1. Outlook
1. Macro-level summary and future forecasts
Due to the weak employment data, market concerns about a weakening economy have intensified, and risk assets have come under pressure. Although the current data is not enough for the Fed to cut interest rates by 50 BP for the first time, the market is worried that the Fed's interest rate cuts are too conservative and the economy may decline faster, forcing the Fed to increase future interest rate cuts. For some time to come, market sentiment may continue to remain risk-off until more economic data improves.
2. Cryptocurrency market changes and warnings
The poor performance of the U.S. non-farm payrolls report in August caused great differences in the market on the extent of the interest rate cut. The U.S. stock market staged a big dive, and all safe-haven assets became ineffective. Bitcoin also plummeted 4% in a single day last Friday, falling to a low of US$52,550, and Ethereum fell to a low of US$2,150.
The market's divergence in macro data expectations has shifted from "trading rate cuts" to "trading recessions" or "trading forced rate cuts." Continued to be affected by macro factors, the future cryptocurrency market may require substantial rate cuts and liquidity releases to regain its heat, which may take 3 to 6 months.
Judging from the current price trend, the rebound strength of BTC and ETH is relatively weak, and the risk of a second bottom is still rising. This week, investors should pay attention to the effectiveness of BTC's support between 50,000 and 53,000, and ETH should pay attention to the support strength near 2,100. If it does not break, the bottom is formed, and if it breaks, the deep correction will continue.
3. Industry and track hot spots
Recently, a decentralized exchange (DEX) called EtherVista has sparked heated discussions. Its platform token VISTA has risen more than 10 times in just one day, with a market value of $13 million. EtherVista claims to challenge Uniswap's AMM model and introduces a new fee allocation and token mechanism designed to encourage long-term investment rather than short-term speculation. Although its innovative model and fast-growing market performance are impressive, it has also sparked some discussions about potential risks. In any case, EtherVista has undoubtedly become a hot topic in the current Web3 field.
In addition, TaxFarm.ing, a meme coin platform on Ethereum, has also attracted widespread attention. Its token FARM exceeded $8 million in market value within 6 hours of its launch, with a maximum increase of 150 times. TaxFarm.ing provides meme coin developers with a way to make profits through a unique "Supply clogging" mechanism, while protecting investors' returns. Holders of the platform coin FARM can make profits through transaction fees. Although the platform data is occasionally wrong, it has become a popular choice in the eyes of investors.
2. Market hot spots and potential projects of the week
1. Performance of hot tracks
1.1. 134 times increase! Can EtherVista trigger DeFi?
According to data tracked by Lookonchain, frenulum.eth earned 274 ETH (about $696,700) in 2 days by trading VISTA, with a return rate of 134 times. During this period, VISTA's 24-hour increase was close to 1,100%.
Ethervista is a new type of DEX protocol that aims to address the shortcomings of the existing AMM model (short-term token price speculation and insufficient LP incentives). By introducing a custom fee structure and a new reward distribution mechanism, Ethervista seeks to enable long-term growth and sustainability of the ecosystem.
Ethervista’s mechanism features:
● Custom Fees: Ethervista uses a custom fee structure payable only in native ETH, allowing for more flexible fee distribution.
● Reward distribution: The protocol distributes fees between liquidity providers and token creators based on trading volume, incentivizing long-termism and utility rather than short-term price action.
● Protocol fees: Part of the fees are allocated to the smart contracts specified by the protocol, thereby supporting various DeFi applications and providing sustainable income for creators.
● Liquidity Provider Rewards: Liquidity providers are rewarded based on their contribution to the pool and total trading volume.
● Creator capabilities: Creators can configure pool settings, define metadata, and even restrict token transfers.
● VISTA Token: Ethervista’s governance token with a supply cap and deflation mechanism.
Technical Overview:
Euler (Reward Calculation Unit): A series of increasing numbers used to calculate the rewards of liquidity providers based on their contribution and total trading volume.
Fee Distribution: Fees are distributed between liquidity providers and the protocol based on predefined variables.
