Market Overview

Overall Market Situation: This week, the cryptocurrency market showed a downward trend due to the impact of the Christmas holiday. Although the market sentiment index rose slightly from 7% to 10%, it is still in the extreme fear zone. It is worth noting that despite the overall market weakness, USDC, which is mainly based on the US market, still achieved a 1.91% growth, indicating that institutional capital is still continuously entering the market, injecting some confidence.

DeFi Ecosystem Development: The DeFi sector's TVL (Total Value Locked) decreased slightly by 0.37% to $52.7 billion this week, but projects like Vault Farms with stable coin yields performed well, and the overall supply of stable coins has been growing, indicating that despite the market correction, basic liquidity is still flowing in, and projects with stable yields are attracting attention.

AI Agent Development: The AI Agent track continues to receive high market attention, with a total scale reaching $10.9 billion. In particular, the aipool model that combines AI with TEE (Trusted Execution Environment) technology has become a new market focus, and it is expected to become a new type of asset issuance method after "Stamping", showing the trend of deep integration of AI and blockchain technology.

Meme Coin Trends: Affected by the holiday and the overall market decline, the Meme coin track performed poorly this week, with investor participation and capital inflows significantly reduced. The market's enthusiasm has temporarily shifted to other tracks, showing the high volatility of this track.

Public Chain Performance Analysis: The public chain sector has shown strong resistance to the decline. Among them, Stacks completed an important milestone for sBTC, BOB pushed forward the development of the BitVM Bridge, and Taiko launched a new round of ecological plans, indicating that major public chains are continuously making efforts in technological innovation and ecosystem building.

Future Market Outlook: Looking ahead, the market is expected to continue the sluggish trend during the New Year's holiday. Investors are advised to maintain a defensive configuration, increase the allocation of top assets, and moderately participate in high-yield Vault Farm projects. In the long run, the market generally expects that the first quarter of 2025 may usher in an upward trend, and AI Agent and DeFi Vault Farm projects are worth focusing on.

Market Sentiment Index Analysis

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

Altcoins performed weaker than the benchmark index this week, showing a significant decline. Due to the Christmas holiday, liquidity has dropped sharply, leading to increased price volatility and causing the market sentiment to not be high. Given the current market structure, Altcoins are expected to move 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 is often at a stage-wise bottom and may turn upward at any time.

Overall Market Trend Overview

· The cryptocurrency market was in a downward trend this week, and the sentiment index remained in extreme fear.

· Crypto projects related to DeFi performed outstandingly, showing that the market continues to focus on improving basic yields.

· The AI Agent track projects received high attention this week, indicating that investors are actively looking for the next market breakthrough.

Hot Tracks

AI Agent

This week, the overall market was in a downward trend, and all tracks were in a downward state. Although the prices of most tokens in the AI Agent track also fell this week, the discussion around this track was the highest in the market. This week, the market discussed a lot about the development of the aipool model, which combines AI Agent and TEE, and its impact on DeFi in the future Crypto market.

Each time the Crypto market experiences a cyclical surge, a new asset issuance method acts as a booster. For example, the previously popular ICO (Initial Coin Offering), IEO (Initial Exchange Offering), INO (Initial NFT Offering), IDO (Initial DEX Offering), and Stamping have all quickly promoted the development of the market and the rise of Crypto prices. Against the background of the rapid integration of AI and Crypto, aipool has become a relatively hot asset issuance method at the moment, and is also a continuation of the "Printing Money FI" in early 2024. If the aipool model is widely accepted by the market, there will be a small wave of asset issuance driven by this model in the near future, so we should pay attention to projects of the aipool type.

Top 5 AI Agent projects by market capitalization:

DeFi Track

TVL Growth Ranking

Top 5 projects with TVL growth in the past week (excluding projects with TVL less than $30 million), data source: Defilama

Resolv (Unissued)：(Recommendation: 3 stars)

· Project Introduction: Resolv is a Delta-neutral stablecoin project that focuses on the tokenization of market-neutral investment portfolios. This architecture is based on economically viable and fiat-independent revenue sources. This allows for the distribution of competitive returns 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 adopts has also passed security audits by multiple institutions. Resolv has performed outstandingly in ecosystem development this week, attracting $100 million in new capital inflows, with an 84% growth rate. Its USDC Vault on Euler Finance offers an APY of up to 36.36%, attracting $5.67 million in TVL. Resolv also launched a unified points system and listed wstUSR on Pendle.fi.

