Frontier Lab Crypto Market Weekly Report | W42

Frontier Lab

14 min readOct 18, 2024

Market Overview

Summary of Major Market Trends

Market Sentiment Rebounds: The market sentiment index rose from 17% last week to 59%, moving into a neutral phase, indicating a recovery in investor confidence.
Overall Rise in the Crypto Market: The market experienced an upward trend, driven by positive factors such as BlackRock’s better-than-expected earnings and the improvement in Donald Trump’s election prospects.
Strong Performance in the DeFi Sector: Particularly in BTCFi projects, where the increase in BTC prices has led to a significant rise in the total value locked (TVL) of related projects.
Layer 1 Blockchains Gain Attention: Public chain projects like Aptos, Starknet, and Scroll have seen rapid TVL growth and increased on-chain activity.
Meme Coins Show Strong Performance: Meme coin projects saw notable gains this week, creating some wealth effects and attracting capital inflows.
AI-related Projects Benefit: AI-themed projects such as STORJ and ARKM saw gains, influenced by Nvidia’s better-than-expected performance.

Market Sentiment Index Analysis

The market sentiment index reached 59%, showing a significant rebound from last week’s 17%, placing sentiment in a neutral phase. Altcoins followed the overall market trend this week. Boosted by BlackRock’s better-than-expected earnings report and positive news regarding Donald Trump’s election prospects, the broader market saw an upward movement. However, the rise in Altcoins lagged behind the overall market. The market is currently in a neutral phase, and during this period, Altcoins tend to follow the general market trend, waiting for a clearer market direction.

General Market Trend Summary

The cryptocurrency market continued its upward trend this week, entering a neutral phase with investor confidence recovering.
DeFi-related crypto projects performed notably, reflecting sustained market interest in improving foundational returns.
Within the DeFi sector, BTCFi projects saw a rise in TVL following the broader market’s increase, indicating investors’ optimistic outlook for its future.

Hot Sectors

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.

Lorenzo Protocol (Not yet launched) (Recommendation Rating: ⭐️⭐️⭐️⭐️

Project Overview: Lorenzo Protocol is a decentralized liquidity staking platform built in Babylon. Stakers can stake Bitcoin through Lorenzo to Babylon and receive liquid staking tokens pegged to the value of Bitcoin.
Latest Developments: Last week, Lorenzo Protocol increased the number of Babylon points users could earn by staking BTC. Babylon has authorized Lorenzo Protocol with a quota of 1,120 BTC, which was fully subscribed by users this week. Additionally, through the Pell Network, Lorenzo Protocol offers stBTC yields exceeding 30%, attracting a large number of participants.

Solv Protocol (Not yet launched) (Recommendation Rating: ⭐️⭐️⭐️⭐️)

Project Overview: Solv Protocol is a decentralized asset management and yield platform. It aims to aggregate yields from the entire decentralized industry, positioning itself as a cross-chain yield platform. Solv Protocol currently allows users to stake major decentralized assets like BTC, ETH, and USDT into wrapped assets assets — LST — allowing users to earn yields while enabling liquidity in the market.
Latest Developments: This week, Solv Protocol introduced the concept of the Staking Abstraction Layer (SAL), aimed at absorbing BTC liquidity from multiple ecosystems such as Ethereum EVM, BNB Chain, and CeDeFi. This provides a unified and transparent application standard for homogeneous and heterogeneous chain assets. Solv Protocol seeks to solve the issue of fragmented BTC liquidity by building a liquidity aggregation layer to accelerate the aggregation and circulation of BTC assets. Additionally, Solv Protocol completed a $11 million fundraising round led by OKX.

Meteora (Not yet launched) (Recommendation Rating: ⭐️⭐️⭐️)

Project Overview: Meteora is a protocol built on Solana that provides DeFi yield infrastructure. It aims to enhance liquidity and capital efficiency within the Solana network through innovative DeFi products and community collaborations. The core functions include a dynamic liquidity market maker and a dynamic automated market maker pool.
Latest Developments: Recently, the ongoing market rally has increased on-chain user activity, and several Meme coin projects on Solana have seen notable gains, driving up transaction volumes. As the main liquidity provider on Solana, Meteora has seen its liquidity providers’ APY increase. Additionally, Meteora is expected to airdrop its MET tokens soon, with users needing to provide liquidity to qualify, which led to a rapid rise in TVL this week.

Corn Kernels (CORN) (Recommendation Rating: ⭐️⭐️)

Project Overview: Corn is a Layer 2 network on Ethereum that uses its hybrid tokenized Bitcoin (BCTN) as a gas token, redirecting network earnings back to users and the protocol. Corn brings BTC into the ERC-20 ecosystem through BCTN to participate in the DeFi space and generate yield.
Latest Developments: Recently, Corn launched the Acorn Network, where users can deposit LSTs based on BTC to earn points from Babylon, Corn, and Acorn. This week, Corn also announced support for Lorenzo’s stBTC, allowing users to earn points from Babylon, Lorenzo, and Core, thereby attracting some users to deposit BTC’s LST.