Protocol Fee Distribution: Protocol fees can be distributed to smart contracts of various DeFi applications.
in conclusion
The core feature of the EtherVista model is that market makers and creators benefit from trading volume rather than simply relying on token prices. However, can the current low price of ETH as a fee retain users? Can the standard for measuring reward issuance based on trading volume avoid the risk of large funds entering the pool in the short term and then quickly exiting the pool after making a profit? After all, trading volume can also be generated in a short period of time, so it will take time to verify whether this profit model can continue.
1.2. Ethereum Pump.fun Copycat TaxFarm Creates a 100-fold Return in 6 Hours
On September 5, TaxFarm.ing, a meme coin platform on Ethereum, published its first tweet on X, releasing the contract and protocol platform entrance for the token "FARM". After that, FARM continued to rise, with a market value of over $8 million within 6 hours of its launch, reaching a peak of $9.6 million. If calculated based on the purchase price 10 minutes after the opening, the maximum increase was 150 times, which took 5.5 hours to achieve.
Compared with other meme coin issuance platforms, the biggest mechanism of TaxFarm.ing is that it provides meme coin issuers with a way to make profits besides selling tokens, and combines this mechanism with the profit expectations of its platform coin FARM holders.
TaxFarm proposed a clogging mechanism. When a new token is issued on the TaxFarm.ing platform, 1 ETH is required as initial liquidity, and 20% of the total supply will be clogged (locked), which is equivalent to an insurance premium.
If the token can generate enough transaction fees to cover at least 1 ETH of initial liquidity, the tax rate will remain at 5/5, and when enough fees are accumulated and the locked portion is released, the tax rate will be reduced to 1/1. If the token fails to generate enough fees within 24 hours (not enough to cover the developer's initial 1 ETH liquidity), an automatic liquidity protection mechanism will be activated. The supply of clog will be withdrawn and returned to the developer. This mechanism is equivalent to an exit mechanism that can quickly reduce the developer's losses when the project performs poorly, giving the developer the opportunity to redeploy tokens or invest in other more promising projects.
In addition, the platform currency of TaxFarm.ing is FARM, and holders earn profits through the transaction fees of meme coins. Of the transaction fees generated by meme tokens on the platform, 80% goes directly to the developers, and the remaining 20% is allocated to the platform, half of which (10%) will be redistributed in the form of ETH to users who hold and stake $FARM tokens.
in conclusion
Taxfarm’s mechanism for protecting coin issuers is indeed something that other platforms do not have, but it is questionable whether the platform coin holders can gain more profits because of the 20% of initial liquidity unlocked by the coin issuers, because in fact there is a high probability that the coin issuers will leave the platform directly after receiving this 20% “minimum guarantee” instead of investing in other memes (based on the current market sentiment, if this is the case, then the transaction fees of the platform’s memes will not increase significantly, and the income of FARM holders will still not be substantially improved, but the clog protection mechanism is worth learning for other meme issuance platforms.
1.3. The Trump family launches World Liberty Financial!
In an effort to revolutionize the banking and finance industry, the 45th and potentially 47th President of the United States, Donald J. Trump, has announced the renaming of his upcoming groundbreaking DeFi platform from The DeFiant Ones to World Liberty Financial.
World Liberty Financial aims to revolutionize the current traditional banking and financial system that lacks innovation, accessibility, transparency and inclusion by providing financial solutions adapted to the needs of the 21st century. As a pioneering DeFi platform, World Liberty Financial will redefine the way people understand and interact with finance, providing a fair and accessible digital bank that challenges the status of the traditional banking system.
World Liberty Financial's official Telegram channel attracted nearly 250,000 subscribers in just a few days, and the number continues to grow.
in conclusion
In fact, the market should look at the project rationally. As a presidential candidate, Trump has not shown support for the concept of decentralization on any occasion in the past. Now facing the most anxious moment of the election, he began to frequently mention the crypto market and threw such a heavy bomb, which is intriguing. However, it is not difficult to understand after careful consideration. As a politician, it is actually contrary to the concept of decentralization. It is extremely difficult to expect the US president to support the "unregulated, anarchic crypto world". As for his purpose in doing so, it is likely that he wants to pull the crypto camp into his faction and help his campaign. In addition, he has made a lot of money in the crypto market over the years, so it is understandable that he made such a decision for his own benefit. But for the crypto market, it is still necessary to remain rational and sober before the project white paper is released.
