Frontier Lab Crypto Market Weekly Report | W41

Market Overview

Summary of Major Market Trends

• The overall market is in a fluctuating downward trend, with market sentiment in an extreme fear phase. The market sentiment index has slightly recovered to 17%.
• The DeFi sector has shown relatively strong performance, especially in yield aggregators and BTCFi projects, indicating continuous investor interest in high-yield DeFi projects.
• Stablecoin market cap changes: USDT saw a slight increase (0.24%), while USDC experienced a minor decline (-2.81%), reflecting changes in demand in the U.S. market.
• In the public chain sector, Fantom, Solana, and Avalanche performed notably well, primarily driven by active Meme coin projects and the launch of new applications.
• The Meme coin market defied the overall downtrend, creating some wealth effects despite the market downturn, attracting the attention of some investors.
• Layer 1 blockchain projects maintained high visibility on social media, reflecting sustained investor confidence in infrastructure projects.

Market Sentiment Index Analysis

The market sentiment index has reached 17%, slightly recovering from last week’s 13%, though market sentiment remains in an extreme fear phase.

Altcoins fully followed the broader market trend this week. Due to unfavorable CPI data, the overall market saw a slight decline. However, altcoins did not experience significant drops and merely followed the general market movement.

The market has entered an extreme fear stage, and it is typical when market sentiment drops below 10% that major reversals occur.

General Market Trend Summary

• The cryptocurrency market this week was in a fluctuating downward trend, having entered an extreme fear phase, which may indicate a potential reversal in the short term.
• DeFi-related cryptocurrency projects showed strong performance, reflecting the market’s continued focus on improving baseline yields.
• The BTCFi projects within the DeFi sector saw a countertrend growth in TVL (Total Value Locked) this week, signaling investor optimism for its future prospects.

Hot Sectors

Sui Ecosystem

The Sui ecosystem has garnered significant market attention this week, primarily due to the rise of Meme coin projects on the Sui chain, Circle’s issuance of USDC on Sui, and Coinbase’s direct support for Sui.

Meme Coin Projects

Following the explosive popularity of the MOODENG project on Solana, the Meme coin project “Hippo” on the Sui chain has also surged, rising by 30% in the past seven days and reaching a market cap of $140 million. AAA, another Meme coin on the Sui chain, features a black cat as its mascot, with the Sui community comparing it to Solana’s Popcat, reflecting the high market expectations. AAA has risen by 20.3% over the past week. BLUB, previously the largest Meme coin on the Sui chain, was overtaken by Hippo. BLUB, represented by a fish with Pepe’s face, aligns well with the water-themed community culture of the Sui chain, and it has risen by 18.6% in the past week. This rise of Meme coins on the Sui chain has created a wealth effect, attracting more users to the Sui ecosystem.

Circle Issues USDC on the Sui Chain

Circle announced in an official tweet that there is a bridged form of USDC on the Sui mainnet called wUSDC, which is bridged from Ethereum. Circle encourages developers and users to transition to the “native” USDC, which is the official USDC form issued on the Sui mainnet, 100% backed by highly liquid cash and cash-equivalent assets, and always redeemable 1:1 for the U.S. dollar. As the second-largest stablecoin issuer in the crypto ecosystem, Circle’s direct support for an ecosystem brings significant capital and attention. The amount of stablecoins within an ecosystem directly impacts its prosperity, suggesting that Sui could see promising growth following Circle’s support.

Coinbase’s Direct Support for Sui

On October 8, Coinbase Assets tweeted that it had added Sui’s USDC to its listing roadmap and would later support USDC/USD trading on the Sui chain. Since the core of the current crypto market is primarily U.S.-based, and Coinbase is the largest publicly listed crypto exchange in the U.S., its direct support for USDC and USD conversion on the Sui chain makes it easier for American investors to enter the Sui ecosystem, providing a positive boost for Sui.

Sui Chain Data

• TVL: Sui’s Total Value Locked (TVL) has surged rapidly over the past month, rising from $663.87 million on September 11 to $999.85 million currently, marking an increase of 50.61%. This indicates that more users are actively engaging with the Sui chain.
• Daily Active Accounts: The number of daily active accounts on the Sui chain increased significantly this week, from 1.17 million to 1.67 million, representing a 42.73% growth, highlighting the rapid rise in on-chain activity.
• DEX Volume: The main decentralized exchanges (DEXs) on the Sui chain are Cetus, Aftermath Finance, and BlueMove DEX. Over the past 30 days, their trading volumes have reached $2.55781 billion, $553.39 million, and $232.29 million, respectively, with growth rates of 136.21%, 62.03%, and 12,760.5%. This demonstrates a very high rate of transaction growth on the Sui chain.

