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During the double festival period, the crypto market is weak, and institutional funds getting on board will inject momentum into the market for Q1 next year.
Crypto Market Weekly: The market is weak during the dual festivals, and Q1 next year may迎来pump行情
Market Overview
This week, the crypto market is showing a downward trend due to the impact of the Christmas holiday. Although the market sentiment index has slightly risen from 7% to 10%, it remains in the extreme fear zone. It is worth noting that despite the overall market weakness, USDC, which is primarily based in the US market, has still achieved a growth of 1.91%, indicating that institutional funds continue to enter the market, injecting some confidence into it.
In terms of the DeFi ecosystem, this week the TVL slightly decreased by 0.37% to $52.7 billion, but projects like the machine gun pool and other stablecoin yield projects performed remarkably. The total supply of stablecoins continues to grow, indicating that despite the market correction, the foundational liquidity is still flowing in, and stable yield projects like the machine gun pool are in high demand.
The AI Agent track continues to receive high attention, with a total scale reaching 10.9 billion USD. In particular, the aipool model combined with TEE technology has become a new market focus and is expected to become a new type of asset issuance method following "inscription", reflecting the development trend of deep integration of AI and blockchain technology.
Meme coins have been adversely affected by holidays and the overall market decline, performing poorly this week. Investor participation and capital inflow have significantly decreased, and market interest has temporarily shifted to other sectors, showcasing the high volatility characteristics of this sector.
The public chain sector shows strong resistance to decline. Stacks has achieved an important milestone with sBTC, BOB is advancing the development of BitVM Bridge, and Taiko has launched a new round of ecological plans, indicating that major public chains are continuously making efforts in technological innovation and ecological construction.
Looking ahead, the market is expected to continue its sluggish trend during the New Year's holiday. It is recommended that investors maintain a defensive allocation, increasing the proportion of head assets, while moderately participating in high-yield machine gun pool projects. In the long term, the market generally anticipates a pump in the first quarter of 2025, and AI Agent and DeFi machine gun pool projects are worth paying special attention to.
Market Sentiment Index Analysis
The market sentiment index has risen from 7% last week to 10%, remaining in the extreme fear zone. Altcoins have underperformed the benchmark index this week, showing a significant downtrend. The Christmas holiday has led to a sharp decline in liquidity, increasing market price volatility and causing rapid rises and falls. 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 market trends. When altcoins are in the extreme fear zone, the market is often at a stage bottom, ready for a potential upward reversal at any time.
Overview of Overall Market Trends
The crypto market has been in a downtrend this week, with the sentiment index still in extreme fear.
DeFi-related encryption projects have performed prominently, showing the market's continued focus on improving basic yields.
The AI Agent track project has seen high public sentiment this week, indicating that investors are actively looking for the next market breakout point.
Hot Tracks
AI Agent
This week, the overall market is in a downtrend, with all sectors experiencing a decline. Although most tokens in the AI Agent sector also saw a drop in price this week, it remains the most discussed topic in the market. The focus of discussion this week is on the development of aipool, an AI Agent + TEE model, in the future crypto market and its impact on DeFi.
One of the boosters for the periodic large rise in the crypto market is the new asset issuance methods. For example, ICOs, IEOs, INOs, IDOs, and inscriptions have all rapidly propelled market development and price increases. With AI and encryption quickly merging, aipool has become a highly popular asset issuance method at present, and it is also a continuation of "money printing FI" in early 2024. If the aipool method is widely accepted by the market, it may soon usher in a wave of small-scale asset issuance frenzy driven by the aipool model, making it worth paying close attention to such projects.