2. Inventory of potential projects of the week
dappOS
Project Background
dappOS is an intention execution network that revolutionizes the way users interact with decentralized blockchain systems. Unlike traditional decentralized applications (dApps), which require multiple steps to be completed manually, users only need to focus on what they want to achieve on dappOS. The network's service providers handle all the intermediate processes, ensuring that users get the desired results with minimal effort and institutional-level efficiency.
dAppOS currently provides three main functions:
● Intent Asset : Users can use their assets while continuing to earn interest.
● Intent EX : Users can get the best transaction cost when trading spot.
● Intent-based dApp interaction : Users can interact with dApps seamlessly, avoiding the complexity of interacting directly with the blockchain.
These three features address the most common on-chain needs of users, and by integrating these key features, dappOS positions itself as a comprehensive Web3 operating system.
dappOS has become a leader in the Web3 ecosystem, with investments from top venture capital firms such as Binance Labs, Polychain, Sequoia, IDG, and OKX Ventures.
Project Analysis
Service Providers
The service provider is the entity responsible for executing the user's intentions. The service provider must pledge collateral to undertake tasks in the network, and the total value of the tasks it accepts cannot exceed a certain proportion of its collateral. When the user's task is successfully completed and verified by the network, other network participants will recognize the reduction in the total value of the service provider's current tasks, allowing it to accept new tasks.
Executing Validators
Execution validators play a key role in verifying whether the user's intention is successfully executed. These validators must pledge a large amount of tokens in the network as collateral. By continuously participating in verification tasks, execution validators are able to earn token rewards. If they fail to provide verification results in a timely manner or submit incorrect verification results, they will face penalties. Their role is critical to maintaining the integrity and accuracy of network operations.
Matcher
Matchers are advanced execution validators with additional responsibilities. In addition to verifying execution results, matchers are also responsible for pairing and matching users with suitable service providers. Due to this dual responsibility, matchers need to stake more assets in the network.
dappOS workflow
Phase 1: Opponent Matching
When a user defines their intent, they can query any matcher in the network. The matcher returns execution quotes from associated service providers based on the intent specified by the user. Once the user selects the best quote, the intent transaction is complete. The user then simply monitors the successful execution of the task; if the task fails, they are compensated.
To facilitate users, dappOS has developed a series of intention task frameworks. When users interact with dappOS's cooperative infrastructure or dApps, intentions are automatically generated through these frameworks. Users can view offers from different service providers in dApps and choose the most attractive option.
Phase 2: Execution
After the intent transaction is determined, the service provider will receive the resources (C) provided by the user for the intent and will be responsible for completing the results (X) expected by the user in the intent.
The dappOS Intent Execution Network does not focus on how service providers complete tasks, it only focuses on whether the results are successfully achieved. Unlike many intent-related projects that are limited to on-chain solutions, dappOS allows service providers to choose a wider range of solutions, and this flexibility may provide better choices for users.
Phase 3: Verification
Service providers can proactively report the completion of tasks. If they do not report, the execution verifier will verify the successful execution of the intent after a specified time set by the intent.
If the task is detected as failed, the execution validator can challenge the network. All execution validators will vote to reach a consensus based on the Delegated Proof of Stake (DPOS) mechanism. If the consensus determines that the intended task failed, the service provider's collateral will be used to compensate the user and reward the challenger. If the consensus confirms that the intended task was successfully executed, the challenger will be punished.
If the task is successful, that is, no one objects to the result, the corresponding task value of the service provider will be released.
Through these stages, dappOS ensures a seamless, efficient, and user-centric intent execution process. The structured workflow not only simplifies user interaction, but also maintains the integrity and reliability of the network.