Based on the above data, it can be concluded that the Sui chain is currently mimicking Solana’s growth model, leveraging Meme coins as a driving force for on-chain growth, and heavily developing its stablecoin business.

DeFi Sector

TVL Growth Rankings

Top 5 projects by TVL growth over the past week (excluding projects with smaller TVLs, with the threshold set at $30 million). Data source: DefiLlama.

BounceBit (BB) (Recommendation Rating: ⭐️⭐️⭐️⭐️)

• Project Overview: BounceBit is a restaking base layer within the Bitcoin ecosystem. It is designed in close collaboration with Binance, constructing CeDeFi components that offer high yields. Additionally, BounceBit has built its own BounceBit Chain, creating specific use cases for restaking.
• Latest Developments: Recently, BounceBit launched CeDeFi V2, which supports the Solana, Ethereum, and BSC chains, enabling participating users to earn rewards. It also introduced a promotion offering a 30% APY on BBTC and a 44% APY for users providing liquidity to the Lnng/BB pair, attracting a large number of arbitrageurs to participate.

Lombard (Not Yet Issued) (Recommendation Rating: ⭐️⭐️⭐️⭐️)

• Project Overview: Lombard Vault is an automated yield management solution designed to bridge Bitcoin and decentralized finance (DeFi). By integrating Bitcoin into the DeFi ecosystem, Lombard Vault aims to maximize BTC-denominated returns by strategically allocating deposits across various DeFi opportunities. The flagship product, LBTC, can be seamlessly used across multiple blockchain ecosystems.
• Latest Developments: The BTCFi trend has been gaining traction in the market, and Lombard Vault, supported by well-known institutions like Babylon, PolyChain, and OKX, has received a warm welcome from users after launching LBTC. LBTC offers opportunities for diversified returns. Lombard provides an 8% APY to PT holders, while YT holders earn more than 8% annually. Additionally, this week Babylon authorized Lombard with a quota of 7,170 BTC, ranking it first among all wrapped BTC issuers, encouraging many users eager to participate in Babylon to join in.

Tokan Exchange (Not Yet Issued) (Recommendation Rating: ⭐️⭐️⭐️)

• Project Overview: Tokan Exchange is a decentralized exchange built on the Scroll network, serving as a liquidity layer to address liquidity issues at the protocol level. It is a community-driven and ecosystem-centered project, aiming to provide deep liquidity support for crypto assets and tokens.
• Latest Developments: Recently, Tokan Exchange has been running promotions offering high APY to arbitrage users, attracting many on-chain arbitrage participants.

Anzen Finance (Not Yet Issued) (Recommendation Rating: ⭐️)

• Project Overview: Anzen is a decentralized lending platform designed to bring stability to the DeFi space and provide more use cases for stablecoins. Users can lend on the platform to earn yields backed by real-world assets (RWA). Loans are secured by safe, tangible, and appreciating assets, offering lenders a predictable income stream tied to RWA performance.
• Latest Developments: Recently, Anzen launched a campaign encouraging users to mint its stablecoin, USDz, and began rewarding users holding USDz with additional z-point rewards. Users can earn multipliers on their z-points, starting at 1x and increasing by 2% daily.

Agni Finance (Not Yet Issued) (Recommendation Rating: ⭐️)

• Project Overview: Agni Finance is a cryptocurrency exchange operating on an Automated Market Maker (AMM) mechanism, focused on spot trading and concentrated liquidity. The platform offers a permissionless trading environment aimed at enhancing the spot trading experience by concentrating liquidity within specific price ranges to achieve maximum returns with minimal risk. It also functions as a Launchpad platform, providing services for project launches.
• Latest Developments: This week, Agni Finance did not announce any notable positive news or updates.

Sector Performance Overview

• Stablecoin Market Cap Growth: USDT grew from $124.9 billion last week to $125.2 billion, while USDC declined from $35.6 billion at the beginning of the month to $34.6 billion, with growth rates of 0.24% and -2.81%, respectively. This shows a decrease in USDC, which is primarily U.S.-focused, and a slowing growth rate for USDT.
• Increasing Liquidity: With risk-free arbitrage rates in traditional markets continuing to decline, returning to DeFi is seen as a very attractive option.
• New Growth Drivers: In addition to traditional DeFi projects like lending and DEXs, two strong new engines of growth have emerged: BTC and ETH’s LSD (Liquid Staking Derivatives) and restaking projects.

