Crypto Market Sentiment Heats Up, MCP Sets New AI Benchmark | Frontier Lab Weekly Report
Market Overview
General Market Conditions
This week, the cryptocurrency market showed an upward trend, with the overall market and the majority of altcoins experiencing gains. The previously subdued market sentiment has significantly improved, with the sentiment index rising from 55% to 79%, indicating that the market has entered a bullish zone. The market capitalization of stablecoins continued the upward trend that began last week, maintaining growth this week (USDT reached $145.7 billion, USDC reached $61.9 billion, with increases of 0.62% and 2.32% respectively), suggesting increased inflows of institutional capital — primarily from the United States. This indicates that the bullish market trend has significantly boosted investor sentiment in the U.S., prompting accelerated entry into the market.
This week’s rally was mainly driven by a softening stance in the U.S. trade tariff policy towards China, former President Trump’s declaration that he does not intend to dismiss Federal Reserve Chair Jerome Powell, and the appointment of the new SEC Chairman Paul Atkins, who holds a friendly attitude towards the crypto industry. These developments contributed to the strong rebound seen in the market this week. However, uncertainties remain regarding a potential U.S. economic recession and tariff issues. Therefore, this week’s rally should be viewed as a rebound from previous oversold conditions rather than a confirmed market reversal.
Bullish Picks for Next Week: SOL, SNX
SOL: A comprehensive recovery in the Solana ecosystem, driven by the rise of meme coins, stablecoins, and decentralized exchanges, is fueling market revival.
Meme Coin Market Recovery
This week, as the market rebounded, trading volume for meme coins on the Solana network increased significantly. The number of meme coin purchases consistently exceeded the number of sales, leading to a rapid recovery in Solana’s on-chain data. This indicates that despite losses caused by the earlier meme coin craze cooling down, investor interest in meme tokens remains strong. Furthermore, after the launch of PumpSwap by
Pump.fun, daily trading volume on PumpSwap gradually increased, stabilizing between $300 million and $480 million, accounting for 9% to 19% of Solana’s DEX trading volume. This shows that the meme coin market is gradually recovering. The heightened activity in the meme market is likely to boost SOL prices in the short term.
On-Chain Stablecoin Supply Growth
The supply of stablecoins on the Solana network continues to grow rapidly, recently surpassing $12.8 billion and setting a new all-time high. This growth reflects investors’ confidence in the Solana ecosystem and the increasing demand for on-chain liquidity support. A sufficient supply of stablecoins provides crucial liquidity for financial activities on Solana, contributing to the development of its on-chain ecosystem. This liquidity not only boosts trading activity on the network but also offers investors more opportunities for trading and investment.
Growth in DEX Trading Volume on Solana
Decentralized exchanges (DEXs) on the Solana network recorded over $3.5 billion in trading volume in the past 24 hours, indicating a resurgence in on-chain activity. The supply of stablecoins is also continuing to rise, recently surpassing $18.2 billion. This reflects growing investor confidence in the Solana ecosystem and provides additional liquidity support for on-chain activities.
Solana Decentralization Policy
The Solana Foundation has introduced a new policy to enhance the level of decentralization. Under the updated delegation program, if certain validators have been eligible for Solana Foundation delegation on the mainnet for at least 18 months and have less than 1,000 SOL staked outside of the Foundation’s delegation, three of them will be removed. This policy aims to reduce dependence on Foundation delegations and encourage support for community-backed validators.
Institutional Entry and Accumulation
Canadian publicly listed investment firm SOL Strategies has issued $500 million in convertible bonds to purchase and stake SOL. Following the announcement, SOL Strategies’ stock price rose by 23.5%. The firm is looking to emulate Michael Saylor’s MicroStrategy strategy — continuously issuing convertible bonds to accumulate BTC and drive up its stock price. If SOL Strategies succeeds in this approach, it could provide substantial support and bullish momentum for SOL’s price. Additionally, a growing trend has emerged where traditional companies are beginning to increase their SOL holdings through various means.
Bullish Catalyst for a Spot SOL ETF
The application for a spot SOL ETF has long been delayed, but with the appointment of the new SEC Chairman Paul Atkins, the situation may change. Paul Atkins holds a friendly stance toward the crypto industry and has made building a clear regulatory framework for digital assets a top priority. This is a positive signal for the approval of a spot SOL ETF and may further boost SOL’s price.
