Crypto Market Weekly Report: DeFi Valuation Restructuring, Zone Rotation Emerges

Market Overview

The main trend of the market

• The market sentiment index has dropped from 91% to 53%, remaining in the greed zone, but BTC maintains high volatility while altcoins are generally under pressure, indicating an intensification of market differentiation.
• The market capitalization of USDT and USDC both increased (+2.91% and +3.23% respectively), and the total TVL in Decentralized Finance continued to rise to 54.1 billion USD, indicating that the overall market is still attracting new funds.
• The DeFi zone leads the market with a weekly return rate of 16.47%, and DEX trading volume has reached a new high of $63 billion in 2024, showing strong development momentum.
• The meme coin market has returned to the market spotlight, performing actively amid market fluctuations, bringing new liquidity and user growth points to the market.
• DEX projects have gained the highest attention, while sectors like artificial intelligence and game finance have shown weak performance, reflecting that market hotspots are shifting towards the infrastructure and liquidity zones.
• Investors are advised to remain cautious, focusing on re-staking projects and opportunities in the DEX zone, while closely monitoring potential market fluctuations that may arise from next week's Federal Reserve interest rate 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 targets failed to recover their losses. Due to leveraged positions, the market saw about $2 billion in forced liquidations, with significant deleveraging in 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 trends.

Overview of the overall market trend

• The crypto market has been in a wide-ranging fluctuation trend this week, and the sentiment index remains in a bullish phase.
• DeFi-related encryption projects have performed outstandingly, showing that the market continues to focus on improving basic yields.
• 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 beginning to attract market attention.

Hot Zone

DEX

This week, due to the overall price fluctuations in the market, many profitable opportunities were created for investors. On-chain investors are actively trading using DEX, and as on-chain funds and users continuously enter the DEX zone, it has driven the growth of DEX projects this week.

On-chain data of DEX

The most intuitive data to observe for DEX is its 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 risen rapidly this week, increasing from last week's 25.22B to the current 26.58B, a growth rate of 5.39%. It is evident that funds are actively entering DEX projects.

• DEX Weekly Trading Volume: The trading volume of DEX reached its highest level in mid-2024 this week, reaching a level of 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 upgrades. 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 manifested as: protocols based on their own chain architecture achieve vertical integration through functional aggregation, creating a one-stop Decentralized Finance service ecosystem. Such architectural innovations signify that the DEX track is evolving from a single trading level towards a comprehensive financial infrastructure, and the reconstruction of track value is underway.

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 outstanding growth this week.

Sui chain Decentralized Finance project data

• TVL: Sui's TVL has risen rapidly this week, increasing from last week's 1.598b to the current 1.793b, a growth rate of 12.88%. It is evident that on-chain funds are actively entering the Sui chain.

• 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, representing a growth rate of 3.39%. Although the growth rate may not seem significant, achieving this increase amid the volatile market conditions this week indicates that the Sui chain has a certain appeal for attracting traffic.

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

• DeFi project TVL growth: The top three projects by TVL in the Sui ecosystem are NAVI Protocol, Suilend, and Aftermath Finance, which belong to the lending and DEX zones, with TVL growth rates of 1.14%, 17.22%, and 1.72% respectively this week. It can be seen that although there is a fluctuating trend, funds in the Sui ecosystem are continuously entering projects in the DeFi zone.

To determine whether a public chain is favored by the market, the most direct criterion is the increase or decrease 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 overall market, the underlying assets of the Sui ecosystem are continuously rising, which drives the growth of the APY of its on-chain DeFi projects. At the same time, the overall market has significant fluctuations, creating profit opportunities, which has attracted a large number of on-chain users to participate, thus promoting the development of the entire Sui ecosystem.

Decentralized Finance zone

TVL growth ranking

The top 5 market projects by TVL growth over the past week (excluding public projects with smaller TVLs, with a standard of over 30 million USD):

| Project Name | Seven-Day 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): (Recommended 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 share of trading fees for V3 LP from 40% to 60%. Meanwhile, Synthetix Treasury plans to charge some integrator fees to increase the revenue for V3 LP. Additionally, Synthetix announced this week the completion of its acquisition of the leveraged token platform TLX, intending to integrate TLX's leveraged token features, drive the launch through improved parameters and redeployment of contracts, and simultaneously launch a leveraged token incentive program.

Babylon (Token Not Released): (Recommended Index: ⭐️⭐️⭐️⭐️⭐️)

• Project Introduction: The Babylon project aims to leverage the security of Bitcoin to enhance the security of other proof-of-stake blockchains. 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 their participation in high-yield projects.

• Latest developments: Although the market price fluctuated quite a bit this week, BTC's performance has been very strong, maintaining a high position. Additionally, users are generally optimistic about BTC's future development, which further reinforces their decision to hold while seeking to unlock the liquidity of their BTC holdings. As a result, more users are choosing yield-generating projects based on BTC. Furthermore, this week, a trading platform announced that users can directly stake BTC from their accounts on the platform to earn returns in Babylon, bringing significant new capital into Babylon. During the promotional period, users participating in the event can receive a maximum of 12% points boost, which incentivized a large number of users to participate.

Usual Money (USUAL): (Recommendation Index: ⭐️⭐️⭐️)

• Project Introduction: Usual Money is a stablecoin project supported by a certain trading platform, aiming to provide a new stablecoin solution through a decentralized approach. The core mechanism of the project includes three main tokens: stablecoin USD0, bond product USD0++, and 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 yield 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 annualized arbitrage returns.

BounceBit (BB): (Recommended Index: ⭐️⭐️⭐️⭐️)

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

• Latest Developments: Recently, BounceBit has increased the staking rates for various tokens, with a 30-day annualized yield of 54.25% for USDT, 24.55% for BTC, 37.13% for BNB, and 37.7% for ETH, attracting a large number of users to invest their assets into BounceBit for staking. 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 generating high returns for users. It utilizes the yield enhancement model adopted by Pendle through the tokenized version of vePENDLE, ePENDLE, providing higher yields for LPs and additional rewards for PENDLE holders.

• Latest Developments: This week, Equilibria strengthened its cooperation with Curve and launched the first enhanced pool - scrvUSD pool, aimed at increasing user yields. Subsequently, enhanced pools for SolvBTC, cmETH, and ePENDLE were added, raising the users' APY to a maximum of 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 (machine gun pool).

zone overall performance

• Stablecoin market capitalization steadily increased: USDT grew from 141 billion dollars last week to 145.1 billion dollars, an increase of 2.91%, while USDC grew from 40.2 billion dollars last week to 41.5 billion dollars, an increase of 3.23%. It can be seen that this week both USDT, which is mainly non-US market-based, and USDC, which is mainly US market-based, 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 declining 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 Status: The TVL of DeFi projects has risen from 53.2 billion USD last week to 54.1 billion USD now, with new funds reaching 1.69%. This week continues to maintain positive growth, showing a sustained upward trend over the past two months, proving that funds are continuously entering DeFi projects.

In-depth Analysis

Driving force of the rise:

The core driving factors of this round of increase can be summarized as the following transmission routes.