DeFi Sector TVL(Data Source: DefiLlama)

• Decreased Capital:

The TVL (Total Value Locked) in DeFi projects dropped from $32 billion last week to $31 billion this week, representing a 3.12% decrease. This decline was primarily driven by the fall in the prices of underlying assets such as BTC and ETH. However, when excluding the impact of the decline in these underlying assets, it becomes evident that the TVL in DeFi projects has not actually decreased. Therefore, despite the overall market downturn, enthusiasm for participating in DeFi projects has not diminished.

In-Depth Analysis

Drivers of Growth

Although the broader market experienced a volatile downward trend this week, the DeFi sector continued to perform strongly, still offering users high APY returns. Investors remain optimistic about the future price trends of BTC and ETH, the two fundamental assets, and continue to hold them. At the same time, they are actively participating in various DeFi projects to increase the returns on their held assets.

Growth Leaders

For DeFi projects, TVL growth is the most straightforward indicator of performance. According to TVL growth statistics, the projects with the largest increases are yield farming vault projects and BTCFi projects. Yield farming vaults help users maximize returns on their holdings, while BTCFi projects involve wrapping BTC into tokenized assets and participating in various DeFi arbitrage opportunities. Both types of projects essentially encourage users to deposit their assets into these platforms, which in turn help users find the highest-yielding underlying protocols. Ultimately, the funds deposited by users are funneled into various underlying DeFi protocols.

Therefore, investors should focus on high-yield DeFi projects and BTCFi projects, which are based on the issuance of BTC-backed LRTs (Liquid Restaking Tokens), for future investments.

BTCFi Sector Overview

Current Sector Status

This week, the BTCFi sector experienced a cooling off due to the market’s price decline. However, within the BTCFi sector, liquid staking projects that mint tokenized assets (LST) by staking BTC showed resilience. Despite the fall in BTC prices, most projects in this subsector saw an increase in their TVL (Total Value Locked), indicating that liquid staking remains a strong segment within BTCFi.

Key Highlights

• BTC declined by 4.93% this week. Excluding this decline, the TVL growth for BTCFi projects based on BTC-issued LRT (Liquid Restaking Tokens) was as follows: Bedrock (+0.24%), Lombard (+53.64%), Lorenzo (-46.15%), Pell Network (+5.73%), PumpBTC (+32.21%), Solv Protocol (+16%), and Stakestone (+2.51%).
• Bedrock allows users to stake wBTC and receive uniBTC as rewards while also providing base returns for staked wBTC. Previously, Bedrock reached its staking limit, but this week, it increased the amount of Babylon points earned per BTC staked to 5,854 points, the highest among all BTC LRT projects.
• Lombard enables users to stake BTC via Babylon, with Lombard managing the restaking process. When users stake BTC, Lombard mints an equivalent amount of LBTC on Ethereum. This week, Lombard offered an annualized APY of 8% to PT holders, with YT holders earning over 8% as well. Additionally, Babylon authorized Lombard with a capacity of 7,170 BTC, the highest among all BTC token issuers, encouraging more users to participate.
• Solv Protocol increased the Babylon points earned per BTC stake from 25% to 30% this week. Now, users earn 3,957 Babylon points for each BTC stake, and Babylon authorized Solv Protocol with 6,010 BTC, ranking it second among all BTC token issuers.
• Lorenzo Protocol also increased the Babylon points earned for BTC staking. Now, users earn 2,567 Babylon points per BTC stake, with Babylon authorizing Lorenzo Protocol with 1,120 BTC, ranking fourth among BTC token issuers.
• PumpBTC integrated with the Base chain this week and collaborated with several DeFi projects on Base, quickly gaining traction. PumpBTC now offers high APYs to LP users and increased Babylon points to 5,235 per BTC stake. Babylon authorized PumpBTC with 2,080 BTC, ranking third in the BTC token issuer category.
• Pell Network partnered with Symbiosis this week, allowing users to restake syBTC on Pell Network’s zkSync Era to earn PELL points.
• Stakestone is expected to adopt a model similar to ETH-STONE, where users stake native BTC to Babylon and mint STONEBTC, a yield-generating token for cross-chain liquidity. Stakestone launched Fund 2 this week, offering users who stake STONE a 2x to 2.5x multiplier on STONE-W1 points.

