Recovery and Opportunities Amid Volatility | Frontier Lab Crypto Weekly Report

10 min readMar 30, 2025

Market Overview

Overall Market Conditions

This week, the cryptocurrency market exhibited a choppy trend, but market panic subsided significantly, with the market sentiment index rebounding from 11% to 45%. The market capitalization of stablecoins continued its upward trend (USDT reaching $144.2 billion and USDC at $60.3 billion, increasing by 0.56% and 1.86%, respectively). This suggests that institutional funds have been consistently flowing into the crypto sector for the past four weeks, with inflows steadily increasing. Notably, USDC, predominantly backed by U.S. capital, has maintained a growth rate of over 1% for the past three weeks, indicating that despite the market’s recent consolidation, U.S. Investors have been aggressively entering space.

The primary reason for this week’s market volatility was the renewed uncertainty introduced by the Trump administration’s announcement on Wednesday of a 25% tariff on non-U.S. automobiles and the upcoming announcement of new foreign trade tariffs on April 2. This development counteracted the market’s optimism from the Federal Reserve’s decision to scale down quantitative tightening (QT) and the diminished expectations of a U.S. economic recession, ultimately leading to market fluctuations.

Forecast for the Coming Week

Bullish Targets: CRV, S

CRV: The Leading Beneficiary of the Stablecoin 2.0 Wave

The Rise of the Stablecoin 2.0 Trend

The stablecoin sector has been highly dynamic recently, signaling the arrival of a new growth cycle. Notable developments include Wyoming’s upcoming issuance of the WYST stablecoin, the introduction of the Stablecoin Transparency and Accountability for Promoting Ledger Economics Act in the U.S. House of Representatives, and the Trump-backed World Liberty Financial launching the USD1 stablecoin on BSC. These events suggest that regulatory frameworks are becoming clearer, and official attitudes toward stablecoins are turning supportive. As the U.S. government and major institutions enter space. Stablecoins have become one of the hottest sectors in the crypto market, paving the way for the second wave of stablecoin development.

Curve Finance’s Growing Role as Core Infrastructure

Infrastructure projects play a crucial role in the stablecoin ecosystem, and Curve Finance stands at the center of this sector. As a veteran stablecoin liquidity provider, Curve has evolved into the largest decentralized stablecoin exchange, offering liquidity for most mainstream stablecoins. With the stablecoin 2.0 trend unfolding, new stablecoins will emerge, driving fresh demand for Curve Finance. This surge in activity is expected to significantly boost Curve’s trading volume and revenue, positioning it as one of the biggest beneficiaries of stablecoin expansion.

S: Sonic Surpasses the $1 Billion TVL Milestone, Validating Its DeFi-Centric Chain Strategy and Attracting Capital Inflows

Innovative Revenue-Sharing Model Attracts Project Participation

Sonic shares 90% of its transaction fees with projects, fostering a mutually beneficial ecosystem between the public blockchain and its developers. This unusually high profit-sharing policy, coupled with transaction subsidies, has drastically reduced operational costs for projects while providing them with additional revenue streams. This dual incentive mechanism has successfully attracted leading DeFi projects like AAVE, Pendle, and Euler to integrate with Sonic. As a result, Sonic has built a diverse and thriving ecosystem, driving an explosive increase in total value locked (TVL) within a short period.

High-Yield Arbitrage Opportunities Fuel User Capital Inflows

The Sonic ecosystem has fostered a unique high-yield arbitrage model. Users borrow funds from AAVE or Silo Finance and reinvest them in Pendle or Beets, taking advantage of yield spreads exceeding 10% to secure stable returns. This low-risk, high-return strategy has attracted a substantial influx of investors, pushing the stablecoin supply on Sonic to approximately $400 million. Moreover, Circle’s announcement that it will support and issue USDC on Sonic further strengthened investor confidence. These factors collectively drove a 3,800% increase in Sonic’s TVL over the past three months, with a weekly growth rate of 18.36%, ranking second among blockchains with over $1 billion in TVL.

Rapid Growth in On-Chain Data

According to Sonic’s official website, the number of on-chain transactions surged from 434,642 last week to 702,217 this week, representing a 61.56% increase, highlighting significant on-chain activity growth. Sonic employs a unique ecosystem incentive mechanism, distributing most of its revenue to ecosystem projects while subsidizing on-chain users. Consequently, while Sonic’s on-chain revenue is relatively lower compared to other blockchains, DefiLlama data shows that its daily on-chain revenue grew from $6,000 to $10,280 — an impressive 71.33% increase. These figures underscore Sonic’s rapidly expanding ecosystem and growing user engagement. As on-chain activity continues to rise, Sonic is poised to further solidify its competitive position in the blockchain space while generating more value for ecosystem projects and users.