Summarize
The intent track aims to improve the user experience of web3, thereby opening the "1995 moment" of web3 and introducing massive adoption. The intent track is also a popular track for VC investment in the past year, and many projects have also aligned their projects with the concept of intent.
However, the intention track is still in its infancy. Most of the projects in the track have not yet launched a complete product, and the business model is not very clear. Most of the products and mechanisms of the dappOS written in this article have not yet been launched, and there is a lot of uncertainty in the future development of the track and the project.
3. Macro data review and key data release nodes next week
Last week, most global stock indices fell, with France's CAC 40 down 3.84% and Germany's DAX down 3.3%; the S&P 500 fell 4.25%, the Nasdaq fell 6.25% and the Dow Jones fell 2.93%; in the Asia-Pacific market, the Hang Seng Index fell 1.97%, India's SENSEX 30 rose 0.01%, the Nikkei 225 fell 5.73% and the South Korean Composite Index fell 5.11%.
In terms of U.S. stocks, the Dow Jones Industrial Average and the S&P 500 both recorded their biggest weekly declines since March 2023, while the Nasdaq index recorded its biggest weekly decline since January 2022.
(Source: https://cn.investing.com/)
Last Friday, the United States released August non-farm payrolls data, with the public number of 142,000, lower than the expected 165,000, and the previous value was significantly revised down. Although the number of manufacturing jobs has dropped significantly, employment in the service industry and government departments has rebounded, but the overall trend of new non-farm jobs has slowed down significantly, and data quality issues still exist.
Federal Reserve Board Governor Waller said that given the continued progress on inflation and a cooling labor market, it is time to lower the target range for the federal funds rate.
The cryptocurrency market continued its downward trend, with Bitcoin falling 4.24% and Ethereum falling 5.29% in a single week.
Important macro data nodes next week (September 9-September 13) include:
September 11: The annual rate of the US unadjusted CPI in August was 2.90% in the previous month and 2.60% in the expected rate.
September 12: U.S. initial jobless claims for the week ending September 7, U.S. PPI for August;
September 13: The preliminary value of the University of Michigan Consumer Confidence Index for September, the preliminary value of the one-year inflation rate expectations, and the US Import Price Index for August.
4. Industry data analysis
1. Overall market performance
1.1. Spot BTC+ETH ETF
Last week, BTC and ETH spot ETFs continued to be affected by the market's risk aversion due to concerns about the US economic recession. Following the US stock market, funds fled in sync, with a single-week ETF net outflow of nearly $8 billion, setting a record high since mid-March this year. This also reflects to a certain extent that in the current battle for cyclical dominance in the crypto market, traditional institutions have taken the initiative. In other words, the future trend of cryptocurrencies will be highly positively correlated with the trend of risky assets such as US stocks.
From Figure 2, we can see that the institution that sold a large amount of BTC last week was Fidelity, one of the traditional giants that entered the market the latest. Unlike Grayscale, ARK and other old-fashioned crypto investment institutions, Fidelity’s cost of acquiring BTC is relatively high and its current profit is relatively low. In order to prevent the price of BTC from falling to its cost price, it has to sell BTC that is still making a small profit.
But the good news is that with the start of the interest rate cut cycle, the bottom of the crypto market will gradually become clear. The expectation of a rate cut in September has been fully digested by the market and reflected in the trend. The extent of the rate cut in the next three months will be the decisive factor in determining the direction of the market. Judging from the signal given by the significant cooling of the job market in August, inflation has been continuously curbed, so a rate cut is a natural thing.
1.2. Spot BTC vs ETH price trend
From the price trend, ETH still maintains a positive correlation of nearly 100% with BTC, but from the morphological point of view, the price of ETH has fallen below the low point in early August, but the price of BTC is still above the bottom range. Therefore, from the first week of September, ETH's resistance to decline is significantly weaker than BTC, and both assets have the probability of continuing to bottom out. Therefore, investors should focus on the intensity of the second bottoming out this week and do a good job of risk control.
1.3. Fear & Greed Index
Over the past week, the market has continued to be in a panic mood, but it is still some distance away from the extreme panic index. Therefore, the current market situation can be defined as a deep correction phase rather than a deep bear phase brought about by the "extreme panic index".