SNX: From Depegging Crisis to Recovery Hopes — How Synthetix Is Rebuilding Market Confidence
Recently, the algorithmic stablecoin sUSD issued by Synthetix experienced a severe depegging incident due to changes to Synthetix’s debt management mechanism under proposal SIP-420. The price of sUSD dropped as low as $0.68, while the Synthetix token SNX fell to a low of $0.55. The total value locked (TVL) in Synthetix hit a low of $72.23 million. Investor confidence in Synthetix was significantly shaken.
Recovery Measures
- Liquidity Incentives: Synthetix increased the yield on sUSD/sUSDe LP staked on Convex to 49.18% to attract more liquidity.
- Deposit Incentives: Through the Infinex project, Synthetix incentivizes users to deposit sUSD, distributing 16,000 OP tokens weekly for six weeks to users who deposit more than 1,000 sUSD.
- Staking Incentives: Users are allowed to stake sUSD in the 420 pool, with a one-year lock-up earning 5 million SNX in rewards.
- Negative Incentives & Staking Optimization: Stakers are required to deposit a certain ratio of sUSD, with debt forgiveness paused for those not meeting the target. When the peg deviates, the required ratio increases. Additionally, SNX pooled staking is introduced to expand sUSD supply, along with Perps V4, which supports multi-collateral staking and off-chain order matching.
Market Response
Driven by these measures, sUSD’s price rebounded to as high as $0.88, and SNX also rose to $0.74. In addition, Synthetix’s total value locked (TVL) increased from $72.23 million to $89.25 million, representing a 23.56% rise.
Future Impact
Although the depegging issue of sUSD has not been fully resolved, Synthetix’s proactive measures have given the market renewed hope. If sUSD can return to its $1 peg, investor confidence in Synthetix may be restored, potentially driving further upside in the price of SNX.
Bearish Picks: REZ, OMNI
REZ: 8.64% Token Unlock Under Low Restaking Interest Could Trigger Institutional and Team Sell-off Renzo is a liquidity restaking protocol built on the EigenLayer ecosystem, designed to simplify complex staking mechanisms for end users and enable quick cooperation with EigenLayer node operators and active validation services (AVS). However, due to the recent underperformance of the Ethereum ecosystem and ETH’s continued low price, Ethereum’s staking rate has also declined, leading to a loss of market interest in Restaking projects. On April 30, 864 million REZ tokens will be unlocked, accounting for 8.64% of the total locked supply. Currently, the total circulation rate is only 21%, and according to the linear unlock chart in its white paper, the main recipients of this unlock will be institutional investors and the project team. Given the current low interest in the Restaking sector and Ethereum’s poor performance, this large token unlock could trigger significant sell-offs, potentially impacting the price of REZ.
OMNI: Token Unlock Approaching, Market Sell-off Risk Increasing Omni is an interoperability layer for Ethereum that establishes low-latency communication between all Ethereum rollups, allowing Ethereum to operate as a cohesive system in the modular era. Omni is also a public chain project. Due to the continued underperformance of the Ethereum ecosystem and the recent poor performance of Layer-2 projects, Omni has lost value as a bridging project between Layer-2 solutions. On May 2, 16.63 million OMNI tokens will be unlocked, accounting for 16.64% of the total locked supply. At present, the circulation rate is only 19%, which effectively doubles the circulating token supply. According to its white paper’s linear unlock chart, the main recipients of this unlock will be institutional investors and the project team. Given that Omni is currently experiencing low interest, this substantial token unlock could lead to significant sell-offs, potentially negatively impacting the price of OMNI.
Market Sentiment Index Analysis
The market sentiment index has risen from 55% last week to 79%, entering the bullish range. This shift indicates a significant improvement in overall market sentiment, signaling growing optimism among investors and participants in the crypto space.
Hot Track
MCP — Can It Lead the Future Development of Crypto✖️AI?
Current Status
MCP, or Model Context Protocol, was launched by Anthropic on November 25, 2024. Initially, it did not gain significant market attention. However, following Deepseek’s impact on existing AI software, the market began to gradually focus on optimizing algorithms and resource scheduling, shifting away from the previous model of AI development based on increasing computational power. This shift led to growing interest in MCP’s approach, which standardizes how external data and applications interact with large language models (LLMs) to provide context.
