Frontier Lab Crypto Market Weekly Report｜W48

Market Overview

Summary of Major Market Trends

• Market Sentiment and Overall Trends

This week, the market sentiment index rose to 83%, remaining nearly flat compared to last week’s 82%, reflecting a sustained phase of greed. Despite some corrections during the week, the overall market remains near historical highs, with investors maintaining an optimistic outlook on future trends. A rotation of funds is anticipated in the coming weeks.

• Altcoin Performance and Fund Flows

Altcoins followed the broader market’s correction earlier in the week but rebounded after Wednesday, driven by ETH’s rally. This resulted in a general upward trend. Projects across various blockchain ecosystems saw gains as ETH’s price increase bolstered confidence in the future performance of altcoins.

• Outstanding Performance of DeFi Projects

DeFi-related projects performed notably well, as investor focus on improving base yields continues to grow. The Sei ecosystem gained significant attention this week, with its TVL showing rapid growth, underscoring the appeal of liquid staking projects. Additionally, the rise in APYs due to higher base asset prices attracted a large number of users.

• Pullback in Meme Coin Sector

This week saw widespread declines in the Meme coin sector, with funds beginning to flow out of these projects, reflecting waning enthusiasm for Meme coins. Changing market sentiment has redirected capital towards more promising DeFi projects, leading to underperformance in the Meme sector.

• Rapid Growth of Blockchain Ecosystems

Blockchain ecosystems saw broad gains driven by ETH’s rally, with Sei and Fantom chains standing out. Sei’s TVL increased significantly, attracting a large influx of new users and showcasing the ecosystem’s strong appeal.

• Social Media Sentiment Analysis

Layer 1 blockchain projects garnered the highest attention on social media this week, with an overall upward trend. Investors showed strong interest in DeFi projects within blockchain ecosystems, pushing TVL and transaction volumes higher, reflecting market optimism about future prospects.

• Outlook for Next Week and Investment Recommendations

Looking ahead to next week, macroeconomic data is expected to influence market movements, likely resulting in a period of volatility. Investors are advised to exercise caution, particularly in identifying higher yield opportunities in DeFi liquid staking protocols. Additionally, keeping an eye on developments in the AI Agent sector could reveal promising investment opportunities.

Market Sentiment Index Analysis

The market sentiment index rose to 83% this week, holding steady compared to last week’s 82%, reflecting a phase of greed.

Altcoins initially mirrored the broader market’s correction earlier in the week but rallied alongside ETH after Wednesday, resulting in a generally upward trend. Following ETH’s price increase, projects within various blockchain ecosystems experienced gains, boosting confidence in the future performance of Altcoins. Market participants widely anticipate fund rotations in the coming weeks.

The broader market, despite undergoing some corrections this week, remains near historical highs. With the sentiment index approaching the “extreme greed” level of 90%, a further correction remains possible. Investors are advised to adopt prudent risk management strategies.

Overall Market Trend Overview

• The cryptocurrency market displayed a consolidating trend this week, with the sentiment index firmly in the greed phase.
• DeFi-related projects performed strongly, reflecting continued market focus on improving base yields.
• Meme sector projects broadly declined as the broader market corrected, with funds flowing out of Meme coins.
• Blockchain ecosystems experienced widespread gains, led by ETH’s rally.

Hot Sectors

Sei Ecosystem

Following the strong performance of the Sui blockchain last week, this week saw a decline in on-chain activity and SUI token price as funds began to flow out. Meanwhile, Sei’s ecosystem garnered significant market attention, with both interest and capital shifting toward its DeFi projects.

Sei Blockchain DeFi Project Data

• TVL Growth: Sei’s total value locked (TVL) surged by 39.26%, climbing from $216.61 million last week to $257.03 million this week. This indicates active capital inflow into the Sei blockchain.
• New Accounts: The number of newly created accounts on Sei experienced significant growth, with 623,800 accounts added this week, a 27.12% increase from the previous week, underscoring Sei’s strong user acquisition momentum.
• DEX Trading Volume: Decentralized exchange (DEX) trading volume on Sei reached $99.14 million this week, up 82.13% from last week’s $54.23 million. This highlights the rapid increase in trading activity, with Dragon Swap and Jellyverse — the two largest DEXs on Sei — seeing TVL increases of 25.52% and 62.74%, respectively.
• DeFi TVL Growth: In the Sei ecosystem, the top three DeFi projects by TVL are Yei Finance (lending), SiloStake (liquid staking), and Dragon Swap (DEX). Their TVL grew by 27.32%, 38.43%, and 25.52% respectively this week, demonstrating the ecosystem’s robust growth in DeFi project participation.

