Investment Opportunities in Stablecoin Innovation and Regulation | Frontier Lab Crypto Market Weekly
Market Overview
Overall Market Conditions
This week, the cryptocurrency market experienced a downward trend, with panic sentiment further intensifying. The market sentiment index dropped from 45% to 5%, reaching an extreme fear level. Although the growth rate of stablecoin market capitalization slowed, it still maintained an upward trajectory (USDT reached $144 billion, USDC reached $60.7 billion, with respective changes of -0.13% and +0.66%). This suggests that institutional capital currently holds divergent views on the short-term outlook of the crypto industry. Notably, USDC, primarily held by U.S. investors, have continued to show relatively strong growth.
The market performed strongly from Monday to Wednesday, but on Thursday, the U.S. government announced a new tariff policy that exceeded market expectations. This heightened investors’ concerns about future inflation and the potential for a U.S. recession. Furthermore, significant uncertainties remain regarding the implementation of these tariffs, which triggered a sharp market downturn.
Next Week’s Bullish Pick: PENDLE PENDLE: Triple Drivers of Compliance Architecture, Market Innovation, and User Growth
Strategic Significance of the Compliant Citadel Architecture Pendle’s newly launched compliant Citadel architecture provides a structured, regulated bridge for institutional capital, bringing on-chain fixed income products into the traditional finance world. This initiative addresses institutional pain points in compliance, custody, and execution. Through collaboration with regulated investment management entities and the establishment of Special Purpose Vehicles (SPVs), it lays the foundation for the migration of fixed income markets onto blockchain. Given the global fixed income market exceeds $100 trillion, even a small portion moving on-chain could inject billions to tens of billions in potential liquidity into Pendle. As institutional investors grow increasingly optimistic about the long-term value of crypto assets, Pendle’s positioning in this area becomes particularly significant, highlighting its future growth potential.
Innovation and Market Opportunity of the Boros Platform Pendle’s upcoming sub-platform, Boros, focuses on fixed-rate trading of perpetual funding fees — an income stream in crypto markets that has yet to be effectively structured. With over $150 billion in open interest and daily trading volumes surpassing $200 billion, the global perpetual contract market holds tremendous potential. The launch of Boros signifies Pendle’s transition from a DeFi yield platform to an on-chain interest rate trading desk. It will serve as a foundational tool for protocols seeking stable yields. By offering funding rate hedging, fixed spread settings, and carry trade strategies, Boros aims to attract large-scale asset managers and further solidify Pendle’s position as core DeFi fixed income infrastructure.
Dual Drivers of Steady Growth and Strong User Engagement Pendle has demonstrated excellent performance over the past six months, with data showing a stable and rapid growth trajectory. According to DefiLlama, Pendle’s project revenue over the past six months has reached $16.5 million, with a monthly growth rate of approximately 20%. Meanwhile, the number of active user addresses has exceeded 360,000, with a monthly growth rate of over 45%, indicating a significant increase in user engagement. In addition, the number of new user addresses reached 103,000, with a monthly growth rate of over 40%, showcasing the project’s strong capability in attracting new users. These key metrics reflect Pendle’s rapid development in the market and its robust growth potential. Based on current data, Pendle’s future growth prospects appear highly promising.
Bearish Tokens: BNB, MAGIC, TNSR, AXS
BNB: Binance’s Triple Crisis — Rule Adjustments, Stablecoin Depegging, and Collapsing Market Trust Rule Adjustment Issues Amid Meme Coin Crash On April 1st (April Fool’s Day), Binance abruptly adjusted the leverage and margin tiers of multiple token contracts, giving users less than three hours to react. This directly caused a sharp decline of up to 50% in several Meme coins such as ACT, DEXE, and HIPPO. The hasty rule changes were made without fully assessing their market impact, particularly the impact on market makers’ positions. As an industry leader, Binance’s decision triggered a chain reaction and panic selling, severely damaging market confidence in its risk management capabilities.
Deeply Bound Risks in FDUSD Depegging Crisis Binance holds about 94% of FDUSD’s circulating supply (approximately $2.35 billion), creating a highly concentrated risk exposure. As a replacement for BUSD, FDUSD is deeply tied to Binance’s operations. Market trust in FDUSD is largely based on Binance’s backing. This tight linkage revealed serious hidden risks during the FDUSD depegging incident — when FDUSD faces a crisis, investors’ trust in Binance is also shaken, and vice versa. This forms a dangerous two-way risk transmission mechanism.