Recently, with the successful performance of the MCP-related token Dark on Binance Alpha, there has been a growing interest from investors in MCP-related tokens, making MCP one of the few hot trucks in the market.
The Concept of MCP
The Model Context Protocol (MCP) is an open-source standard launched by Anthropic. Initially designed as an extension of the Claude ecosystem, it aims to solve the fragmentation issue of how AI models interact with external tools and data. Now, MCP has evolved into a standardized and secure way for AI agents powered by large language models to interact with external systems to obtain real-time data.
In practice, MCP serves as a universal adapter, allowing AI to access content repositories, business tools, and development environments, among others.
The core objective of MCP is to improve efficiency through a standardized process, enabling AI agents to shift from “understanding” to “doing.” It provides developers with efficient tools and allows businesses and non-technical users to easily customize their AI agents. In this way, MCP could become the bridge connecting virtual intelligence with the real world, driving personalized innovation and development across various industries.
MCP Working Principle and Technology
Technology Used by MCP
The technical foundation of MCP is JSON-RPC 2.0, a lightweight and efficient communication standard that supports real-time bidirectional interaction, similar to the high performance of WebSockets. It operates on a client-server architecture:
- MCP Host: The user interaction application, such as Claude Desktop, Cursor, or Windsurf, is responsible for receiving requests and displaying results.
- MCP Client: Embedded within the host, the client establishes a one-to-one connection with the server, handling protocol communication while ensuring isolation and security.
- MCP Server: A lightweight program that provides specific functionality, connecting to local (such as desktop files) or remote (such as cloud APIs) data sources.
Transmission Methods include:
- Studio: Standard input and output, suitable for local quick deployment, such as file management, with latency as low as milliseconds.
- HTTP SSE: Server-sent events, supporting remote real-time interaction, such as cloud API calls, suitable for distributed scenarios.
Working Principle
MCP adopts a client-server architecture. In simple terms, when the MCP host wants to retrieve data or perform an operation, it needs to communicate and collaborate through the MCP client and MCP server. To ensure efficiency and security, MCP assigns a dedicated client to each server, forming a one-to-one isolated connection. The core components include:
- Host: The user interface, such as Claude Desktop, responsible for initiating requests and displaying results, acting as the “face” of the interaction.
- Client: The communication intermediary, using JSON-RPC 2.0 to interact with the server, managing requests and responses, and ensuring isolation.
- Server: The function provider, connecting to external resources and performing tasks, such as reading files or calling APIs.
Transmission Methods are flexible and varied:
- Stdio: Local deployment, suitable for quick access to desktop files or local databases, with latency as low as milliseconds.
- HTTP SSE: Remote interaction, supporting cloud API calls with strong real-time performance.
Advantages of MCP
MCP solves the challenges faced by AI applications today through standardized interfaces:
- Real-time Access: AI can access the latest data in a very short time.
- Security and Control: Direct data access avoids intermediate storage, with a reliability of up to 98% for permission management. Users can limit AI’s access to specific files only.
- Low Computational Load: No need to embed vectors, reducing computational costs by approximately 70%.
- Flexibility and Scalability: The number of connections is reduced from the traditional 100 million to 20,000, greatly simplifying the configuration process.
- Interoperability: One MCP Server can be reused by multiple models.
- Vendor Flexibility: Switching LLMs (Large Language Models) does not require infrastructure reconstruction, offering compatibility similar to USB-C.
- Autonomous Agent Support: Supports AI’s dynamic access to tools for executing complex tasks.
MCP Ecosystem Projects
- Dark
Dark is an experimental MCP network based on Solana, focusing on Trusted Execution Environments (TEE). By automatically integrating new tools and on-chain interactions, Dark aims to innovate within decentralized technology. However, most of the project’s features have not been launched yet, and it is still in the conceptual phase. The token has already been issued, and its token is DARK.
- SkyAI
SkyAI is a native AI infrastructure based on the BNB Chain, providing multi-chain data access and AI agent deployment. The project is still in the conceptual phase, with the actual product yet to be launched. The token has already been issued, and its token is SKYAI. With a market capitalization of $43 million, SkyAI is a leading project in the MCP sector.
- Solix
Solix is a DePIN network that adopts MCP, focusing on smart bandwidth sharing. Users can share bandwidth via a browser extension and earn rewards, covering 63 countries globally. The project’s technology has been deployed quickly, but the user participation rate and the sustainability of its economic model still need to be validated. The project has not issued any tokens yet.