A key indicator of a blockchain’s market favorability is its TVL trajectory. Based on the above data, Sei is exhibiting high-speed development. The significant price increase of SEI this week has bolstered the ecosystem by raising the APY of on-chain DeFi projects. This has attracted a substantial influx of users, fueling the ecosystem’s expansion and further strengthening its position in the blockchain landscape.

DeFi Sector

TVL Growth Rankings

The top 5 projects by TVL growth over the past week (excluding projects with smaller TVL, with a minimum threshold of $30 million). Data source: DefiLlama.

iZUMi Finance (IZI) (Recommendation: ⭐️⭐️)

• Project Overview: iZUMi Finance is a multi-chain DeFi protocol offering Liquidity-as-a-Service (LaaS) to help projects achieve better on-chain liquidity in an efficient and sustainable way.
• Latest Developments: This week, iZUMi Finance partnered with Taiko to launch a Rush campaign, distributing 75,000 TAIKO tokens to TAIKO token holders via iZiSwap. Participants could earn up to 3x points through activities like swaps and liquidity provisioning on iZiSwap (Taiko mainnet). Additionally, iZUMi’s LiquidBox product offered an attractive 283.75% APY, drawing a significant influx of users to the platform.

SiloStake (Not yet issued a token) (Recommendation: ⭐️⭐️)

• Project Overview: SiloStake is a liquid staking protocol on the Sei blockchain, designed to enhance the utility and value of SEI tokens by providing liquidity.
• Latest Developments: With growing market enthusiasm, SiloStake increased its staking APY for SEI from 4.2% to 5%. Coupled with a 43.12% rise in SEI token price this week, SEI holders were incentivized to stake their assets for higher yields, leading to a significant uptick in staking activity on SiloStake.

Lenfi (AADA) (Recommendation: ⭐️)

• Project Overview: Lenfi is a lending protocol built on the Cardano blockchain.
• Latest Developments: The rapid rise in ADA token price this week led to increased reluctance among users to sell their ADA holdings. Instead, users sought leverage to maximize profits during this bullish phase by staking ADA to obtain funds. Lenfi experienced a noticeable increase in lending volume, with rising lender APYs attracting more deposits. However, there were no specific announcements or promotions from Lenfi this week.

Kelp DAO (Not yet issued a token) (Recommendation: ⭐️⭐️⭐️)

• Project Overview: Kelp DAO is a liquidity re-staking (LRT) solution platform built on EigenLayer, offering liquidity for staked Ethereum assets. Kelp DAO’s hgETH token allows users to re-stake liquid staking tokens (like stETH or ETHx) on EigenLayer.
• Latest Developments: Kelp DAO not only provides hgETH tokens to users staking ETH but also employs strategies to deliver up to 20% APY. The significant price increase in ETH this week boosted optimism among ETH holders, prompting many to pursue higher APYs by utilizing Kelp DAO.

Flexa (Not yet issued a token) (Recommendation: ⭐️⭐️)

• Project Overview: Flexa aims to facilitate the natural adoption of cryptocurrencies in merchant payment systems, enabling users to utilize digital assets in real-world transactions through its payment network.
• Latest Developments: Flexa made notable progress this week by enabling payments via its app at thousands of supporting stores and restaurants across the United States, bridging the gap between crypto and offline commerce.

This week, projects with rapid TVL growth were primarily concentrated in the liquid staking (LRT) sector, reflecting the market’s continued interest in maximizing yields and liquidity efficiency.

Overall Sector Performance

• Steady Growth in Stablecoin Market Cap: USDT’s market capitalization increased from $135.4 billion last week to $138.6 billion this week, reflecting a 2.36% growth. Similarly, USDC’s market cap rose from $37.7 billion to $39.4 billion, an increase of 4.51%. This indicates growth in both USDT, dominant in non-U.S. markets, and USDC, focused on the U.S. market, suggesting sustained capital inflows into the cryptocurrency ecosystem.
• Increasing Liquidity: Risk-free arbitrage rates in traditional markets continue to decline due to ongoing interest rate cuts. Conversely, arbitrage rates in on-chain DeFi projects are rising, driven by the increasing value of crypto assets. This trend makes DeFi an increasingly attractive option for capital deployment.

The TVL across various DeFi sectors (Source: DefiLlama)

• Capital Inflows into DeFi: The total value locked (TVL) in DeFi projects rose from $45.2 billion last week to $46.8 billion this week, a 3.53% increase. This consistent upward trend over the past few weeks indicates sustained capital inflows into DeFi platforms, demonstrating growing investor interest and confidence in the sector.