Market Trust Crisis and Reputational Risk A series of negative events is building a crisis of confidence around Binance. From the Meme coin crash and FDUSD depegging to public questioning by industry figures like Justin Sun, Binance’s decision-making and crisis-handling capabilities are being challenged as never before. These incidents not only affect short-term market sentiment but could also cause long-term reputational damage, impacting user retention and market share. If Binance fails to effectively manage these crises and rebuild market confidence, its leadership position in the industry could face a substantial threat.
MAGIC: Treasure DAO Hit by Triple Blow — Financial Exhaustion, Business Retrenchment, and Ecosystem Breakdown Severe Deterioration in Financial Health Treasure DAO’s financial situation is critically strained, with annual operating expenses reaching $8.3 million and only $2.4 million left in its treasury. Its expected runway can only support operations until July 2025. Even after withdrawing $785,000 of idle funds from market maker Flowdesk, its stablecoin balance would only increase to $3.2 million, which at best could extend its runway to February 2026. This severe capital shortage poses a direct threat to the project’s continued existence.
Comprehensive Business Retrenchment Facing a survival crisis, Treasure DAO has implemented aggressive cutbacks, including laying off 15 employees, terminating support for game publishing, and halting development of Treasure Chain. It is also assisting partners in migrating to other blockchains. This full-scale retreat not only signifies a complete failure of the project’s development strategy but also indicates that its core value proposition can no longer be sustained in the current market environment. This severely weakens the project’s long-term competitiveness and value creation capability.
Rapid Decline in Ecosystem Attractiveness With the cessation of game publishing support and abandonment of Treasure Chain, the ecosystem’s appeal to developers and users will rapidly decline. Partners are being forced to migrate to other blockchain platforms. The disintegration of the ecosystem will lead to user attrition and significantly reduce the utility value of the MAGIC token, further undermining market confidence in the project and accelerating capital outflow and value collapse.
TNSR: Tensor Faces Dual Pressure — Sluggish NFT Market and 126 Million Token Unlocking Event Tensor is an NFT project. Since the end of the last bull cycle, the NFT sector has remained in a prolonged slump and, in the current market, has been largely overshadowed by the Meme coin craze. As a result, NFT projects currently receive little market attention. Furthermore, Tensor is scheduled to unlock 126 million TNSR tokens on April 8, accounting for 12.64% of its total supply. According to its linear vesting chart, this unlock is mainly targeted at institutional investors and the project team. Given the project is currently in a downtrend, it is highly likely that these investors and team members will sell to realize profits, which could put downward pressure on the price of the TNSR token.
AXS: Axie Infinity’s Predicament — 8.43 Million AXS Unlock May Trigger Sell-Off Amid GameFi Weakness Axie Infinity is a GameFi project. The GameFi sector has underperformed in this cycle, and the current market is in a risk-averse mode. As a result, capital tends to exit low-liquidity sectors first, exacerbating the decline of GameFi projects. On April 11, 8.43 million AXS tokens are scheduled to be unlocked, accounting for 3.12% of the total locked supply. According to the linear unlocking schedule published in its white paper, this unlock is primarily for early institutional investors and the project team. Given the lack of attention and participants in the GameFi sector, this large unlock could lead to significant sell-offs, exerting additional pressure on the price of the AXS token.
Market Sentiment Index Analysis
The market sentiment index dropped sharply from 45% last week to 5% this week, indicating a rapid deterioration in sentiment and placing the overall market firmly in the extreme fear zone.
Hot Sector
Stablecoins — Innovation and Opportunities Driven by Regulation
Background
Background With Donald Trump’s return to the U.S. presidency, the government’s stance on stablecoins has shifted significantly, gradually moving from cautious observation to active promotion. The introduction of the STABLE Act of 2025 marks the official entry of the U.S. government into stablecoin regulation. This legislation establishes a comprehensive regulatory framework for payment stablecoins to ensure market transparency, protect consumer rights, and maintain financial system stability. Furthermore, state governments and major institutions are accelerating their entry into the stablecoin market. For example, Wyoming is launching its own stablecoin WYST, Trump family-owned World Liberty Financial Inc. (WLFI) is issuing the stablecoin USD1, Fidelity is testing a USD-pegged stablecoin, Circle, the issuer of USDC, has formally filed for an IPO, and Custodia Bank and Vantage Bank Texas have launched Avit, the first U.S. bank-issued stablecoin on Ethereum.