In-Depth Analysis

The standout projects in the BTCFi sector are those based on BTC-issued LSTs. For BTCFi projects, TVL is a critical indicator of their prosperity. The data above shows that despite BTC’s price drop this week, the TVL of LST projects remained mostly unaffected and even increased. This is primarily because BTC is often viewed as a relatively stable asset during market downturns. Investors are optimistic about BTC’s future growth and, while holding BTC, seek to earn additional returns by depositing their holdings into various protocols, where BTC is tokenized as LST tokens. These LST tokens can then be staked in other projects for further yield, effectively allowing users to “double-dip” their BTC holdings for multiple income streams.

From a mid-to-long-term perspective, BTC has the potential for growth, and this underlying optimism serves as the foundational driving force behind the BTCFi sector’s development. As such, the BTCFi sector is worth considering for investors.

Other Sector Performance

Public Chains

Top 5 Public Chains by TVL Growth Over the Past Week (Data Source: DefiLlama)

Fantom

Fantom is an EVM-compatible public chain that leverages the Opera mainnet combined with its own technical innovations, making it a high-performance blockchain. Recently, Sonic officially launched Sonic Gateway, an official cross-chain bridge that eliminates third-party and centralized risks, with Sonic providing security backing for the project. Using Sonic Gateway allows users to complete cross-chain transfers between Sonic and Ethereum within an hour. As the Ethereum ecosystem has been weakening recently, with issues causing some on-chain users to exit, Sonic, which is compatible with Ethereum, has become an attractive destination for this capital outflow. Additionally, this week, 750,000 FTM tokens were distributed as rewards to users participating in an event, drawing further attention to the platform.

Solana

Recently, the entire crypto market has remained in a state of stagnation, but Meme coin projects have started to regain activity. Meme coins on the Solana chain have seen significant growth this week, creating wealth effects. Notably, the MOODENG project on Solana has become a star project, with a market cap exceeding $140 million, bringing substantial traffic to the Solana chain. Additionally, Binance launched BNSOL this week, providing liquidity for staked SOL on Binance and drawing more attention to Solana. Solana has also been actively pursuing the stablecoin payments track, with Stripe launching USDC and USDP payments on the Solana chain this week.

Avalanche

Recently, the game company Nexpace launched the nostalgic game MapleStory on the Avalanche chain, triggering a wave of nostalgia among users, and quickly capturing a large share of the Web3 gaming market. With the resurgence of Meme coins, projects on the Avalanche chain have also experienced notable gains, generating wealth effects. Additionally, Littio, a Latin American bank, abandoned Ethereum and transitioned to the Avalanche chain to issue RWA (Real-World Assets), contributing to an increase in Avalanche’s TVL.

Near

Near is deeply integrated with the AI sector, and its association with AI has strengthened. Recently, OpenAI announced the launch of Advanced Voice, which attracted a new wave of interest in the AI sector. Near, being a key player in the AI space, benefited from this positive momentum. Additionally, with the resurgence of Meme coin projects, Near also saw growth in its own Meme tokens this week.

Base

Base is an Ethereum Layer 2 built on the OP Stack and backed by Coinbase. Recently, the BTCFi sector has influenced Base, particularly due to the support from cbBTC, introduced by Coinbase. Moreover, Meme coin projects on Base have been highly active this week, and despite the market’s volatility, some of these projects have seen significant upward momentum, generating wealth effects. This has attracted more users to participate on Base, leading to an increase in Base’s TVL.

Top 5 Tokens by Growth in the Past Week

(Excluding tokens with low trading volume and meme coins. Data Source: CoinMarketCap)

The top-performing tokens this week exhibited a trend of sector concentration, with most of the gainers coming from the public chain sector.

