Original Title: "Market Rebound, DeFi and AI Leading the Trend | Frontier Lab Cryptocurrency Market Weekly Report"

Original Source: Frontier Lab

Market Overview

Overall Market Summary

This week, the cryptocurrency market has shown a significant rebound trend, with the sentiment index rising from 11% to 35%, still in the fear zone but significantly improved. The market cap of stablecoins continues to grow (USDT reaching $137.4 billion, USDC reaching $46.5 billion), indicating that institutional funds are still entering the market continuously. The market rebound is mainly driven by two factors: first, the U.S. CPI data meeting expectations, and second, the market's optimistic expectations of relaxed crypto regulations after a potential Trump victory. Altcoins have outperformed the overall market, especially DeFi and AI-related tokens, with significant price increases, showing a trend of funds shifting from Bitcoin to small-cap tokens.

DeFi Ecosystem Development

The TVL of the DeFi sector has slightly increased to $53.5 billion, a week-on-week growth of about 1%. Notably, DeFAI, as a product of the combination of DeFi and AI, saw its market cap surge from $600 million to $3.2 billion within a week, demonstrating the market's strong interest in innovative DeFi applications.

AI Track Development

The AI Agent sector has continued its strong development trend since the end of last year, shifting from simple AI token trading to deeper application scenario development. The rise of DeFAI marks the entry of AI applications in the crypto field into the 2.0 phase, mainly manifested in four directions: user-friendly AI interfaces, portfolio management, infrastructure development, and market analysis forecasting. The development paths of leading projects such as Griffain, Anon, and AXIBT show that the market is transitioning from the concept validation phase to the practical application phase.

Meme Coin Trend

The meme coin sector has shown relatively flat performance this week, with market attention significantly lower than the peak in the fourth quarter of last year. This indicates that investor risk appetite is shifting from purely speculative meme tokens to projects with practical use cases. However, with the rise in Trump-related topics, the market anticipates a possible new wave of meme coin hype centered around political themes.

Public Chain Performance Analysis

Layer 1 public chains have shown a stable upward trend overall, but the growth is not as strong as the DeFi and AI sectors. Among mainstream public chains, those with advantages in AI and DeFi ecosystems have performed well, reflecting that the value of underlying public chains is increasingly dependent on the prosperity of their upper-layer application ecosystems. It is worth noting that public chains supporting AI computing are beginning to attract market attention, indicating that a new round of public chain competition may revolve around AI computing capabilities.

Future Market Outlook

The short-term market will be influenced by the Federal Reserve's January interest rate meeting and Trump's inauguration, with increased volatility expected. It is recommended that investors focus on DeFAI projects with practical use cases when making choices, avoiding chasing purely conceptual speculation. In terms of DeFi investment, one can explore yield opportunities in yield farming projects but should strictly control leverage risk. In terms of timing, it is advised to observe the policy changes brought about by Trump's inauguration in the short term, avoid blindly buying at high prices, and ensure the security of the investment portfolio.

Market Sentiment Index Analysis

The market sentiment index has dropped from 11% last week to 35%, still in the panic zone but showing some recovery.

Altcoins performed stronger than the benchmark index this week, with most tokens experiencing larger gains than the overall market. This was mainly due to this week's CPI data and the optimistic market sentiment stemming from the expected relaxation of regulations on the Crypto market after Trump's inauguration as the U.S. President next week, leading to price increases in the market. Given the current market structure, it is anticipated that Altcoins will remain synchronized with the benchmark index in the short term.

Overall Market Trend Overview

· The cryptocurrency market has been on an upward trend this week, with the sentiment index still in the panic zone.

· DeFi-related crypto projects have outperformed other sector projects, demonstrating the market's continued focus on enhancing fundamental yields.

· Projects related to DeFAI have had high public sentiment this week, indicating that investors are actively seeking the next market breakout point.

Hot Sector Review

DeFAI

The overall market has been in a volatile upward trend this week, with all sectors in an upward state. Due to the significant decline in the AI sector last week, the rebound this week has been very strong. Additionally, the current hot topic in the AI sector has shifted from the AI Meme's issuance asset model to DeFAI, which combines AI and DeFi. As DeFAI is just beginning to emerge in the market and combines the most promising sector in Crypto—AI—and the most capital-intensive sector in the Crypto industry—DeFi, DeFAI has attracted the highest level of market attention in the near term.