In-Depth Analysis

Driving Forces Behind Growth

This week, BTC prices saw a brief pullback before rebounding, while ETH outperformed BTC with significant gains. Although BTC and ETH experienced fluctuations, market sentiment remains optimistic about their future price trajectories. This confidence has encouraged investors to hold their positions firmly. The rise in ETH prices has also prompted increased participation in various DeFi projects, allowing investors to generate additional returns while retaining their original assets.

Top Growth Leaders

TVL growth serves as the most straightforward metric to gauge a DeFi project’s performance. According to TVL leaderboards, the projects with the most notable growth this week belong to the liquid staking sector. The substantial increases in the base assets of various blockchains have strengthened user confidence in holding these assets. At the same time, users aim to unlock liquidity to participate in other investment opportunities and boost their returns. This demand has driven the adoption of liquid staking projects, which allow users to earn higher yields without altering their core asset holdings.

The growth of liquid staking projects hinges on the appreciation of their underlying assets. As ETH prices continue to rise, the prices of other blockchain networks’ base assets are expected to follow suit. Consequently, liquid staking projects on these blockchains are also likely to see further growth.

Investment Strategy

Investors should focus on the liquid staking sector across various blockchain ecosystems when making investment decisions in the near term. These projects offer significant growth potential as they capitalize on rising base asset prices and the increasing demand for yield optimization.

Other Sector Performance

Public Chains

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

• Mode

Mode has capitalized on the AI Agent trend by introducing its on-chain AI Agent product, Olas Modius. Unlike other blockchain AI Agents, Mode’s AI Agent App Store serves as a hub for DeFi-specific AI agents. This platform aims to enhance yield optimization by recommending AI Agent tools to users. Following the hype generated by AI Agent concepts through Meme projects, on-chain users are now exploring DeFi-focused AI Agent initiatives.

• Sei

After Sui’s robust performance last week, both Sui’s on-chain activity and SUI’s price declined, signaling noticeable capital outflows. Meanwhile, Sei captured the spotlight with SEI prices surging 38.32%, the highest among all blockchains, defying the broader market trend. This price spike, along with rapid ecosystem growth, appears to have absorbed capital outflows from Sui, highlighting Sei’s rising prominence.

• Fantom (Sonic Labs)

Fantom recently rebranded as Sonic Labs, which is expected to launch in December. There are rumors of airdrop rewards for ecosystem contributors, generating significant buzz. This optimism propelled FTM prices to a 51.52% increase this week. Fantom’s ecosystem also experienced remarkable growth, with top projects like Beethoven X, SpookySwap, Equalizer, and WigoSwap seeing their TVLs rise by over 40%.

• Algorand

Algorand launched a Meme token series this week, drawing market attention and some capital inflows. Its largest DeFi project, Folk, saw its TVL climb 39%, directly boosting the chain’s overall TVL. Meanwhile, ALGO token prices rose 36.71%, outperforming most other tokens and securing additional investor interest.

• Cardano

Cardano founder Charles Hoskinson expressed willingness to collaborate with a Trump-led U.S. government on cryptocurrency legislation, fueling speculation and optimism. Rumors of ongoing discussions with the Trump administration further spurred ADA’s rapid price growth. Previously flagged by the SEC as an unregistered security, Cardano’s rise reflects market expectations that a Trump administration would adopt a more open and lenient stance on cryptocurrency regulation. This sentiment led to a significant surge in projects formerly targeted by the SEC.

Top 5 Tokens by Growth in the Past Week

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

This week’s top gainers exhibited a clear sectoral trend, with most rising tokens belonging to the Layer 1 (L1) ecosystem. Here’s a detailed look:

• LCX

LCX is a cryptocurrency trading platform based in Liechtenstein, allowing users to trade seamlessly across major exchanges through a unified interface. This week, LCX listed several popular projects, including DEAI, CPOOL, CROWN, BANANA, and PAAL, attracting significant trading volume and user attention. The increased platform activity translated into a notable price increase for LCX’s native token.

• BASEDAI

BasedAI is a decentralized P2P network that integrates Fully Homomorphic Encryption (FHE) with Large Language Models (LLM) to enhance data privacy during AI model interactions. This week, BasedAI announced a two-year MAINNET cluster data center protocol across Estonia, Iceland, Denmark, Japan, and the U.S., marking a major development milestone. Riding on the current AI Agent trend, BasedAI also revealed plans to launch its AI Agent, further bolstering its market position.

• QUBIC

Qubic is a community-driven initiative aggregating GPU and CPU computational power to support AI models like Aigarth. The project released its white paper this week, outlining a strategic pivot to becoming an AI-oriented Layer 1 blockchain. By channeling its computing resources into AI model development, Qubic positions itself as a vital infrastructure layer in the expanding AI ecosystem.