USDX Money (Unissued)：(Recommendation: 3 stars)

· Project Introduction: USDX Money is an emerging synthetic US dollar stablecoin protocol that aims to provide a new crypto-native stablecoin solution through a multi-chain, multi-currency strategy. The project's core goal is to build the next-generation stablecoin infrastructure and maintain the peg 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 the user experience. It also launched USDX/USDT and sUSDX/USDX liquidity pools on Curve Finance, with the ecosystem scale continuing to expand. The sUSDX reached a TVL of $170 million through a collaboration with Lista DAO. USDX Money also launched the X-Points incentive program, including content creation and angel programs, and held a special Christmas event.

Usual (USUAL)：(Recommendation: 5 stars)

· Project Introduction: Usual is a stablecoin project supported by Binance, aiming to provide a new stablecoin solution in a decentralized manner. The core mechanism includes three main tokens: the stablecoin USD0, the bond product USD0++, and the governance token USUAL.

· Latest Developments: Recently, Usual received a $10 million Series A funding led by Binance Labs and KrakenVentures. It also collaborated with the M^0 Foundation to launch a new product, UsualM. Usual has become the largest USD0/USD0++ pool on Curve Finance, with its TVL surpassing $1.5 billion, making it one of the top 5 global stablecoins. The DAO treasury has also doubled to $17 million. Usual launched a high-yield USUALx staking program offering up to 18,000% APY and initiated a community airdrop.

Hashnote (Unissued)：(Recommendation: 2 stars)

· Project Introduction: Hashnote is a solution focused on institutional cryptocurrency management, aiming to provide transparency and optimized asset management through blockchain technology. Hashnote combines digital assets and traditional finance to offer innovative yield-enhancing solutions, such as USYC.

· Latest developments: This week, Hashnote reached a strategic partnership with CoreDAO and participated in its ecosystem panel meeting, where it launched an innovative Bitcoin dual-staking model that combines BTC and Core Token, aiming to provide users with a sustainable yield solution. Additionally, the project CEO shared the new strategy at the meeting, which received over 14,000 views, indicating strong market interest in this innovative model.

Spectra (SPECTRA): (Recommendation: 2 stars)

· Project introduction: Spectra is a protocol for the tokenization of future yields. DeFi users can deposit interest-bearing tokens from other protocols for a specified future period and trade the future yields in advance. Spectra's mechanism involves placing interest-bearing tokens (IBT) or any fixed-term yield-bearing asset in a smart contract and issuing Future Yield Tokens (FYT) as a reward.

· Latest developments: This week, Spectra successfully deployed a new governance contract on the Base mainnet and launched Gauges and Incentivize pages in the Spectra App. It also optimized the multi-lock feature for veSPECTRA holders, allowing them to participate more efficiently in the Gauge voting mechanism. Additionally, Spectra completed the APW emission adjustment, with the new emission mechanism executed at a 1:20 ratio.

In summary, we can see that the projects with the fastest TVL growth this week are mainly concentrated in the stablecoin yield sector (Liquidity Pools).

Overall Sector Performance

· Steady growth in stablecoin market capitalization: USDT decreased from $145.1 billion last week to $144.7 billion, a decline of 0.27%, while USDC grew from $42.1 billion to $42.9 billion, an increase of 1.91%. Although the market has been in a downward trend this week, USDC, which is primarily focused on the US market, still saw growth, indicating that the main buying force in the market is maintaining continuous inflows.

· Increasing liquidity: The risk-free arbitrage rate in the traditional market is constantly declining due to the ongoing rate cuts, while the arbitrage rate in on-chain DeFi projects is increasing due to the appreciation of cryptocurrency assets, making a return to DeFi a very good choice.

TVL of various DeFi sectors (Data source: https://defillama.com/categories)

· Capital situation: The TVL of DeFi projects increased from $52.9 billion last week to $52.7 billion, a slight decline of 0.37% over two consecutive weeks. The main reason is that this week, the Western markets, led by the US, are in the Christmas holiday period, and both the trading volume of various tokens and on-chain activities have declined. Next week is also the New Year's holiday, so the outlook is not expected to improve significantly. Therefore, the focus should be on the overall TVL changes in the market in January, and whether the downward trend will continue.