This week, DeFAI has become the focus of the market, with its market cap rising from $600 million last week to $3.2 billion, achieving over a 4x growth in one week. This demonstrates that DeFAI is currently highly sought after in the market. DeFAI projects can be categorized into four types: Abstracted/User-Friendly AI, Yield Optimization and Portfolio Management, DeFAI Infrastructure or Platforms, and Market Analysis and Prediction. DeFAI is currently in an early stage, with most projects focusing on Abstracted/User-Friendly AI and Market Analysis and Prediction. The most representative projects are Griffain, Anon, and AXIBT. Although DeFAI has grown rapidly in the recent period and gained a lot of market attention, its current applications are still in the proof-of-concept stage, with most features yet to be implemented. Therefore, in the upcoming investment process, it is advised not to blindly follow the trend but to pay more attention to the real-world applications of DeFAI projects in various fields and be mindful of market hype risks.

Top Five DeFAI Projects by Market Cap:

DeFi Track

TVL Growth Ranking

Top 5 Market Projects by TVL Growth in the past week (excluding small TVL projects, with a threshold of $30 million, data source: Defilama)

Folks Finance (Unlaunched): (Recommendation Rating: 3 stars)

· Project Overview: Folks Finance is a decentralized finance (DeFi) platform primarily built on the Algorand blockchain. It offers a range of permissionless DeFi tools, including lending, borrowing, staking, and trading functionalities.

· Latest Developments: This week, Folks Finance has focused mainly on ecosystem partnerships and community incentives. On the one hand, it has partnered with DeBank to enable users to monitor their xChain accounts on the DeBank platform and has introduced accompanying social task activities. On the other hand, it continues to deepen its collaboration with Algorand, with a focus on promoting the gALGO liquidity staking governance mechanism. It has introduced a governance incentive plan offering rewards of up to 4x, along with social task activities in conjunction with the Galxe platform (January 14 to February 15).

Beets (Unlaunched): (Recommendation Rating: 3 stars)

· Project Overview: Beets is a Sonic-based hub for Sonic liquidity staking tokens, supporting users staking to earn real yields in an LST-centric liquidity pool.

· Latest Developments: This week, Beets' Liquid Staked S token (stS) surpassed 88.99 million in staking volume on the Sonic platform in less than a month, surpassing FTM's nearly three-year high on Fantom. Additionally, Beets is actively expanding its ecosystem partnerships, having partnered with PaintSwap and introduced SolvProtocol. It has launched the scUSDC|USDC liquidity pool and offers 6x points and around $165,000 in stS token rewards.

AlphaFi (ALPHA): (Rating: 3 Stars)

· Project Overview: AlphaFi is an automated yield optimization platform based on the SUI blockchain, designed to simplify digital asset management. Through intelligent strategies and automation, users can maximize asset yields without the need for frequent operations.

· Latest Developments: This week, AlphaFi has focused primarily on technical optimization and ecosystem development: On the technical front, they have rolled out an optimized liquidity solution, including range optimization, active rebalancing, and auto-compound rewards, contributing approximately 10% of the trading volume on the Sui chain through their Liquidity Staking (LST) product; on the ecosystem development side, they are driving DeFi growth through deep integration with the Sui ecosystem, showcasing strong community engagement (close to a 1:1 follower-to-staker ratio), and revealing that around $1.8 million in protocol revenue will be airdropped through ALPHA tokens to the community.

Echelon Market (Not Yet Launched): (Rating: 2 Stars)

· Project Overview: Echelon Market is a decentralized finance market project built on the Move language. Users can indirectly borrow and lend assets through non-custodial pools and earn interest. Additionally, Echelon Market also provides leverage trading services to users.

· Latest Developments: This week, Echelon Market has mainly focused on ecosystem building and community development: The Echelon team has officially announced the upcoming launch of the project and is actively recruiting hardcore software engineers to develop a comprehensive DeFi application suite. In terms of community building, Echelon has organized in-depth discussions with GlenMoves and redactedrain to explore the project roadmap and conduct community Q&A sessions. They have also disclosed the annualized yield based on lending returns and APT incentives as follows: USDC 12.88%, USDT 11.39%, WETH 8.76%, enticing more on-chain users to participate through high-interest rates.

