Easing Fear and Structural Opportunities in a Volatile Market | Frontier Lab Crypto Weekly Report
Market Overview
General Market Conditions
This week, the cryptocurrency market experienced wide-ranging fluctuations. However, market panic has somewhat eased, with the market sentiment index rebounding from 5% to 11%. Although it has moved away from the level of extreme fear, it remains within the fear zone. The previously consistent growth trend in stablecoin market capitalization has been interrupted, showing a decline for the first time in recent weeks (USDT reached $144.2 billion, USDC reached $60 billion, with changes of +0.14% and -1.15% respectively). Given the recent sharp market fluctuations, it is still too early to conclude whether institution-driven capital, primarily from U.S. investors are pulling out. This situation requires continued monitoring. From Monday to Tuesday, the market performed poorly due to the anticipation of imminent tariff implementation. On Wednesday, the market rebounded as tariffs were postponed by 90 days. However, from Thursday to Friday, the market resumed its downward trend due to increasing uncertainty about the future market outlook. This volatility was largely driven by investor concerns over the uncertain trajectory of the market and fears of a looming U.S. recession, leading to risk-averse trading behavior and thus resulting in wide price swings.
Bullish Picks for Next Week
EUL
EUL: Modular Lending Innovation Leading DeFi 2.0, Efficient Capital Utilization Driving Explosive Growth
Innovative Product Ecosystem and Technological Advantages
Euler V2’s modular architecture, built through the EVK (Euler Vault Kit) and EVC (Ethereum Vault Connector), has created a unique composable lending ecosystem that goes far beyond traditional lending protocols. The soon-to-launch EulerSwap will be deeply integrated with the lending layer, aiming to solve core DeFi issues such as fragmented liquidity and difficulty in yield generation. This innovation not only expands the functional scope of Euler but also creates new revenue streams for the protocol.
Explosive Growth and Strong Financial Performance
Euler delivered a very strong performance in Q1 2025: TVL grew by 399% to $891 million, and outstanding loans increased by 434.7% to $423 million. Protocol fees rose by 707.4% to $4.4 million, with total revenue up 647.3% quarter-over-quarter. Daily active users surged by 953.87%, indicating accelerating user adoption. The Price-to-Fee (P/F) ratio improved from 17.05x to 4.61x, suggesting revenue growth is significantly outpacing market cap growth, thereby leaving room for valuation uplift. This revenue-driven, non-speculative growth model provides more sustainable value support for the EUL token.
Vault Efficiency and Capital Optimization
Euler’s total supply of assets in insurance vaults reached $931 million, with $423 million in borrowings, resulting in an overall utilization rate of 45%. The most popular lending vaults, such as USL and USDO, have reached near 100% utilization (with $214 million in loans), and Euler Prime WETH has also achieved a high utilization rate of 76% (with $36.2 million in loans). This efficient capital usage not only generates higher returns for users but also brings considerable fee income to the protocol. Euler’s customizable vaults enable fine-tuned adjustments based on asset class and risk preferences, helping the protocol attract and retain a broad user base, forming a virtuous cycle of sustained growth.
Market Adaptability and Sustainable Business Model
Euler’s customizable lending vaults support a wide range of emerging markets, including Resolv, conventional stable loans, and Euler Yield, making it a go-to protocol for sophisticated DeFi strategies. The high platform utilization rate of 47.47% demonstrates strong lending demand. Project teams can quickly build customized credit markets around emerging trends, allowing Euler to swiftly adapt to market changes and seize new opportunities.
Bearish Picks: CAKE, TIA, LUMIA, SCR
CAKE: PancakeSwap Tokenomics 3.0 — A Risky Shift from Decentralized Governance to Deflationary Model
Governance Trust Crisis
PancakeSwap is facing a governance trust crisis stemming from the sudden appearance of 25 million veCAKE — allegedly linked to Binance — right before a major proposal vote. This suspected vote manipulation, coupled with the sacrifice of benefits for loyal ecosystem builders, severely violates the core decentralized principles of DeFi. As a result, institutional investors and long-term holders are likely to lose confidence in the project, reducing their willingness to hold CAKE over the long term.