In-depth Analysis

Drivers of the Uptrend:

The core driving factors behind this round of uptrend can be summarized as the following transmission path: Due to the recent downward trend in the market, the APYs of various DeFi protocols have declined. Stablecoin yield projects have raised their yields through token/point rewards, making the APYs of liquidity pool projects significantly more attractive from an overall market perspective.

· Market environment: Although in a bull market cycle, the market has been in a downward trend recently, causing a significant drop in the underlying interest rates.

· Interest rate end: The underlying lending rates have risen, reflecting the market's pricing expectations for capital.

· Yield end: The yields of stablecoin yield projects have expanded compared to other projects, attracting more users to participate in this transmission mechanism, strengthening the value support of stablecoin yield projects and forming a virtuous growth momentum.

Potential Risks: As the market has been in an upward trend recently, investors have focused more on yields and borrowing leverage, neglecting the risk of a downturn. Additionally, due to the Christmas holiday this week, market liquidity has sharply declined, leading to selling pressure that could not be adequately absorbed, causing prices to continue to fall. This has triggered the liquidation of long positions, increasing the risk of cascading liquidations and further price declines.

Performance of Other Sectors

Public Chains

Top 5 public chains by TVL growth in the past week (excluding chains with relatively small TVL), data source: Defilama

Stacks: This week, 922 BTC were transferred to the Stacks network, completing the first phase deposit limit of 1,000 BTC for sBTC. In DeFi applications, 35% of sBTC are generating yields on the Zest Protocol. The ALEX community also voted to allocate 12 million ALEX tokens for the Surge program. Stacks has also achieved L1/L2 asset swap functionality through Bitflow Finance and AI Console, and launched the "Stackies" community reward program to incentivize developer contributions.

BOB: This week, BOB collaborated with Fiamma Labs to develop and release a prototype of the BitVM Bridge based on zero-knowledge technology, planned for testnet launch in early 2025. BOB also partnered with Lombard Finance for protocol deployment on the BOB chain and had initial governance discussions with Aave to potentially integrate their protocol. Additionally, BOB launched a 6-week DeFi incentive program, rewarding LST holders for participation through Babylon Points.

Taiko: This week, Taiko launched Trailblazers Season 3, setting up a 6 million TAIKO token reward pool, and introduced the Liquidity Royale activity to reward the top 100 liquidity providers with 12,000 TAIKO tokens. Taiko's on-chain ecosystem has grown to 130 projects, including the addition of Symmetric as a key DEX partner. Taiko also held its first community meetup in Turkey with ITU Blockchain and Node 101, and strengthened community building through holiday giveaways and meme contests.

Cardano: This week, Cardano highlighted the technical advantages of its slashing mechanism in safeguarding user ADA assets, and launched convenient Web application development tools. It also deepened its partnership with hardware wallet provider Ledger and advanced the decentralization of community governance through the DReps (Delegate Representatives) voting model.

Sei: This week, Sei released a major technical breakthrough called "Giga", successfully scaling EVM to a processing capacity of 5 gigagas per second, a 50-fold performance improvement. Sei also launched the EVM Wrapped feature for cross-chain interoperability and held the "12 Days of Christmas" holiday event, collaborating with PythNetwork, Silo, and Nansen.

Top Gainers Overview

Top 5 token price gainers in the past week (excluding low-volume tokens and meme coins), data source: Coinmarketcap

ZEN: This week, Horizen successfully deployed the Horizen 2.0 Devnet testnet, introducing an optimized zero-knowledge (ZK) solution to reduce technical complexity and costs. Horizen also established a strategic partnership with Automata Network to advance Web3 development and gained recognition from institutional investors through Grayscale's Horizen Trust. Horizen completed the final halving of ZEN and listed the token on the Bitvavo exchange, while 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, leading to significant user growth, including 1.5 million page views and 800,000 spin-and-win interactions. Moca Network remained active in community operations, enhancing user engagement through Christmas marketing campaigns (#MocaFam) and focusing on user security education by issuing anti-fraud reminders.

