Crypto Market Weekly: DeFi Sector Valuation Restructuring, Zone Rotation Emerging

Market Overview

The main trend of the market

• The market sentiment index has dropped from 91% to 53%, still in the greed zone, but BTC maintains high-level fluctuations while altcoins are generally under pressure, indicating an intensification of market differentiation.
• The market capitalization of USDT and USDC both increased (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 reached a new high in 2024 ($63 billion), demonstrating strong development momentum.
• The Meme coin market returns to market visibility, performing actively amid market fluctuations, bringing new liquidity and user growth points to the market.
• DEX projects have received the highest attention, while artificial intelligence, game finance, and other sectors are performing poorly, reflecting that market trends are concentrating on infrastructure and liquidity zones.
• Investors are advised to remain cautious, focusing on the opportunities in re-staking projects and the DEX zone, while closely monitoring the market volatility that may arise from next week's Federal Reserve meeting.

Market Sentiment Index Analysis

• The market sentiment index has dropped from 91% last week to 53%, still remaining in 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 were unable to recover their losses. Due to leveraged positions, the market experienced forced liquidations of about $2 billion in positions, 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 market movements.

Overview of the overall market trend

• The crypto market has been in a wide-ranging fluctuation trend this week, and the sentiment index is still in the bullish phase.
• Decentralized Finance-related encryption projects have performed remarkably, showing that the market continues to focus on improving fundamental returns.
• 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 is starting to attract market attention.

Hot Zone

DEX

This week, due to the significant price fluctuations in the overall market, many profit opportunities have been created for investors. On-chain investors are actively using DEX for trading, and as on-chain funds and users continue to enter the DEX sector, 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 of DEX, as these two indicators can directly reflect the status 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 can be seen that funds are actively entering DEX projects.

• DEX Weekly Trading Volume: The trading volume of DEX has reached its highest level in mid-2024 this week, hitting $63 billion, with a trading volume of $7.58 billion 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 certain top protocols are undergoing a strategic transformation from a single trading function to a comprehensive financial infrastructure. This evolution is reflected in the fact that the protocols, based on their own chain layer 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 widely discussed in the market this week, with the price of SUI rising by 7.8%, outperforming BTC and ETH. The growth performance of DeFi projects within the Sui ecosystem has been outstanding this week.

Sui chain Decentralized Finance project data

• TVL: Sui's TVL has increased rapidly this week, rising from last week's 1.598b to the current 1.793b, an increase of 12.88%. It is evident that on-chain funds are actively flowing into 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, with a growth rate of 3.39%. Although the increase may not seem significant, achieving growth amidst this week's volatile market conditions 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 of DEXs on the Sui chain surpassed $35 billion, with an average daily trading volume of $466 million, indicating that DEXs on the Sui chain are very active.

• DeFi project TVL increment: The top three projects in the Sui ecosystem by TVL are NAVI Protocol, Suilend, and Aftermath Finance, which belong to the lending and DEX zones, with this week's TVL growth rates being 1.14%, 17.22%, and 1.72% respectively. It can be seen that even amidst 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 fluctuation in its TVL. Based on the above data, we can see that the Sui chain is currently maintaining rapid development. Due to the stronger performance of SUI compared to the market, the underlying assets of the Sui ecosystem are continuously appreciating, which in turn drives the growth of the APY of its on-chain DeFi projects. At the same time, the overall market is experiencing significant fluctuations, presenting 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 projects by TVL growth in the market over the past week (excluding projects with a smaller TVL, standard set at over $30 million)

| Project Name | 7-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): (Recommendation Index: ⭐️⭐️⭐️⭐️)

• Project Introduction: Synthetix is a decentralized synthetic asset protocol based on Ethereum, designed to provide 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 intends to charge some aggregator fees to boost the revenue for 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 by improving parameters and redeploying contracts, while launching a leveraged token incentive program.

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

• Project Introduction: The Babylon project aims 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 contradiction between Bitcoin holders' pursuit of asset security and their participation in high-yield projects.

• Latest developments: Although the market prices have been quite volatile this week, BTC's performance has been very strong, remaining at high levels. Additionally, users are generally optimistic about BTC's future development, which has led to a more determined holding of BTC while wanting to liberate the liquidity of their BTC holdings. As a result, many are choosing interest-generating projects based on BTC. Furthermore, 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 can receive a points boost of up to 12%, 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 mainstream 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 a certain DEX was 54%, and the average annualized return rate for USD0/USDC was 52%. At the same time, the minting volume of USUAL was reduced by 17%, increasing the price of USUAL. This has attracted many users to participate in Usual Money to obtain high annualized arbitrage yields.

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

• Project Introduction: BounceBit is a re-staking base layer on the Bitcoin ecosystem. It is designed in deep collaboration with a major trading platform to create high-yield CeDeFi components; additionally, it builds the BounceBit Chain to establish specific usage scenarios 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, thus attracting a large number of users to invest their assets into BounceBit for staking. At the same time, this week BounceBit has partnered with Ondo to introduce tokenized RWA into BounceBit, starting its foray into the RWA zone.

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

• Project Introduction: Equilibria is a gun pool project that aims to create high returns for users. By utilizing the yield enhancement model of veToken adopted by Pendle, it provides higher returns for LP through the tokenized version of vePENDLE, ePENDLE, and offers additional rewards for PENDLE holders.

• Latest developments: This week, Equilibria strengthened its collaboration with a certain DEX, launching 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 a maximum of 59%, thus 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

• Stablecoin market capitalization steadily grows: USDT increased from $141 billion last week to $145.1 billion, a growth rate of 2.91%, while USDC rose from $40.2 billion last week to $41.5 billion, a growth rate of 3.23%. It can be seen that this week both USDT, which is mainly non-US market, and USDC, which is primarily US market, have shown growth, indicating that the entire market is still maintaining a continuous inflow 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 Decentralized Finance projects are continuously increasing due to the rising value of encryption assets. Returning to DeFi will be a very good choice.

• Funding situation: The TVL of DeFi projects has risen from $53.2 billion last week to $54.1 billion now, with new funding reaching 1.69%. This week continues to show positive growth and maintains a sustained upward trend for nearly two months, proving that there is a constant influx of funds 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 up liquidity demand, which in turn pushes up the level of the base lending interest rate, amplifying the profit space of arbitrage cycle strategies in DeFi protocols. Specifically:

• Market Environment: The bull market cycle brings the whole