Strategic Focus on DeFi and a Healthy Ecosystem Structure

Sonic has positioned itself as a “DeFi-centric chain,” focusing on lending, liquid staking tokens (LST), and decentralized exchanges (DEX), forming a well-structured ecosystem loop. Lending platforms provide leverage, LST projects contribute staking yields, and DEXs ensure asset liquidity — creating a fully integrated DeFi service system. This specialized strategy prevents resource fragmentation, allowing Sonic to build deep expertise in key sectors. Moreover, its on-chain capital structure remains healthy, avoiding over-reliance on a single project, which enhances ecosystem stability and long-term sustainability.

Bearish Targets: HYPE, PYR, AGLD, MBOX

HYPE: HyperLiquid Faces Another Targeted Attack, Raising Governance and Risk Control Concerns

Attack Tactics and Crisis Response

On Wednesday night, HyperLiquid was once again the target of a precise on-chain attack. The attacker first opened a large short position on JELLYJELLY at $0.0095, using $3.5 million USDC as margin. They then manipulated the market to force the platform to take over the position before reversing the price movement, causing massive losses on system short positions. At one point, the protocol’s treasury had an unrealized loss exceeding $10 million. In response, HyperLiquid urgently delisted the contract and force-liquidated the positions, preventing further treasury losses. However, since the decision was made solely by Hyper Foundation without broader community consensus, its governance model faced severe scrutiny. The platform’s TVL plummeted 28.38% in 24 hours, with approximately $90 million in assets exiting.

Fundamental Flaws

The repeated on-chain attacks on HyperLiquid have exposed fundamental deficiencies in its leverage and liquidity balance as well as its risk control mechanisms, creating exploitable vulnerabilities. Public criticism from industry experts further eroded user confidence, rapidly dismantling HyperLiquid’s reputation as the “on-chain Binance.” Without substantial structural reforms, the platform is likely to face more attacks in the future. This incident serves as a wake-up call not only for HyperLiquid but also for the broader DeFi industry, prompting deeper discussions on risk control mechanisms and governance structures for decentralized exchanges.

PYR: Vulcan Forged Faces Dual Challenges — A — A Struggling GameFi Sector and a 6.41% PYR Token Unlock

As an established NFT and gaming project, Vulcan Forged is facing a challenging market environment. On March 31, 3.2 million PYR tokens will be unlocked, accounting for 6.41% of the total locked supply. According to its linear vesting schedule, the primary recipients of this unlock are early investment institutions and project team members. Given the project’s declining market interest, these early investors are likely to sell their tokens to recoup funds, exerting downward pressure on PYR’s price.

AGLD: Adventure Gold’s 6.2 Million Token Unlock Could Worsen NFT Market Weakness

Adventure Gold, an NFT project, has struggled since the last bull market, with the NFT sector being overshadowed by the meme coin craze. On April 2, 6.2 million AGLD tokens will be unlocked (3.34% of total locked supply), primarily allocated to investment institutions and the project team. Given the project’s current downturn, these stakeholders are likely to liquidate their holdings, putting further downward pressure on AGLD’s price.

MBOX: MOBOX Faces Its Largest Token Unlock in a Year, Risking Significant Sell-Off Pressure

MOBOX, a GameFi project combining DeFi and NFTs, was once a market favorite but has since faded into obscurity. On April 6, 75 million MBOX tokens will be unlocked, representing 13.63% of the total locked supply — the largest unlock in nearly a year. According to its vesting schedule, the primary beneficiaries are early investors and project team members. Given MOBOX’s current lack of user engagement, this large-scale unlock could trigger heavy selling pressure, negatively impacting MBOX’s price.

Market Sentiment Index Analysis

The market sentiment index rebounded from 8% last week to 45%, significantly alleviating panic in the market. Although sentiment remains in the fear zone, it is approaching a neutral stance.

Hot Sector

Sonic — From DeFi Specialist to GameFi Rising Star

Current Status

Sonic, an EVM-compatible blockchain evolved from Fantom, has demonstrated strong growth momentum despite the current sluggish market environment. Its total value locked (TVL) surged from $26 million at the beginning of the year to over $1 billion within three months — a 38-fold increase — ranking 12th on DeFiLlama. The chain currently hosts over $400 million in stablecoins, with Circle announcing support for issuing USDC on Sonic, further enhancing its competitiveness in the stablecoin ecosystem.

Meanwhile, Sonic has built a comprehensive DeFi ecosystem centered around lending, liquid staking tokens (LST), and decentralized exchanges (DEX). This has led to an on-chain transaction activity level that surpasses some mainstream blockchains, reflecting broad user engagement and strong market recognition.

Although Sonic was originally positioned as a professional DeFi blockchain, a hit GameFi project, “Oil Tycoon,” recently emerged within its ecosystem. This game caused the OIL token price to surge fivefold in a single day, with the annual percentage yield (APY) peaking at over 13,000%. This phenomenon not only filled a gap in Sonic’s GameFi sector but also attracted significant user attention, creating new opportunities for ecosystem expansion. As a result, multiple projects within the Sonic ecosystem have begun shifting towards GameFi, driving further diversification of the on-chain ecosystem.