The top five AI Agent projects by market capitalization:
DeFi track
TVL rise ranking
In the past week, the top 5 projects by TVL rise ( excluding smaller projects with a standard of over 30 million USD ):
Resolv( has not issued tokens)( Recommendation Index:⭐⭐⭐):
USDX Money( Unissued Coin ) Recommended Index:⭐⭐⭐(:
Usual)USUAL()Recommendation Index:⭐⭐⭐⭐⭐(:
Hashnote) has not issued tokens () recommendation index:⭐⭐(:
Spectra)SPECTRA()Recommendation Index:⭐⭐⭐(:
In summary, this week's projects with rapid TVL growth are mainly concentrated in the stablecoin yield sector ) machine gun pool (.
)# Overall performance of the track
The market value of stablecoins is steadily growing: USDT decreased from $145.1 billion last week to $144.7 billion, a drop of 0.27%. USDC increased from $42.1 billion to $42.9 billion, a rise of 1.91%. Although the market fell this week, USDC, which is primarily based in the U.S. market, still grew, indicating that major funds continue to enter the market.
Liquidity is gradually increasing: The risk-free arbitrage rates in traditional markets continue to decline with interest rate cuts, while the arbitrage rates of on-chain DeFi projects have increased due to the rise in the value of encryption assets, making a return to DeFi a good choice.
Funding situation: The TVL of DeFi projects has decreased from $52.9 billion to $52.7 billion, marking a negative growth for two consecutive weeks, with a decline of 0.37%. This is mainly due to the Christmas holiday in Western markets, resulting in a decrease in token trading volume and on-chain activities. The New Year's holiday next week is expected to show no significant changes. It is recommended to pay close attention to the overall TVL changes in January and whether the downtrend continues.
![The market is weak during the Double Festival period, and Q1 next year may welcome a pump market | Frontier Lab Crypto Market Weekly Report]###https://img-cdn.gateio.im/webp-social/moments-51965377ad7fc1e885518a59f44b637c.webp(
)# In-depth analysis
pump driving force: The core driving factors of this round of rise can be summarized as follows: the recent market decline has led to a decrease in the APY of various DeFi protocols, while stablecoin yield projects have boosted their yields through token/points rewards, giving machine gun pool projects a significant advantage in APY. Specifically:
This mechanism strengthens the value support of stablecoin yield projects, forming a virtuous growth momentum.
Potential risks: Due to the recent pump in the market, investors are paying more attention to yield and borrowing leverage, neglecting the risk of decline. This week's Christmas holiday has caused a sharp reduction in liquidity, and the market's selling pressure lacks sufficient liquidity support, leading to continuous price drops and triggering long contract liquidations, resulting in losses for investors. The risk of cascading liquidations has increased, which may further lower prices and liquidate more assets.
Other tracks performance
public chain
The top 5 public chains by TVL rise in the past week ### did not include smaller public chains (:
Stacks: This week, 922 BTC were transferred to the Stacks network, completing the first phase of the sBTC deposit cap at 1000 BTC. 35% of sBTC is generating returns in the Zest Protocol. The ALEX community voted to allocate 12 million ALEX tokens for the Surge plan. L1/L2 asset exchange functionality has been achieved through Bitflow Finance and the AI console. The "Stackies" community reward program has been launched to incentivize developer contributions.
BOB: Collaborated with Fiamma Labs to develop and release a prototype of the BitVM Bridge based on zero-knowledge technology, with plans to test it online in early 2025. Collaborated with Lombard Finance to deploy on the BOB chain. Preliminary discussions with Aave to introduce the protocol. Launched a 6-week DeFi incentive campaign, incentivizing LST holders to participate through Babylon Points. Conducted multiple community education tasks and Spaces events.
Taiko: Launching the Trailblazers Season 3 plan with a reward pool of 6 million TAIKO tokens. Introducing the Liquidity Royale event to provide a reward of 12,000 TAIKO tokens for the top 100 liquidity providers. The number of on-chain ecological projects has increased to 130, with Symmetric added as an important DEX partner. Hosting the first community meetup in Turkey with ITU Blockchain and Node 101. Strengthening community building through holiday giveaways and meme competitions.
Cardano: Key points on slashing mechanism