Colend Protocol (Not yet launched) (Recommendation Rating: ⭐️⭐️⭐️)

Project Overview: Colend is a lending protocol built on the Core chain, where the primary collateral is BTC LST tokens. The project aims to advance the BTC-Fi sector.
Latest Developments: This week, Colend Protocol increased APY for depositors, raising USDC’s APY to 49%, USDT’s APY to 36%, and BTC’s APY to 6%, which led to a significant increase in TVL.

Sector Performance Overview

Stablecoin Market Cap Growth: USDT increased from $125.2 billion last week to $125.3 billion, and USDC rose from $34.6 billion at the beginning of the month to $34.7 billion, with growth rates of 0.08% and 0.29%, respectively. Notably, USDC ended its two-week decline.
Liquidity Gradually Increasing: Risk-free arbitrage rates in traditional markets have been steadily declining, while arbitrage rates in on-chain DeFi projects are on the rise. Returning to DeFi presents an excellent opportunity.
New Growth Drivers: In addition to traditional DeFi sectors like lending and DEXs, two strong growth engines have emerged — BTC and ETH’s LSD (Liquid Staking Derivatives) and Restaking projects.

Capital Decline: The TVL (Total Value Locked) in DeFi projects rose from $31 billion last week to $33 billion, a decrease of 6.45%, mainly driven by the increase in the underlying assets BTC and ETH prices.

In-Depth Analysis

Drivers of the Rise The broader market saw a sustained upward trend this week, and the DeFi sector followed with strong performance, offering users higher APY yields. As prices continued to rise, market confidence grew stronger. Investors are highly optimistic about the future price trends of BTC and ETH, the two foundational assets, and thus remain committed to holding them. At the same time, they are participating in various DeFi projects to enhance the returns on their holdings.

Growth Leaders For DeFi projects, TVL growth is the most direct indicator of success. According to TVL growth statistics, the projects with the most significant growth this week were BTCFi projects within the DeFi sector. These projects involve wrapping BTC into tokenized assets to participate in various DeFi arbitrage and yield-generating activities. The core of BTCFi projects is to guide users to deposit assets into their platforms, where they help users find the underlying protocols offering the highest returns. Ultimately, the funds deposited by users are transferred to various underlying protocols.Therefore, investors should pay closer attention to BTCFi projects that issue LRT (Liquid Restaking Tokens) based on BTC when making investment decisions in the near future.

BTCFi Sector Overview

Current Sector Status

This week, projects in the BTCFi sector have regained market and institutional attention, following the broader market’s price rise. Leading investment institutions, such as Binance and OKX, have announced investments in BTCFi projects that focus on staking BTC to mint wrapped liquid staking tokens (LST), making a strong entry into the BTCFi sector. Most LST projects based on BTC have seen a rise in TVL this week, with growth far exceeding the rise in BTC’s price.

Current Sector Conditions

BTC rose by 10.82% this week. Excluding BTC’s price increase, the TVL growth of various BTC-based LRT (Liquid Restaking Tokens) projects were: Bedrock (0.18%), Lombard (14.26%), Lorenzo (305.28%), Pell Network (-25.83%), PumpBTC (10.25%), Solv Protocol (15.23%), and Stakestone (-2.12%).
Bedrock allows users to stake wBTC and receive uniBTC, as well as earn foundational returns by staking wBTC. Previously, Bedrock hit its quota, but it has recently increased the number of Babylon points users can earn by staking BTC. This week, Penpie introduced uniBTC with an APY of 27%, though the response was moderate. Bedrock mainly benefited from BTC’s price rise.
Lombard allows users to stake Bitcoin via Babylon, with Lombard managing the restaking process. Binance Labs invested in Lombard this week, helping accelerate LBTC’s evolution toward becoming a core primitive like stETH for BTC, enabling wider adoption across more DeFi projects.
Solv Protocol launched the concept of the Staking Abstraction Layer (SAL) this week, designed to capture BTC liquidity from Ethereum EVM, BNB Chain, CeDeFi, and other ecosystems. This creates a unified and transparent standard for homogeneous and heterogeneous chain assets. Solv aims to solve the issue of fragmented BTC liquidity by building a liquidity aggregation service layer to speed up the aggregation and circulation of BTC assets. Additionally, Solv Protocol completed an $11 million fundraising round led by OKX.
Lorenzo Protocol increased the number of Babylon points earned by staking BTC last week, and Babylon authorized Lorenzo with a quota of 1,120 BTC. This week, the quota was fully subscribed by users. Lorenzo Protocol, via Pell Network, offers stBTC yields of over 30%, attracting a large number of participants.
PumpBTC received support from DeFi projects like Coral Finance this week, enabling pumpBTC trading. Four minting paths for pumpBTC were launched: Pump on Bera Windows, PumpBeraFrens Window, Wallet Window, and Whale Window, further expanding the minting of pumpBTC.
Pell Network raised $3 million in a pre-seed round this week, co-led by Halo Capital, Mirana Ventures, and Paper Ventures.
Stakestone plans to adopt a model similar to ETH-STONE, where users stake native Bitcoin to Babylon and mint STONEBTC for cross-chain liquidity. This week, Stakestone announced collaborations with Zerolend and Zircuit, aiming to explore new growth opportunities in the RWAfi (Real-World Asset Finance) field.