• BDX: Beldex is a dApp ecosystem focused on privacy protection, consisting of decentralized and confidential applications such as BChat, BelNet, Beldex Browser, Beldex Protocol, and Beldex Bridge. These applications and services collectively form a decentralized application (DApp) platform aimed at safeguarding user data and identity, restoring internet privacy in the cryptocurrency space. Beldex had no major positive news this week.
• REEF: REEF is a Layer 1 blockchain project built on the Substrate framework, focusing on decentralized finance (DeFi), NFTs, and GameFi. It uses the Nominated Proof of Stake (NPoS) consensus mechanism to ensure the security and efficiency of the blockchain. This week, REEF negotiated with multiple centralized exchanges (CEXs) for listing opportunities and partnered with Pigmo, which uses REEF for crypto transactions, casino games, and sports betting. REEF’s funding rate on CEXs this week was -2.37%.
• GAS: NEO is a public chain project utilizing a dual-token system with NEO and GAS. NEO tokens confer governance rights and the ability to earn GAS, while GAS tokens fuel transactions and smart contract operations on the NEO blockchain. NEO had no major news this week.
• ORBS: Orbs is a blockchain Infrastructure-as-a-Service (IaaS) platform providing infrastructure for consumer applications, designed to help the software application industry transition to blockchain technology. It consists of two core infrastructure products: consensus-based smart contracts and formula-based decentralized storage services. Orbs had no major news this week.
• CHZ: Chiliz is a blockchain platform designed specifically for the sports and entertainment sectors, aiming to bridge the gap between sports organizations and their fans through technological advancements and community development. This week, Chiliz will airdrop PERPER tokens to users staking CHZ, and Bitget Exchange announced support for PERPER token trading.

The five top-performing tokens this week belong to the private and public chain sectors, highlighting a concentration of gains in these areas. Funds appear to be returning to the public chain sector, which is becoming the focus of the market again this week.

Meme Token Gains Ranking

Data Source:coinmarketcap.com

This week, the overall market exhibited a sideways downtrend, with a prevailing sense of pessimism driven by renewed fears related to war and concerns over economic recession. However, the performance of meme coins stood out against the broader market trend, as various meme coin projects experienced significant gains, creating a wealth effect that attracted some capital into the meme coin sector.

Social Media Hot Topics

According to the top five growth metrics from LunarCrush and the AI scores from Scopechat, the most frequently mentioned theme this week was Layer 1 (L1) blockchains. The following tokens made the list (excluding those with insufficient trading volume and meme coins):

Data Sources: Lunarcrush and Scopechat

Data analysis indicates that the Layer 1 blockchain projects with the highest social media engagement generally exhibited an upward trend. Despite the overall lackluster performance of the broader market, meme coin projects associated with various public chains have remained very active, attracting significant capital to these ecosystems.

Moreover, in the context of market fluctuations and the absence of standout projects or sector rotations, major public chains often outperformed other sectors. This trend reflects that, within the current market environment, investors maintain relatively stable confidence in infrastructure projects.

Overall Market Themes Overview

Data Sources: SoSoValue

Based on weekly return rates, the CeFi sector performed the best, while the AI sector performed the worst.

• CeFi Sector: Within the CeFi sector, BNB holds a significant share, accounting for 86.23%. This week, BNB outperformed the broader market, rising 5.03%, which positively influenced the overall performance of the CeFi sector.
• AI Sector: The AI sector is primarily represented by FET, RENDER, and WLD, which collectively account for 81.65% of the sector. However, this week, these tokens experienced declines of -11.91%, -18.49%, and -12.82%, respectively, resulting in the AI sector having the poorest performance index. Despite the recent downward trend, the AI sector maintained positive returns year-to-date after an impressive start at the beginning of the year.

Upcoming Major Crypto Events

• Wednesday, October 16: ETHShanghai 2024
• Thursday, October 17: U.S. September Retail Sales Month-over-Month
• Friday, October 18: ETHGlobal San Francisco

Outlook for Next Week

Following the U.S. CPI announcement for September, which exceeded market expectations, and collective statements from the Federal Reserve’s voting members, market expectations shifted from a potential 50 basis point rate cut in November to a more moderate 25 basis points. Recent buying sentiment has decreased, suggesting that the market will likely continue its downward trend next week. In this downward trajectory, BTC typically exhibits stronger resilience compared to other assets, making it a preferred choice for investors. Therefore, next week, the BTCFi sector is expected to present significant growth opportunities.

BTCFi Update

Lombard is primarily focused on using BTC as the foundational asset to mint wrapped assets LBTC, allowing users to hold LBTC and participate in DeFi projects. Currently, investor sentiment towards BTC’s future remains optimistic, indicating that BTCFi, which relies on BTC as its underlying asset, is likely to experience solid growth moving forward. Recently, Lombard has been enhancing user APY through collaborations with other projects, maintaining APY above 8%. Furthermore, leading BTC ecosystem project Babylon continues to support Lombard, increasing its limits, indicating that Lombard is poised for promising development in the future.