- HighKey
HighKey is a DeFAI project that is compatible with both the MCP and DARP protocols, focusing on DeFi arbitrage and professional analysis. The token has already been issued, and its token is HIGHKEY. With a small market capitalization of only $5.68 million, the project has clear development features but still needs to enhance user experience and differentiation.
- DeMCP
DeMCP is a decentralized MCP project focused on trust and security, providing SSE proxy services. The project has not issued any tokens yet and is still in development, requiring the demonstration of an actual product.
- UnifAI
UnifAI is a DeFAI project that offers both on-chain and off-chain task execution capabilities. Its flagship product, UniQ, simplifies complex on-chain operations. Although the token has not been issued, the project has launched a points program.
Future Development Directions
Currently, Web3 AI projects based on the MCP protocol are mostly in the early stages of development, with substantial products not yet available, though some have issued tokens. Despite MCP being an emerging hotspot in the AI sub-sector, caution is still required due to past failures in the AI Agent space. It remains uncertain whether MCP projects are merely a fleeting trend driven by AI meme assets or if they can genuinely contribute to the advancement of AI. Therefore, the future direction of MCP should primarily focus on the implementation and application of decentralized technologies.
With the rapid development of AI and blockchain technologies, MCP will continue to optimize its technical architecture to support more efficient computing and data sharing. Additionally, MCP will work to improve interoperability, simplify the usage process for developers, and promote the widespread adoption of decentralized applications.
Overall Market Sector Performance
Weekly Return Rate Statistics
- AI Sector: The AI sector, dominated by projects like TAO, RENDER, FET, WLD, and FARTCOIN, accounts for a significant share of 86.32%. The weekly price changes for these projects were 50.96%, 18.93%, 53.36%, 33.58%, and 29.95%, respectively. The average returns from the AI sector projects outperformed those of other sectors, leading to the best performance in this sector.
- CeFi Sector: The CeFi sector, led by BNB, BGB, and OKB, accounts for 89.97%. The weekly price changes for these projects were 2.35%, 2.51%, and 2.29%, respectively. The average returns from CeFi sector projects were lower compared to those of other sectors, resulting in the worst performance for the CeFi sector.
Next Week’s Major Crypto Events Preview
- Wednesday (April 30): U.S. Q1 Real GDP Annualized Growth Rate (Revised) U.S. March Core PCE Price Index Year-Over-Year U.S. April ADP Nonfarm Employment Change
- Thursday (May 1): U.S. April ISM Manufacturing PMI
- Friday (May 2): U.S. April Adjusted Nonfarm Payrolls U.S. April Unemployment Rate
Summary
This week, the cryptocurrency market saw a significant upward trend, with market sentiment shifting from a bearish to a more optimistic outlook. This change was primarily driven by the easing of U.S. policies and the friendly stance of the new SEC Chairman toward the crypto industry. As the policy environment improved, investor confidence gradually returned, leading to an inflow of capital into the cryptocurrency market, which boosted prices. However, the market still faces risks from potential economic recessions and uncertainties regarding tariff policies, which could continue to affect market trends. Investors should remain cautious and be prepared for potential volatility while enjoying the current market growth.
Projects like Solana and Synthetix have shown recovery potential, particularly due to technological upgrades and active community support. Solana’s accelerated development and Synthetix’s innovative moves have attracted more investor attention, and these projects are expected to continue expanding their market influence in 2025. However, projects like Omni are facing selling pressure from token unlocks, which could negatively impact their prices. Investors should carefully consider the specifics of each project and the overall market environment when making investment decisions to avoid potential risks.
While the overall industry trend is positive, the market still faces the risk of a potential U.S. economic recession and uncertainties around tariffs. Therefore, this week’s price rise should be seen as a rebound from recent oversold conditions, rather than a full market reversal. Next week, several key macroeconomic data points will be released, including the U.S. Q1 Real GDP Annualized Growth Rate (Revised), U.S. March Core PCE Price Index Year-Over-Year, U.S. April ADP Employment, U.S. April ISM Manufacturing PMI, U.S. April Adjusted Nonfarm Payrolls, and U.S. April Unemployment Rate. These figures could significantly influence future market trends, so it is recommended that investors maintain moderate positions and manage risk effectively while waiting for clearer policy direction. This approach will be the best strategy for navigating the current market.