Phala Network officially launched Phala 2.0 this week, integrating GPU TEE technology and Ethereum Layer 2 scaling capabilities, and partnered with NVIDIA to jointly test the efficiency of TEE on H100/H200, which reached nearly 99%. Phala Network also announced the decision to migrate the Khala chain to the Ethereum mainnet, and its TEE-as-a-Service has been adopted by projects like Flashbots. Annual data shows a significant increase in AI Agent contract executions to 4,500, with 37,650 active TEE Workers, demonstrating Phala Network's leading position in decentralized AI infrastructure.

Adventure Gold interacted with the community through a Christmas-themed marketing campaign, with its Christmas greeting tweet receiving high community engagement (27 likes, 14 retweets). Adventure Gold also collaborated with BladeGamesHQ on AI Agent-driven on-chain economics, showcasing the project's exploration in game ecology and AI technology integration.

Movement launched several innovative products based on its technology stack, including the multi-chain Puffpaw Vape (with usage data tracking and reward features), the high-definition screen Vomeus smart Vape, and the Sentimint project that allows users to mark emotions and memories on items. Movement also optimized performance through Block-STM parallelization and Rollup architecture, and expanded its on-chain DeFi scenarios through cross-chain integration with WBTC.

Meme Token Price Increase Ranking

Data source: coinmarketcap.com

This week, Meme projects were significantly impacted by the overall market downturn, as the Christmas holiday period saw reduced user participation in market trading, leading to capital outflows and decreased attention and investment in the Meme token sector.

Social Media Hotspots

Based on the top 5 daily growth data from LunarCrush and the top 5 AI scores from Scopechat, the most frequently mentioned topic this week (12.21-12.27) was L1s, with the following tokens listed (excluding small trading volume tokens and meme coins):

Data source: Lunarcrush and Scopechat

The data analysis shows that L1 projects received the highest social media attention this week. Due to the Christmas holiday period, the US-dominated market entered a vacation phase, leading to a significant decline in market liquidity. Most ordinary investors reduced on-chain investment activities and engaged in selling, resulting in a substantial market downturn. However, the declines of various public chains were relatively smaller. During a general market downturn, public chains often perform better than other sectors, as investors, in addition to buying BTC and ETH for hedging, also allocate capital to various public chains. When the downturn ends and an uptrend begins, public chains tend to rise earlier than other projects.

Overall Market Theme Overview

Data source: SoSoValue

Based on weekly returns, the SocialFi sector performed the best, while the RWA sector performed the worst.

· SocialFi Sector: The absolute leader in the SocialFi sector is still TON, accounting for 91.07% of the sector's market capitalization. This week, TON did not follow the broader market downturn and instead rose by 6.3%, contributing to the SocialFi sector's best performance. This week, Toncoin collaborated with GMX to promote the development of high-frequency DeFi trading.

· RWA Sector: In the RWA sector, OM, ONDO, and MKR account for a relatively large proportion, at 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 a larger decline compared to other sector projects, resulting in the RWA sector's worst performance this week.

Preview of Next Week's Crypto Events

Monday (December 30): The European Securities and Markets Authority (ESMA) will release the implementation of the MiCA crypto regulation.

Thursday (January 2): US weekly initial jobless claims.

Friday (January 3): The court will approve the effective start of FTX's Chapter 11 reorganization plan.

Outlook for Next Week

· Macroeconomic Factor Analysis

Next week will enter the New Year's holiday period, with few macroeconomic data releases. In previous years, during the New Year's holiday period, the market dominated by US buyers has generally continued the sluggish purchasing power seen during the Christmas period, leading to increased market volatility.

· Sector Rotation Trends

Although the current market environment for the DeFi sector is poor, investors generally expect a broad market rally in the first quarter of next year, so most investors are still unwilling to sell their tokens. At the same time, to increase their token holdings' yields, they are actively participating in yield farming projects to boost their returns. The AI sector's AI Agent track has received sustained market attention, with the market size reaching $10.9 billion. The asset issuance model based on AI Agent + TEE's "aipool" has also received widespread market attention.

· Investment Strategy Recommendations Maintain a defensive configuration, increase the allocation of top assets BTC and ETH to enhance the risk-hedging properties of the assets. At the same time, you can participate in some high-yield DeFi yield farming projects. Investors are advised to remain cautious, control positions, and manage risks carefully.