Analysis: Why Sonic Experienced Explosive Growth

Comprehensive Technical Architecture

Performance Optimization: Sonic replaces EVM with FVM, achieving an 8.1x performance improvement.
Efficient Storage System: Its revolutionary file-based StateDB storage reduces 98% of storage overhead.
High-Speed Cross-Chain Interoperability: The Sonic Gateway cross-chain bridge enhances security and efficiency.
Scalability: Sonic’s infrastructure can process over 10,000 transactions per second (TPS) with sub-second finality, ensuring smooth execution of complex DeFi applications and significantly improving the user experience.

Innovative Economic Incentive Model

90% transaction fee-sharing mechanism disrupts traditional public chain incentive structures, directly motivating project teams to continuously develop and optimize.
Inter-protocol arbitrage spreads exceeding 10% create lucrative opportunities for liquidity providers, attracting substantial capital inflows.
Early-stage transaction subsidies effectively lower user participation costs, overcoming the cold-start challenge faced by new blockchains.
These measures collectively form a thriving ecosystem characterized by sustained capital inflows, proactive project participation, and high user engagement, establishing a powerful network effect.

Diversified User Acquisition Strategy

Sonic has rapidly expanded its user base by providing differentiated value propositions to various participants:

Developers: Fee-sharing and technical support lower the development barrier.
Yield Farmers: A diverse range of high-yield opportunities attract liquidity providers.
Airdrop Hunters: Reward mechanisms and point systems enhance user engagement.
GameFi Users: High APY models are extended to GameFi projects, increasing user adoption.

This comprehensive user strategy has built a diverse community composed of developers, investors, traders, and content creators, enhancing the ecosystem’s resilience and sustainability.

Sonic’s Future Development Directions

Looking ahead, Sonic’s growth is likely to focus on four key areas:

Deepening Its Position as a Professional DeFi Chain Continue strengthening its core sectors (lending, LST, and DEX) while encouraging further innovation.
Expanding Its Stablecoin Ecosystem Leverage its existing foundation to enhance on-chain stablecoin utility and efficiency.
Enhancing Cross-Chain Interoperability Achieve seamless integration with more blockchains to support advanced cross-chain DeFi strategies.
Establishing a Sustainable Growth Model Transition from high APY-driven initial growth to a more utility-driven application ecosystem.

Sonic’s long-term success will depend on its ability to shift from early-stage, high-yield incentives to a sustainable development model. At the same time, it must maintain a differentiated competitive advantage within the L1 sector, offering investors an opportunity that combines high growth potential with strong fundamentals.

Overall Market Sector Performance

Weekly Sector Performance Analysis

Based on weekly return statistics, the AI sector outperformed all others, while the PayFi sector showed the weakest performance. In the AI sector, TAO, RENDER, FET, and WLD accounted for 80.87% of the total market share, with weekly gains of 5.43%, 18.46%, 3.38%, and 8.36%, respectively. Their average performance exceeded that of projects in other sectors, making AI the best-performing category. Conversely, in the PayFi sector, XRP and XLM dominated with a combined 91.62% share. Their weekly performance was -5.61% and -1.05%, respectively, with XRP (holding an 86.34% share) experiencing the largest drop, which negatively impacted the overall sector index.

Upcoming Crypto Events Next Week

Tuesday (April 1): U.S. March ISM Manufacturing PMI
Wednesday (April 2): U.S. March ADP Employment Data; U.S. House Financial Services Committee Review of Stablecoin Legislation; Trump Administration’s New Tariff Policy Announcement
Thursday (April 3): BitBlockBoom 2025
Friday (April 4): U.S. March Non-Farm Payroll Data; U.S. March Unemployment Rate
Sunday (April 6): 2025 OKX Web3 Night

Market Summary and Outlook

This week, the crypto market remained volatile, but the market sentiment index saw a significant rebound. Institutional capital continues to flow into the market, particularly from the U.S. investors, indicating long-term confidence in the industry’s outlook. However, the Trump administration’s new tariff policies introduce fresh uncertainties, offsetting the positive impact of the Federal Reserve’s reduction in quantitative tightening (QT).

From a project perspective, Sonic SVM leveraged the wealth effect of Oil Tycoon to attract users, proving that high-yield incentives remain the most effective user acquisition strategy, even in a sluggish market. Additionally, the emergence of Stablecoin 2.0 trends presents new growth opportunities for foundational infrastructure projects such as Curve. Meanwhile, Sonic’s innovative yield distribution model has propelled its TVL to explosive growth.

Looking ahead to next week, several projects face significant token unlocks, particularly MBOX, which could trigger selling pressure. Investors should closely monitor U.S. employment data and the implementation of Trump’s new tariff policies, as these factors will be pivotal in determining short-term market direction. In an environment of heightened volatility, project fundamentals and risk management mechanisms will be key factors in investment decisions.