Ecosystem Contraction
The new model threatens to destroy the core business models of veCAKE aggregator projects like Cakepie, thereby shrinking the room for innovation within the ecosystem. Arbitrary rule changes may also discourage future developers from building on PancakeSwap. Meanwhile, highly active DeFi power users could migrate to other platforms that still retain the veToken mechanism, ultimately leading to a decline in overall ecosystem vitality.
Decline in Token Utility
The CAKE token is at risk of degrading from a multi-functional asset with governance and yield rights into a purely speculative tool driven by deflationary expectations. It loses its core utility in governance participation. Additionally, the upcoming unlock of all veCAKE in the short term will release approximately 70 million CAKE into the market, creating significant sell pressure. Whether the deflationary model can truly deliver long-term value growth remains uncertain — especially under severely damaged user trust.
Plummeting Trading Volume
Following the meme coin boom on the BSC chain, the underlying infrastructure development failed to keep pace, resulting in a significant user outflow from the BSC ecosystem. Concurrently, PancakeSwap’s trading volume has sharply declined — from a peak of $13.075 billion during the week of the meme surge on March 16, 2025, to just $2.138 billion today — an 83.65% drop, representing a cliff-like collapse in activity.
TIA: Celestia’s Fourfold Dilemma — Commoditized Infrastructure, Valuation Bubble, Ecosystem Weakness, and Token Structure Flaws
Commoditized Infrastructure with Limited Value Capture
Celestia’s data availability service is essentially a commoditized infrastructure lacking a strong moat, comparable to a replaceable CDN service. As a pure bandwidth layer, it does not provide settlement, execution, or user experience features, allowing Rollups to switch providers without affecting end users. True value accrual happens at the application layer, not the infrastructure layer. TIA is nearly invisible to end users and accounts for only a small portion (1–10%) of total transaction fees, lacking user stickiness and direct usage scenarios.
Valuation Severely Misaligned with Real Revenue
With a current market cap of approximately $2 billion, TIA would require Celestia to generate $350–500 million in annual revenue over the next few years to justify its valuation. This implies that Rollups using Celestia would need to generate up to $10 billion in annual transaction fees. This expectation is far removed from market realities — Ethereum and Solana combined generated only around $760 million in total fees last year — highlighting a massive disconnect between TIA’s current valuation and its realistically achievable revenue.
Competitive Threats and Ecosystem Weakness
Ethereum could undermine Celestia’s core value simply by increasing blob capacity. Meanwhile, Celestia currently lacks direct-to-user distribution channels: it has no mainstream wallet, consumer-facing apps, stablecoins, or high-traction native Rollups. Its main Rollup, Eclipse, is largely noisy, and other integrations have yet to launch. In contrast, Ethereum boasts a fully developed distribution ecosystem — MetaMask, Etherscan, Uniswap, Base, etc. — putting Celestia at a clear competitive disadvantage.
Tokenomics and User Experience Challenges
TIA’s token allocation is heavily skewed toward insiders and institutional investors, with around 80% of total supply controlled internally. Although much of the supply is locked, the staking rewards from these locked tokens can be sold immediately, creating a potential daily sell pressure of roughly $4 million. Additionally, the crypto user experience is evolving toward abstracting tokens away from interfaces — end users may never need to hold TIA. This limits TIA’s ability to develop monetary premium status, making its investment return path more indirect and uncertain compared to directly investing in successful Rollup tokens.
LUMIA: Lumia Faces Upcoming Unlock Wave for Institutional Investors Lumia is an RWA Layer 2 project that offers full-cycle infrastructure for real-world assets. However, it failed to gain market recognition post-launch, leading to significant price drops and a sharp decline in market cap. On April 18, Lumia will unlock 11.91 million LUMIA tokens, representing 4.99% of the total locked supply. According to its linear unlock schedule, the majority of this tranche is allocated to institutional investors. As the project is currently in a downturn phase, these institutions are highly likely to sell off tokens for liquidity, which could exert downward pressure on LUMIA’s price.