In the BTCFi sector, projects based on BTC-issued LSTs have shown standout performance recently. For BTCFi projects, TVL is a key indicator of success. The data shows that alongside the rise in BTC prices this week, various LST projects have also seen their TVL increase. This is largely due to the positive outlook investors have on BTC’s future, with many believing that BTC is worth holding at this stage. At the same time, they seek additional returns by depositing their BTC into protocols that wrap them into LST tokens, then using those tokens to stake in other projects for even more returns, effectively maximizing their BTC’s yield.

From a medium- to long-term perspective, BTC has the potential and space to grow, forming the foundation for the BTCFi sector’s continued development. Additionally, leading institutions such as Binance and OKX have announced investments in BTCFi projects this week, signaling strong institutional confidence in the sector. As a result, 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)

Aptos:

Due to the overall market’s continued upward trend, the meme projects within the Aptos ecosystem have become more active. The daily average transaction volume on the Aptos chain has surged by 474%, reaching 4.4 million transactions. The DeFi TVL on the Aptos chain grew by 123%, reaching $603 million, while daily DEX trading volume increased by 189%, hitting $30 million. Aptos’ ecosystem has been particularly active recently, especially as October 18 marks the chain’s two-year anniversary. To celebrate, Aptos has been hosting numerous commemorative events and on-chain meetings, drawing significant attention.

Starknet:

This week, Starknet initiated its four-phase plan to transition into a fully decentralized PoS network. The first phase was launched, introducing a permissionless staking protocol and delegation staking. Users can now stake STRK tokens on Starknet’s testnet, Starknet Sepolia, with a promise of rewards for those who participate in the staking test. As a result, many STRK holders have joined the test staking.

Scroll:

This week, the Trump family-backed DeFi project Worldlibertyfi was launched on Scroll, attracting significant traffic to the network. Additionally, Scroll’s airdrop snapshot will take place on October 19. Although the criteria for the SCR airdrop have not yet been announced, users have been increasing their on-chain activity in the final days to maximize their chances of receiving the airdrop. Consequently, Scroll’s TVL has seen rapid growth this week.

Osmosis:

Osmosis introduced wrapped BTC (WBTC) into its ecosystem, supported by the Nolus Protocol. With the recent surge of interest in BTCFi and BTC’s continued price increase this week, Osmosis’ TVL has steadily grown. Additionally, Osmosis has ramped up its efforts to support on-chain payments, launching Osmosis Pay this week and securing a partnership with Visa.

Stacks:

As BTC prices continue to rise, Stacks, the earliest BTC Layer 2 project, has garnered renewed market attention. This week, Stacks’ primary testnet successfully completed a hard fork and is currently running the full Nakamoto version. If no issues arise, the final mainnet upgrade is expected to occur this weekend or next week.

Top 5 Tokens by Growth in the Past Week

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

This week, the gainers list did not show a “sector concentration” feature, as the rising tokens were spread across sectors such as Restaking, DePIN, Layer 1 chains, AI, and decentralized sequencers.

ENA:

This week, the Ethena Foundation proposed integrating Hyperliquid Ethena liquidity with USDe and adding SOL as one of the assets supporting USDe. This attracted a wave of market attention and capital to ENA. Additionally, Solv Protocol not only secured $11 million in financing led by OKX but also launched the Staking Abstraction Layer (SAL), a new concept designed to unify staking across various protocols. As a project supported by Solv, Ethena LST (SolvBTC.ENA) benefited from the increased traffic Solv received, which is positive news for ENA.

STORJ:

As part of the AI concept within the DePIN sector, Storj saw an uptick this week following Nvidia’s third-quarter earnings report, which exceeded expectations and spurred growth in the AI sector. However, there were no direct positive developments from the Storj project itself.

ARK:

Ark is a Layer 1 blockchain project aimed at creating a highly interoperable and flexible blockchain ecosystem. Its core feature, SmartBridge technology, enables seamless interaction across different blockchains. There were no specific positive news developments for Ark this week.