These moves highlight the growing importance and confidence governments and institutions place in the stablecoin market. They also indicate that under a gradually improving regulatory framework and the establishment of technical standards, the stablecoin market will experience a new round of explosive growth. This will not only foster the development of stablecoins themselves but also stimulate innovation and expansion in related infrastructure projects, injecting new vitality into the global cryptocurrency ecosystem.
Current Situation
The STABLE Act of 2025
The STABLE Act of 2025 was introduced on March 28, 2025 to establish a comprehensive regulatory framework for payment stablecoins to ensure transparency, protect consumer rights, and maintain financial stability. The Act defines the entities allowed to issue stablecoins, limiting them to approved subsidiaries of insured depository institutions, federally certified non-bank payment stablecoin issuers, and state-certified payment stablecoin issuers. It sets a stringent 100% reserve requirement and mandates transparency mechanisms, including independent audits and monthly reports. The Act establishes a multi-layered regulatory system covering both federal and state levels and sets entry barriers for foreign stablecoins. The penalties for non-compliance include both civil and criminal sanctions to ensure adherence.
The implementation of the STABLE Act will create competition for existing stablecoin issuers, raising compliance costs for current players while allowing new issuers to enter the market, thus splitting the existing market share. Moreover, the Act could trigger global coordination in stablecoin regulation, prompting other countries to draft similar regulatory frameworks. In the short term, the Act may bring some uncertainty, but in the long term, a clear regulatory framework will help stabilize and develop the market.
Wyoming Launches Stablecoin WYST
Wyoming plans to launch its own stablecoin, WYST, in July 2025. This will be the first U.S. entity-issued stablecoin backed by fiat. The token will be fully supported by U.S. Treasuries, cash, and repurchase agreements, with at least a 102% capitalization requirement. WYST is the first stablecoin issued by a public entity in the U.S., using LayerZero’s OFT standard to support cross-chain transfers. Wyoming plans to generate new revenue by using the interest income from reserve assets to fund education and infrastructure.
Governor Mark Gordon stated that the token could help farmers and ranchers develop new markets. The state government is considering using blockchain platforms like Solana, Ethereum, and Polygon to host the WYST token.
The launch of WYST marks an important step for the U.S. government in the stablecoin space and may lead other states or public entities to explore similar projects. By linking stablecoins to public interest, Wyoming enhances its image as a financial innovator and provides a model for other regions to follow. Furthermore, the cross-chain support will increase the token’s applicability and drive its usage in a variety of scenarios.
WYST’s adoption of LayerZero’s OFT standard will significantly boost LayerZero’s market recognition, demonstrating the technology’s effectiveness in practical applications and driving innovation and ecosystem expansion. WYST’s success could attract more projects to choose LayerZero, increasing its market share and warranting our continued focus on LayerZero.
World Liberty Financial Launches USD1
WLFI, the Trump family’s crypto venture, has officially announced its intention to launch the USD1 institutional stablecoin. USD1 will be 100% backed by short-term U.S. Treasuries, dollar deposits, and other cash equivalents, ensuring each USD1 token is redeemable at a 1:1 ratio for U.S. dollars. The token is designed to provide a “safe, compliant, and transparent” digital dollar tool for institutional and sovereign investors. This design is similar to other mainstream U.S. dollar-backed stablecoins (such as USDT and USDC), but WLFI emphasizes institutional-level compliance and transparency, aiming to attract large-scale investors.
The launch of USD1 not only marks the Trump family’s entry into the crypto business but also may drive deeper development within the stablecoin market. As a USD-pegged stablecoin, USD1 aims to attract institutional and sovereign investors by challenging existing giants like Tether and Circle with its emphasis on compliance and transparency. It could also promote the digitization of the U.S. dollar and drive the integration of traditional finance with the DeFi ecosystem.