• XLM (Stellar)

Stellar is a blockchain-based payment network facilitating decentralized transfers between cryptocurrencies and fiat currencies. This week, following Donald Trump’s election victory, optimism about relaxed SEC scrutiny spurred price increases for projects previously flagged by the SEC, such as XLM and XRP. XLM, as a major U.S.-based blockchain project, saw a significant price surge fueled by its association with anti-SEC narratives.

• ENS (Ethereum Name Service)

ENS is a decentralized domain name service operating on the Ethereum blockchain, simplifying blockchain interactions by mapping Ethereum addresses to human-readable names. With Ethereum’s price climbing sharply this week, its ecosystem experienced renewed growth, benefiting ENS significantly. Increased user activity and demand for ENS domains drove its token price higher, reflecting its integral role within the Ethereum infrastructure.

The projects leading this week’s gains highlight a market focus on AI innovation, Layer 1 blockchain enhancements, and Ethereum ecosystem expansion. The trend suggests a strong preference for projects combining technological relevance with ecosystem utility.

Social Media Hot Topics

Based on the data from LunarCrush and Scopechat, the most frequently mentioned theme this week (11.23–11.29) was Layer 1 (L1) blockchains, with the following insights:

Data Sources: Lunarcrush and Scopechat

Based on the data, Layer 1 blockchain projects dominated social media discussions this week, with most showing an upward trend and outperforming BTC and ETH. This surge in attention aligns with notable price increases across these projects.

In contrast, Meme coin projects saw a decline compared to last week. On-chain users shifted their focus and funds to DeFi projects on Layer 1 blockchains. As the overall crypto market experienced price gains, DeFi projects offered significantly higher APY returns, attracting more participation. This trend led to a notable rise in TVL and transaction volumes across DeFi ecosystems.

This behavior reflects the current market sentiment, where investors remain optimistic about future market conditions and are actively seeking higher returns through DeFi opportunities. The focus on Layer 1 ecosystems suggests a preference for projects with robust fundamentals and a long-term growth outlook.

Overall Market Overview

Sector

Data Sources: SoSoValue

According to weekly return rate statistics, the GameFi sector performed the best, while the Meme sector performed the worst.

• GameFi Sector: This week, GameFi emerged as the top-performing sector, primarily due to the ETH price rally, which caused a market-wide surge. The leading GameFi projects IMX, GALA, and SAND showed impressive gains, up 28.53%, 24.72%, and 68.43%, respectively. Together, these three projects accounted for 53.48% of the GameFi market, driving the sector’s strong performance after a period of lackluster growth.
• Meme Sector: The Meme coin sector, however, showed the weakest performance. As the market cooled and the FOMO (fear of missing out) effect diminished, Meme coins began to see a decline in interest. Many Meme projects across various blockchains experienced price drops as investors moved funds to other sectors. This reflects the inherent volatility of Meme coins when speculative interest wanes.

Next Week’s Crypto Events

• Monday (Dec 2): U.S. ISM Manufacturing PMI for November; Chicago Options Exchange to launch its first cash-settled BTC options.
• Tuesday (Dec 3): U.S. ADP Employment Report for November.
• Thursday (Dec 5): U.S. Initial Jobless Claims for the week.
• Friday (Dec 6): U.S. Unemployment Rate and Non-Farm Payrolls for November.

Outlook for Next Week

This week, due to the upward trend in the U.S. PCE core price index and the Federal Reserve meeting minutes suggesting a possible slowdown in interest rate cuts, market bets on the Fed halting interest rate cuts in December increased significantly. This indirectly caused a large-scale correction in the crypto market, following BTC. On Wednesday, ETH saw a significant rise, driving other sectors upward. However, due to the Thanksgiving holiday, no new funds entered the crypto market afterward. It is expected that the crypto market will be significantly influenced by macroeconomic data next week and is likely to experience a period of consolidation. Investors should remain cautious.

DeFi projects, especially liquidity staking protocols, performed very well this week. This is primarily because liquidity staking protocols benefit from the rise in the price of underlying assets. Since the essence of DeFi projects is arbitrage, the arbitrage rates of DeFi projects are increasing as the value of crypto assets rises. As a result, these projects are expected to continue attracting a large number of investors seeking higher returns.

AI Agent projects are still in the early stages, mainly concentrated on Solana, Ton, and Base chains. Currently, the market is mainly focusing on two types of projects: Meme coin projects linked to the AI concept and AI Agent token launch platforms. For ordinary investors, the chance of hitting the right Meme coin is very low. Therefore, attention should be given to AI Agent token launch platform projects, similar to Meme token launch platforms like Pump.fun. Key factors to monitor are whether the number of tokens launched daily on the platform continues to increase and if the trading volume continues to grow positively.