Crypto Market Weekly: Decentralized Finance Sector Valuation Reconstruction, Zone Rotation Evident

Market Overview

The main trend of the market

• The market sentiment index has fallen from 91% to 53%. Although it remains in the greed zone, BTC maintains high volatility while altcoins are generally under pressure, indicating an increase in market differentiation.
• The market capitalization of USDT and USDC both grew (by +2.91% and +3.23% respectively), and the total TVL of DeFi 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 DEX trading volume has hit a new high for 2024 (63 billion USD), demonstrating strong development momentum.
• The Meme coin market has returned to the market's view, performing actively amid market fluctuations, bringing new liquidity and user growth points to the market.
• DEX projects have received the highest attention, while sectors such as AI and GameFi are showing weak performance, reflecting that market hotspots are concentrating on infrastructure and liquidity zones.
• It is advised that investors remain cautious, focusing on opportunities in re-staking projects and the DEX zone, while closely monitoring the market fluctuations that may arise from the Federal Reserve's interest rate meeting next week.

Market Sentiment Index Analysis

• The market sentiment index has dropped from 91% last week to 53%, still remaining in the bullish zone.
• Altcoins performed weaker than the benchmark index this week, showing a fluctuating 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 forced liquidations of about $2 billion, with long positions significantly deleveraging. 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 the overall market trend

• The crypto market has been in a wide-ranging fluctuation trend this week, with the sentiment index still in the bullish phase.
• Decentralized Finance related encryption projects 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 starting to actively participate in on-chain investment activities.
• This week, the Meme zone has returned to the spotlight and has begun to attract market attention.

Hot Zone

DEX

This week, due to the overall price volatility in the market, many profit opportunities have been created for investors. On-chain investors are increasingly using DEX for trading. As on-chain funds and users continue to enter the DEX zone, it has driven the growth trend of DEX projects this week.

On-chain data of DEX:

• TVL: The TVL of DEX projects in the DEX zone has risen rapidly this week, increasing 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.

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

The DEX zone is showing a clear trend of upgrading its business model. 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 the fact that the protocol is based on its own chain architecture, achieving vertical integration through functional aggregation to create 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, and the reconstruction of track value is currently underway.

SUI

The Sui ecosystem has been a hot topic of discussion in the market this week, with the price of SUI rising by 7.8%, outperforming BTC and ETH. The performance of DeFi projects within the Sui ecosystem has been outstanding this week.

Data of DeFi projects on Sui chain:

• TVL: Sui's TVL has risen rapidly this week, increasing from last week's 1.598b to the current 1.793b, with an increase of 12.88%. It can be seen 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, the ability to achieve growth amidst the volatile market conditions this week indicates that the Sui chain has a certain appeal in 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 DEX on the Sui chain has exceeded $35 billion, with an average daily trading volume of $466 million, indicating that the DEX on the Sui chain is very active.

• Decentralized Finance项目TVL增量：在Sui生态中TVL排名前三的项目分别为NAVI Protocol、Suilend和Aftermath Finance，分别属于借贷和DEX zone，在本周TVL增速分别是1.14%、17.22%和1.72%。可以看出虽然在震荡趋势中，但是Sui生态中的资金在不断的进入Decentralized Finance赛道的项目。

To determine whether a public chain is favored by the market, the most direct judgment criterion is the fluctuation of 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 drives the growth of APY for its on-chain DeFi projects. At the same time, there are significant fluctuations in the overall market, creating profit opportunities, which attracts a large number of on-chain users to participate and promotes 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 smaller TVL, with a standard of over $30 million):

| 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):

• Project Introduction: Synthetix is a decentralized synthetic asset protocol built 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 intends to charge some integration fees to boost the revenue of V3 LP. Additionally, Synthetix announced this week the completion of the acquisition of the leveraged token platform TLX, aiming to integrate TLX's leveraged token features, drive the launch through improved parameters and redeployment of contracts, and simultaneously introduce a leveraged token incentive program.

Babylon (not issued):

• Project Introduction: The Babylon project is designed to enhance 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 dilemma faced by Bitcoin holders between the pursuit of asset security and participation in high-return projects.

• Latest Developments: Although the market price fluctuated significantly this week, BTC performed very strongly, maintaining a high level. Additionally, users are generally optimistic about BTC's future development, which further strengthens their resolve to hold while seeking to liberate the liquidity of their BTC holdings, leading to more choices of income-generating projects based on BTC. Moreover, this week, a trading platform announced that users can directly stake BTC from their accounts to earn returns on Babylon, bringing significant new capital to Babylon. During the event period, users participating in the event are offered up to a 12% point boost, encouraging a large number of users to participate.

Usual Money（USUAL）：

• Project Introduction: Usual Money is a stablecoin project supported by a certain trading platform, aimed at providing 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 conducted 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%, while 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):

• Project Introduction: BounceBit is a re-staking underlying layer on the Bitcoin ecosystem. In design, it works deeply with a certain trading platform to architect high-yield CeDeFi components; additionally, it builds the BounceBit Chain itself to create specific use cases for Restaking.

• Latest Developments: Recently, BounceBit has increased the staking rates for various tokens, with the 30-day annualized return for USDT reaching 54.25%, BTC at 24.55%, BNB at 37.13%, and ETH at 37.7%, thereby attracting a large number of users to invest their assets in BounceBit for staking. At the same time, this week BounceBit has partnered with Ondo to introduce tokenized RWA into BounceBit, starting to enter the RWA zone.

Equilibria (EQB):

• Project Introduction: Equilibria is a machine gun pool project aimed at generating high returns for users. It utilizes the yield enhancement model of veToken adopted by Pendle, providing higher yields for LPs through the tokenized version of vePENDLE, ePENDLE, and offering 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 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).

Overall performance of the zone

• The market capitalization of stablecoins is steadily increasing: USDT has grown from 141 billion USD last week to 145.1 billion USD, an increase of 2.91%, while USDC has risen 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 non-US markets, and USDC, which is primarily in the US market, have experienced growth, indicating that the entire market continues to see a sustained influx of capital.

• 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 Decentralized Finance projects are increasing due to the rising value of encryption assets. Returning to Decentralized Finance will be a very good choice.

• Financial Situation: 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, and has sustained an upward trend for nearly two months, proving that funds are continuously entering DeFi projects.

in-depth analysis

Driving force for the rise:

The core driving factors of this round of increase can be summarized as follows: the market enters a bull market cycle, driving the rise in liquidity demand, which in turn pushes up the basic lending rate level, amplifying the profit space of arbitrage cycle strategies in Decentralized Finance protocols. Specifically:

• Market Environment: Bull market cycle brings overall liquidity demand increase
• Interest rate side: The base lending rate has increased, reflecting the market's pricing expectations for funds.
• Yield side: The yield rate of the circular arbitrage strategy has expanded, and the protocol's endogenous yield has significantly improved.

This conduction mechanism strengthens the intrinsic value support of the Decentralized Finance zone, forming a positive growth momentum.

Other zone performance

public chain

The top 5 public chains in terms of TVL growth over the past week (excluding public chains with smaller TVL):

| Project Name | Increase in the Last Seven Days