase this week, causing market makers and institutions to be on break, resulting in a significant decline in market liquidity. Most ordinary investors have also reduced their on-chain investment activities and engaged in selling, leading to a substantial market downturn, although the declines in various public chains were relatively small. During a general market decline, public chains often perform better than other sectors. Besides buying BTC and ETH for hedging, most investors still allocate funds to various public chains. When the downturn ends and an uptrend begins, public chains generally rise before other projects.

Overall Market Theme Overview

Data source: SoSoValue

According to weekly return statistics, the SocialFi sector performed the best, while the RWA sector performed the worst.

• SocialFi Sector: The absolute leader in the SocialFi sector remains TON, which accounts for 91.07% of the SocialFi market cap. This week, TON did not follow the market downturn and instead rose by 6.3%, making the SocialFi sector the best performer. This week, Toncoin partnered with GMX to promote high-frequency DeFi trading development.

• RWA Sector: In the RWA sector, OM, ONDO, and MKR have significant shares, 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, with declines larger than those in other sectors, resulting in the RWA sector performing the worst this week.

Next Week's Major Crypto Events

• Monday (December 30): The European Securities and Markets Authority releases the implementation of MiCA crypto regulations.

• Thursday (January 2): Initial jobless claims in the U.S. for the week.

• Friday (January 3): Court approval of FTX's Chapter 11 reorganization plan begins to take effect.

Outlook for Next Week

• Macroeconomic Factors Analysis

  Next week enters the New Year's holiday, with few macro data releases.

  In previous years, as the New Year's holiday approached, the U.S.-dominated market generally continued the low purchasing power seen during the Christmas period, leading to increased market volatility.

• Sector Rotation Trends

  DeFi Sector: Although the current market environment is poor, investors generally expect a broad market rally in the first quarter of next year. Therefore, most investors are still unwilling to sell their tokens. Meanwhile, to increase yield, many are participating in machine gun pool projects to enhance returns.

• AI Sector

  The AI Agent sector continues to attract market attention, with a market size reaching $10.9 billion.

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

• Investment Strategy Recommendations

  Maintain a defensive allocation, increasing the allocation of top assets BTC and ETH to enhance the hedging properties of assets.

  While hedging risks, investors can participate in some high-yield machine gun pool DeFi projects.

  It is recommended that investors remain cautious, strictly control positions, and manage risks effectively.

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