SCR: 4% Token Unlock Under Bearish Layer 2 Sentiment Could Trigger Institutional and Team Sell-Off
Scroll is an Ethereum-native zkEVM Layer 2 project. The Layer 2 sector has underperformed in this cycle and is currently clouded with uncertainty. As risk aversion dominates investor sentiment, capital tends to exit from sectors with weaker liquidity. On April 21, Scroll will unlock 40 million SCR tokens, representing 4% of the total locked supply. According to the project’s whitepaper and linear unlock schedule, this unlock is primarily allocated to institutional investors and the project team. Given the low current interest in Layer 2 and Ethereum ecosystem underperformance, this large unlock could trigger significant sell-offs, potentially putting downward pressure on the SCR token price.
Market Sentiment Index Analysis
The market sentiment index rebounded from 5% last week to 11%. Although it has moved out of the extreme fear zone, it still remains within the fear range.
Overall Market Sector Performance
Based on weekly returns, the AI sector performed the best, while the SocialFi sector performed the worst.
- AI Sector: Within the AI sector, TAO, RENDER, FET, WLD, and FARTCOIN account for a significant portion, with a combined weighting of 84.23%. This week, their respective price changes were: 16.42%, 7.76%, 1.21%, -1.63%, and 95.36%. The average gains were higher than those of projects in other sectors, making the AI sector the top performer of the week.
- SocialFi Sector: In the SocialFi sector, TON and CHZ dominate with a combined weighting of 93.83%. This week, their declines were -18.16% and -3.29% respectively, with TON — holding the largest weighting — declining more than other projects across sectors, leading to SocialFi being the worst-performing sector.
Upcoming Major Crypto Events Next Week
- Monday (April 14): The legal dispute between Binance and the U.S. Securities and Exchange Commission (SEC) has been delayed. Both parties must submit a joint status report by April 14. Former President Trump has invited El Salvador’s President Nayib Bukele to the White House to discuss bilateral cooperation and diplomatic relations.
- Wednesday (April 16): U.S. March Retail Sales MoM.
- Thursday (April 17): European Central Bank deposit facility rate decision.
Summary
This week, the crypto market experienced wide-range fluctuations. The market sentiment index rebounded from 5% to 11%. Although it exited the extreme fear zone, it still remains in the fear range. The upward trend in stablecoin market capitalization was interrupted — USDT saw a slight increase of 0.14%, while USDC declined by 1.15%. The market was highly volatile due to tariff-related policies: it dropped at the beginning of the week, rebounded midweek after a 90-day tariff delay, and weakened again later due to growing uncertainty. Sector performances diverged significantly, with the AI sector posting the only gains and a weekly return of 1.36%, while SocialFi, Layer 1, and Layer 2 sectors performed the worst, with declines of 18.23%, 10.81%, and 10.45%, respectively.
On the investment opportunity side, EUL is leading DeFi 2.0 through its modular lending innovation. Its TVL surged by 399% to $891 million, protocol fees increased 707.4% year-on-year, asset utilization reached 45%, and the most popular vaults were nearly 100% utilized.
On the risk side, investors should watch out for structural issues in several projects:
- BNB/CAKE: A trust crisis was triggered due to Binance’s interference in PancakeSwap governance, resulting in a cliff-like drop of 83.65% in CAKE’s trading volume.
- TIA: Faces multiple challenges including commoditization risk, valuation bubble, ecosystem weaknesses, and flaws in token structure.
- LUMIA and SCR: Both are about to undergo token unlock events, which may lead to institutional sell-offs and intensify price pressure.
Key market events next week include the latest updates on the Binance-SEC legal case on April 14 and the White House meeting between former President Trump and El Salvador President Bukele, followed by the release of U.S. March retail sales data on April 16, and the ECB deposit facility rate decision on April 17. Investors should closely monitor the impact of these events on market sentiment, while remaining vigilant about the pressure from upcoming token unlocks. Amid the current environment of rising uncertainty, it is recommended that investors prioritize projects with substantial revenue growth and innovative business models, remain highly alert to governance risks and token unlock pressures, maintain moderate position sizing, and practice sound risk management — this will be the best strategy to navigate the current market.