ARKM:

ARKM announced plans to list on the BBG exchange next month and also received support from OpenAI. As a long-standing project in the AI sector, ARKM benefited from the recent AI sector rally.

METIS:

This week, Metis partnered with Chainlink, integrating Chainlink’s Cross-Chain Interoperability Protocol (CCIP) to enhance Metis’ cross-chain innovations. Metis also experienced a sharp increase in TVL, as more sequencer node operators joined and continued to stake METIS. Additionally, many users delegated their METIS tokens to LST protocols paired with sequencer nodes to earn rewards. The on-chain activity surged, with a 640% increase in Metis’ transaction volume, significantly boosting its network activity.

Meme Token Gains Ranking

This week, the broader market has been on an upward trend, with overall positive sentiment returning. Investors are once again optimistic about the future market outlook. Meme tokens outperformed the broader market this week, with significant price gains across various Meme projects. These projects have generated wealth effects, attracting funds to the Meme sector.

GOAT: GOAT originated from an AI bot known as Truth Terminal (@truth_terminal), which operates in a semi-autonomous mode, where human administrators can approve its Twitter posts and decide with whom it interacts. GOAT is now the official token of@truth_terminal. @truth_terminal is a carefully tuned OPUS large language model, trained on data from platforms like Reddit and 4chan. Essentially, it is trained on content derived from extreme subcultures. The AI is designed to debate belief systems generated by AI, combining elements of Meme culture.

Social Media Hot Topics

Based on the top five growth assets from LunarCrush and the AI scores from Scopechat, the most frequently mentioned theme this week is Layer 1 (L1) blockchains. The following token performances have been noted (tokens with low trading volume and meme coins are excluded):

Data analysis indicates that Layer 1 blockchain projects have garnered the highest attention on social media this week, generally exhibiting an upward trend, with price increases outperforming the broader market. Throughout the week, not only have various public chain meme projects been very active, attracting significant funding for their respective blockchains, but the DeFi ecosystems within these public chains have also seen a recovery, with increases in Total Value Locked (TVL) and trading volumes. This phenomenon reflects the optimistic sentiment among investors regarding future market developments under the current market conditions.

Overall Market Themes Overview

Weekly Performance Overview

Meme Sector: In the meme sector, DOGE and SHIB hold significant market shares, accounting for 44.68% and 24.76%, respectively. This week, both DOGE and SHIB performed exceptionally well, rising by 26.53% and 15.21%. Although other meme coins have smaller market shares, they also saw substantial increases, resulting in outstanding overall performance for the meme sector.
Depin Sector: In the Depin sector, the market shares of various tokens are more evenly distributed, with FIL, RENDER, THETA, AR, and HNT making up the highest total share of 78.78%. This week, their performance was mediocre, with no significant price increases. Furthermore, the Depin sector did not attract much attention to the market, leading to a lack of substantial upward movement in line with broader market trends.

Upcoming Major Crypto Events

Tuesday, October 22: Blockchain Life
Thursday, October 24: U.S. Initial Jobless Claims for the week; Solana Hacker House
Friday, October 25: U.S. University of Michigan Consumer Sentiment Index final for October

Outlook for Next Week

The U.S. is entering the final month of the presidential election, and Republican candidate Donald Trump, who has historically shown an open attitude toward the crypto industry, has gained support from the sector. Recently, Trump’s approval ratings have surpassed those of Democratic candidate Kamala Harris, and he has gained a lead in various swing states, increasing his probability of becoming the 50th president of the United States. This has contributed to a recovery in market sentiment. Additionally, BlackRock’s third-quarter report exceeded expectations, and its BTC spot ETF is experiencing the fastest growth among its assets, further boosting optimism about future market conditions.

However, there have been no substantial positive developments in the crypto market recently, so the expectation is for the market to likely remain in a range-bound trend next week. During such fluctuations, Bitcoin (BTC), as a leading asset in the crypto industry, tends to outperform other assets, making it the preferred choice for investors. Therefore, opportunities in the BTCFi sector are expected to be the most promising next week.

BTCFi: Solv Protocol primarily focuses on minting wrapped assets (LBTC) using BTC as the underlying asset, allowing users to hold LBTC and participate in DeFi projects. After introducing the Staking Abstraction Layer (SAL) concept this week, Solv Protocol aims to concentrate dispersed BTCFi liquidity and establish a unified standard for the entire industry, building a liquidity aggregation service layer to accelerate the accumulation and circulation of BTC assets. As a result, the potential ceiling for Solv Protocol has increased alongside the introduction of SAL. Being a pioneer in this area, if successful, Solv Protocol’s valuation will likely exceed that of other BTCFi projects also classified as LSTs.