Crypto Market Weekly Report: Decentralized Finance Sector Valuation Restructuring, Zone Rotation Emerging

Market Overview

The main trend of the market

• The market sentiment index has dropped from 91% to 53%. Although it is still in the greed zone, BTC maintains high-level fluctuations while altcoins are generally under pressure, indicating an increasing market divergence.
• The market capitalization of USDT and USDC has both increased, with respective gains of +2.91% and +3.23%, (. The total TVL in Decentralized Finance continues to rise to $54.1 billion, indicating that the overall market is still attracting new funds.
• The Decentralized Finance zone leads the market with a weekly return rate of 16.47%, and the DEX trading volume has reached a new high of 630 billion in 2024, showing strong development momentum.
• The Meme coin zone has returned to the market spotlight, performing actively amid market fluctuations and bringing new liquidity and user growth points to the crypto market.
• DEX projects receive the highest attention, while artificial intelligence, GameFi, and other zones perform weakly, reflecting that market hotspots are concentrating on the infrastructure and liquidity zones.
• It is advised that investors remain cautious, focusing on opportunities in restaking projects and the DEX zone, while closely monitoring the market fluctuations that may arise from next week's Federal Reserve meeting.

) Market Sentiment Index Analysis

• The market sentiment index has fallen from 91% last week to 53%, still within the bullish zone.
• Altcoins performed worse than the benchmark index this week, showing a volatile downward trend. After a decline in the first half of the week, most assets failed to recover lost ground. Due to leveraged positions, the market experienced approximately $2 billion in forced liquidations, significantly deleveraging long positions. 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 price movements.

Overview of overall market trends

• The crypto market has been in a wide-ranging fluctuation trend this week, and the sentiment index remains in the bullish phase.
• DeFi related encryption projects have performed outstandingly, showing the market's continued focus on improving base returns.
• DEX projects performed well this week, indicating that on-chain investors are beginning to actively participate in on-chain investment activities.
• This week, the Meme zone has returned to the spotlight and is starting to attract the market's attention.

Hot Zone

( DEX

This week, due to significant overall price fluctuations in the market, many profit opportunities have been created for investors. On-chain investors are actively trading using DEX, and with on-chain funds and users continuously entering the DEX zone, it has driven the growth trend of DEX projects this week.

)# On-chain data of DEX

The most intuitive data to observe for DEX is the TVL and trading volume, as these two indicators can directly reflect the state of the DEX zone.

• TVL: The TVL of DEX zone projects has increased rapidly this week, rising from last week's 25.22B to the current 26.58B, a growth rate of 5.39%. It can be seen that funds are actively entering DEX projects.

• Weekly trading volume of DEX: The trading volume of DEX reached its highest level in mid-2024 this week, reaching 63 billion USD, with a trading volume of 7.58 billion USD in the last 24 hours, indicating a surge in trading volume in the DEX zone.

The DEX zone is showing a clear trend of business model upgrading. Leading protocols represented by Hyperliquid and dYdX are undergoing a strategic transformation from a single trading function to a comprehensive financial infrastructure. This evolutionary path is reflected in: protocols based on their own chain architecture, achieving vertical integration through functional aggregation, and creating a one-stop Decentralized Finance service ecosystem. Such architectural innovation signifies that the DEX track is evolving from a single trading level to an all-encompassing financial infrastructure direction, and the reconstruction of track value is underway.

![Reconstructing Valuation in the DeFi Zone, Rotation of Zones Evident｜Frontier Lab Crypto Market Weekly Report]###https://img-cdn.gateio.im/webp-social/moments-b30b5d38b44bf527742aea9a0a7119f6.webp###

SUI

The Sui ecosystem has been highly discussed in the market this week, with the SUI price rising by 7.8%, outperforming BTC and ETH. The DeFi projects within the Sui ecosystem have shown excellent growth performance this week.

(# Sui chain Decentralized Finance project data

• TVL: The TVL of Sui has risen rapidly this week, increasing from 1.598b last week to 1.793b now, a growth rate of 12.88%. It can be seen that on-chain funds are actively entering the Sui zone.

• Accounts: The total number of users on the Sui chain has reached 66,543,317, an increase of 2,184,755 from last week's 64,358,562, reflecting a growth rate of 3.39%. Although the growth rate may seem small, the ability to achieve an increase amidst the volatile market this week indicates that the Sui chain has a certain capacity to attract traffic.

• DEX trading volume: The main DEXs on the Sui chain are: Cetus, Aftermath Finance, and BlueMove DEX. This week, the total trading volume on the Sui chain's DEX has surpassed 35 billion USD, with an average daily trading volume of 466 million USD, indicating that the DEX on the Sui chain is very active.

• DeFi project TVL increment: The top three projects in TVL ranking within the Sui zone are NAVI Protocol, Suilend, and Aftermath Finance, which belong to the lending and DEX tracks. This week, their TVL growth rates are 1.14%, 17.22%, and 1.72%, respectively. It can be seen that although there is a fluctuating trend, funds within the Sui zone are continuously flowing into projects in the Decentralized Finance space.

To determine whether a public chain is favored by the market, the most direct criterion is the fluctuation in its TVL. Based on the above data, we can see that the Sui chain is currently maintaining rapid development. Due to the SUI price being stronger than the market, the underlying assets of the Sui ecosystem are continuously rising, which in turn drives the growth of the APY of its on-chain DeFi projects. Meanwhile, the overall market conditions are experiencing significant fluctuations, presenting profit opportunities, which has attracted a large number of on-chain users to participate, promoting the development of the entire Sui ecosystem.