2. Public chain data
2.1. Layer 1 Summary
The overall TVL of L1 public chains is still weak this week, but with the launch of AUSD, Avalanche and Sui became the only two protocols with net TVL growth in the top 10 of the week. Sui announced that its decentralized lending protocol Scallop will launch two user incentive plans. After the veSCA airdrop event, TVL rose by more than 10%, which indirectly proved that the growth potential of Sui ecology is promising.
2.2. Layer 2 Summary
In terms of L2, TVL has fallen by more than 5% in the past week. Among them, Blast has gradually declined after losing its incentive income advantage, and the locked position has fallen by more than 10% again. However, Blast recently announced that it will launch a 10-week Mobile Big Bang Bootcamp from October 14 to December 20, 2024, and will provide selected development teams with US$250,000 in funding support, support from the Blast Foundation, and 1 million Blast Gold. I wonder if this move can effectively improve the current poor situation.
Except for Starknet of the ZK Stark system, the other nine L2 protocols were affected by the overall market and their TVL fell by an average of more than 7%, further reflecting the sluggish activities on the L2 chain.
2.3. RWA Summary
This week, MAKER's RWA TVL suffered a severe setback, which can be attributed to the "centralized" strategy of stablecoins after its product upgrade. The protocol abandoned its moat of decentralized stablecoins and embraced regulatory compliance, which disappointed crypto users. Coupled with the downward trend in bond yields caused by macro factors, RWA asset returns no longer have a clear advantage, which will be particularly evident in the upcoming interest rate cut cycle.
2.4. Restaking Summary
The TVL of the Restaking sector has dropped significantly this week, which is attributed to the outflow of a considerable amount of ETH and xETH from the leading protocol Eigenlayer. However, compared with the overall DeFi risk-free rate of return in the industry, there is no sustainable protocol that is higher than Eigenlayer, so capital repatriation is still an inevitable trend in the future.
2.5. Liquidity Restaking Summary
This week, the LRT sector as a whole tended to be weak. The TVLs of the top ten protocols, including ether.fi and puffer, all suffered varying degrees of unpledging and capital outflows. However, given that the current RWA asset returns also have downward expectations, the decline in the TVL of the LR sector is not obvious. In the future, while the TVL of the RWA protocol, which relies on government bonds as the main source of income, continues to decline, the LR sector will most likely rebound.
V. Regulatory policies
During the week, countries around the world continued to steadily advance the improvement of regulatory policies for the crypto industry, continuously strengthening regulatory measures from legislation to law enforcement, and striving to provide solid legal guarantees for the long-term development of the industry.
● Qatar
The Qatar Financial Center (QFC) recently released a comprehensive framework for the regulation and creation of digital assets. The framework includes the tokenization process and the legal recognition of the ownership, custody arrangements, transfers and exchanges of tokens and underlying assets. In addition, the framework also provides for the legal recognition of smart contracts. Similar to the free economic zones in the UAE, QFC has a legal, regulatory, tax and business framework independent of Qatar, allowing foreign investment to hold 100% of the equity and allowing full repatriation of profits.
● Japan
Japan's financial regulator is considering classifying cryptocurrencies as financial assets for taxation. The Financial Services Agency (FSA) of Japan said in a review of tax reform documents that it is necessary to explore whether crypto assets should be considered as financial assets for public investment. Currently, cryptocurrency profits are taxed as income, with a tax rate of up to 45% for income over 4 million yen (about $276,000), while capital gains on securities such as stocks are taxed at a flat rate of 20%. This reform may reduce the tax burden on some cryptocurrency investors.
● South Korea
The Financial Supervisory Service (FSS) of South Korea recently announced that it will conduct the first inspection of virtual asset service providers, which is the first action since the implementation of the Virtual Asset User Protection Act in July. The inspection focuses on compliance with regulations, user protection systems, internal control mechanisms, and unfair trade supervision. For illegal acts, the FSS said it will impose strict sanctions to maintain market order, while encouraging companies to strengthen self-regulation.