WLFI also plans to partner with DeFi projects like Sui, Ondo Finance, Chainlink, and Aave to explore how blockchain finance can be more closely integrated with traditional finance. This indicates that Sui, Ondo Finance, Chainlink, and Aave will be key collaboration projects for USD1. The launch of USD1 could bring liquidity, compliance benefits, and market opportunities to these DeFi projects, making them worth monitoring over the long term.
Future Development
The stablecoin sector shows strong growth potential. As the circulation of fiat-backed stablecoins increases significantly, the market is shifting from DeFi speculation to mainstream business applications. Participation from big tech and financial institutions, combined with regulatory improvements, lays the foundation for broad acceptance of stablecoins. They not only offer advantages such as lower transaction costs and instant settlement, but also serve as important savings tools in high-inflation countries. Furthermore, financial institutions can generate new profit models by issuing stablecoins, increasing their competitiveness.
As a critical bridge between traditional finance and the crypto industry, the gradual compliance of stablecoins will enhance the overall regulatory transparency of the crypto industry and promote the development and innovation of some projects within legal frameworks. As stablecoins gain wider adoption, Web2 users will become more comfortable with crypto, providing a good opportunity for the popularization and implementation of crypto technology. At the same time, since many stablecoin projects are issued by governments or major institutions, their technical choices and partnerships will become focal points in the industry. This trend may bring positive impacts to related projects. The compliance process of stablecoins will not only help guide the industry towards greater standardization but also create more possibilities for the deep integration of crypto and traditional finance.
Overall Market Sector Performance
Weekly Return Statistics: The RWA sector outperformed the others, while the AI sector performed the worst.
- RWA Sector: In the RWA sector, OM, ONDO, and MKR have the largest market shares, collectively accounting for 94.32%. Their weekly price changes were -4.12%, -13.21%, and -13.01% respectively. The average decline in the RWA sector was lower than other sectors, which led to its best performance for the week.
- AI Sector: In the AI sector, TAO, RENDER, FET, and WLD make up 82.69% of the market. Their weekly price changes were -24.56%, -20.41%, -23.36%, and -24.78% respectively. The average decline in the AI sector was higher than that of the other sectors, making it the worst-performing sector of the week.
Upcoming Major Crypto Events Next Week
- Monday (April 7): LEAP NIGHT 2025
- Tuesday (April 8): Paris Blockchain Week 2025; Ethereum mainnet undergoes Pectra Upgrade
- Wednesday (April 9): SEC Decision on BlackRock’s Ethereum ETF Options Trading
- Thursday (April 10): U.S. March Unadjusted CPI Year-on-Year Release; Federal Reserve March Monetary Policy Meeting Minutes Released
- Friday (April 11): U.S. March PPI Year-on-Year Release; FTX — Second Distribution
Summary
This week, the crypto market experienced a significant downtrend. The market fear index sharply declined from 45% to 5%, entering the extreme fear zone. The new tariff policies announced by the U.S. government exceeded market expectations, raising concerns about heightened inflation and an economic recession, which led to a major market correction.
Despite this, the market capitalization of stablecoins continued to grow. USDT reached $144 billion, and USDC reached $60.7 billion, with their price changes at -0.13% and +0.66% respectively. This indicates that institutional investors still hold differing views on the long-term development of the crypto industry.
The stablecoin sector is seeing new development opportunities driven by regulatory progress. The introduction of the STABLE Act in the U.S., along with the launches of WYST by Wyoming and USD1 by the Trump family, marks the shift of the stablecoin market from speculation to mainstream commercial applications. This trend not only offers growth potential for stablecoins but also drives innovation and expansion in related infrastructure projects such as LayerZero, Sui, Ondo Finance, Chainlink, and Aave, making them worthy of long-term investor attention.
Looking ahead to next week, the market will face several important events, including Paris Blockchain Week 2025, the Pectra upgrade on Ethereum, the SEC’s decision on BlackRock’s Ethereum ETF options trading, and the release of U.S. March CPI and PPI data. These events could significantly impact market trends, and investors should monitor them closely and manage risks effectively. In the current market environment, it is recommended that investors maintain adequate liquidity, prioritize projects with solid fundamentals and clear growth paths, and avoid excessive leverage to cope with potential market volatility.