Decentralized Finance zone

) TVL Growth Ranking

The top 5 projects by TVL growth in the market over the past week, excluding projects with a small TVL of over 30 million USD, are ###:

| Project Name | Weekly Growth Rate | TVL###million### | |---------|---------|--------------| | Synthetix | 87.69% | 576.82 | | Babylon | 67.32% | 3782.36 | | Usual Money | 53.61% | 833.76 | | BounceBit | 50.31% | 664.98 | | Equilibria | 40.27% | 281.03 |

(# Synthetix)SNX(:)Recommendation Index:⭐️⭐️⭐️⭐️###

• Project Introduction: Synthetix is a decentralized synthetic asset protocol based on Ethereum, aimed at providing on-chain exposure to real-world assets through blockchain technology. The core functionality of Synthetix includes allowing users to mint synthetic assets by collateralizing their SNX tokens.

• Latest developments: This week, Synthetix increased the APY for LP users by implementing SCCP-373, raising the trading fee share for V3 LP from 40% to 60%. At the same time, Synthetix Treasury plans to charge some integrator fees to increase the revenue for V3 LP. Additionally, Synthetix announced this week the completion of the acquisition of the leveraged token platform TLX, which will integrate TLX's leveraged token features, drive the launch through parameter improvements and contract redeployment, and introduce a leveraged token incentive program.

(# Babylon) Not Issued Token (: ) Recommendation Index: ⭐️⭐️⭐️⭐️⭐️###

• Project Introduction: The Babylon project is an initiative aimed at enhancing the security of other proof-of-stake blockchains by leveraging the security of Bitcoin. The core idea is to activate idle Bitcoin assets through a trustless staking mechanism, addressing the contradiction between Bitcoin holders' pursuit of asset security and participation in high-return projects.

• Latest developments: Although the market price has been quite volatile this week, BTC's performance has been very strong, remaining at a high level. Additionally, users are generally optimistic about BTC's future development, so they are more determined to hold while also wanting to unlock the liquidity of their BTC holdings, leading to more choices for income-generating projects based on BTC. Moreover, this week a trading platform announced that users can directly stake BTC from their accounts on Babylon to earn returns, bringing significant new funds to Babylon. During the promotional period, users participating in the event are offered up to a 12% points boost, which has incentivized a large number of users to participate.

(# Usual Money)USUAL(:)Recommended Index:⭐️⭐️⭐️###

• Project Introduction: Usual Money is a stablecoin project supported by a certain exchange platform, aimed at providing a new stablecoin solution through a decentralized approach. The core mechanism of the project includes three main tokens: the stablecoin USD0, the bond product USD0++, and the governance token USUAL.

• Latest developments: Recently, Usual Money underwent a Checker upgrade. After the upgrade, the annualized yield for holders of the bond product USD0++ reached 48%. The average APY for USD0/USD0++ in Curve is 54%, and the average annualized return for USD0/USDC is 52%. At the same time, the minting volume of USUAL has been reduced by 17%, increasing the price of USUAL. This has attracted many users to participate in Usual Money to obtain high annual arbitrage returns.

(# BounceBit)BB(:) Recommendation Index: ⭐️⭐️⭐️⭐️###

• Project Introduction: BounceBit is a re-staking base layer on the Bitcoin ecosystem. Designed in collaboration with a certain trading platform, it structures high-yield CeDeFi components; additionally, it builds the BounceBit Chain to create specific use cases for Restaking.

• Latest developments: Recently, BounceBit has increased the staking rates for various tokens, with the annualized return for USDT reaching 54.25% over 30 days, BTC at 24.55%, BNB at 37.13%, and ETH at 37.7%, attracting a large number of users to stake their assets in BounceBit. Meanwhile, this week, BounceBit has partnered with Ondo to introduce tokenized RWA into BounceBit, marking its entry into the RWA zone.

(# Equilibria)EQB(:)Recommended Index:⭐️⭐️⭐️###

• Project Introduction: Equilibria is a gun pool project aimed at creating high returns for users. Utilizing the veToken-enhanced yield model adopted by Pendle, it offers higher returns to LPs through the tokenized version of vePENDLE, ePENDLE, and provides additional rewards to PENDLE holders.

• Latest developments: This week, Equilibria strengthened its collaboration with Curve and launched the first enhanced pool - scrvUSD pool, aimed at increasing user returns. Subsequently, enhanced pools for SolvBTC, cmETH, and ePENDLE were added, raising users' APY to as high as 59%, thereby attracting a large number of users to participate in arbitrage.

In summary, we can see that the projects with rapid TVL growth this week are mainly concentrated in the stablecoin yield zone ( gun pool ).

( overall performance of the zone

• The market capitalization of stablecoins is steadily growing: USDT increased from 141 billion USD last week to 145.1 billion USD, an increase of 2.91%. USDC increased from 40.2 billion USD last week to 41.5 billion USD, an increase of 3.23%. It can be seen that this week both USDT, which is primarily in the non-US market, and USDC, which is primarily in the US market, have shown growth, indicating that the entire market continues to maintain a steady influx of funds.

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

• Fund Situation: The TVL of DeFi projects has risen from 53.2 billion dollars last week to 54.1 billion dollars now, with new funds reaching 1.69%. This week continues to maintain positive growth, and it has sustained an upward trend for nearly two months, proving that funds continue to enter into DeFi projects.

) In-depth Analysis

Upward driving force:

The core driving factors of this round of increase can be summarized as follows: the market entering a bull market cycle drives the demand for liquidity to rise, which in turn pushes up the level of base lending rates, amplifying the profit potential of arbitrage cycle strategies in Decentralized Finance protocols. Specifically:

• Market Zone