Astherus (Not Yet Launched): (Rating: 3 Stars)

· Project Overview: Astherus is an innovative multi-asset liquidity hub aimed at maximizing the real yield of crypto assets by enhancing their utility. Astherus has also introduced AstherusEx and AstherusEarn. AstherusEx is a perpetual contract decentralized exchange that supports derivative trading of mainstream assets; while AstherusEarn is a yield strategy product that allows users to stake assets for returns.

· Latest Developments: This week, Astherus launched the USDF stablecoin (supporting 1:1 USDT exchange with no minting fee), with its TVL quickly surpassing $1 billion. Astherus saw a 24-hour trading volume of $12 billion, becoming the market's second-largest perpetual contract trading platform. It deepened its collaboration with the BNB Chain to introduce the asBNB minting feature and partnered with Kernel DAO. Additionally, Astherus introduced the Rh Points new incentive system to encourage user participation and adjusted the ALP's Au multiplier.

In conclusion, we can see that this week, projects with rapidly growing TVL are mainly focused on yield farming projects.

Overall Performance of the Sector

· Gradual Increase in Liquidity: The arbitrage rate of on-chain DeFi projects has been steadily increasing due to the rising value of cryptocurrency assets. Returning to DeFi will be a very good choice.

· Funding Situation: The TVL of DeFi projects has risen from last week's $530 billion to the current $535 billion, representing a 0.94% increase. This ends the negative growth trend of TVL in various DeFi sectors last week, mainly due to the market experiencing a downward spike on Monday, followed by an overall upward trend, especially after the release of the US CPI on Wednesday. The market showed a general rise, attracting funds back into DeFi projects. Furthermore, the market is generally optimistic about Monday's presidential inauguration, leading funds to enter the DeFi industry, thereby driving the TVL of the DeFi market upwards.

Performance in Other Sectors

Public Chains

Top 5 Gainers in Public Chain TVL over the past week (excluding smaller public chain TVL), data source: Defilama

Sonic: This week, Sonic introduced a DeFi application supporting various cryptocurrencies such as USDC, USDT, and ETH, and innovatively introduced a real-time deposit feature, allowing users to deposit without the constraints of pre-deposits and indefinite lock-ups. Sonic also collaborated with RedotPay to develop a global payment solution based on $S and stablecoins. It received approval from Uniswap DAO to provide a total of $750,000 ($250,000 UNI + $500,000 $S) in liquidity mining rewards. The $S token successfully launched on Bybit this week and released the first batch of NFT series "Umans on a Sonic Trip" created by WorldofUmans. It then launched a new points dashboard and is set to introduce $LBTC from Lombard Finance.

Hyperliquid: This week, Hyperliquid successfully launched the SOLV token, which is the Crypto's first innovative token to achieve "Day 1 Triple Sync" (simultaneously on a centralized exchange, Hyperliquid spot market, and multi-chain deployment). SOLV has not only been listed on Hyperliquid L1 and BNB Chain simultaneously but also plans to achieve seamless cross-chain asset connection on the upcoming HyperEVM. Hyperliquid entered into a key strategic partnership with NFT project Azuki for an open anime metaverse token called ANIME, where HYPE stakers will receive ANIME token TGE airdrop benefits.

Algorand: This week, Algorand completed a significant upgrade deployment to version 4.0 and introduced the NodeKit tool to simplify node operation, preparing for the upcoming Staking reward mechanism. Additionally, Algorand entered into strategic partnerships with Mastercard and PeraAlgoWallet to advance instant settlement capabilities. Collaborations with multiple DeFi platforms such as Tinyman and Pact.Fi were initiated to enrich the ecosystem's financial application scenarios. Algorand also disclosed recent progress in practical applications, having processed over 112 million transactions by 2024 through the TravelX platform.

BSquared: This week, BSquared made significant progress in technical and ecosystem development. As a Bitcoin Layer-2 solution, the platform has successfully processed over 101 million transactions and further strengthened the BTCFi ecosystem through a strategic partnership with Segment Finance. Particularly noteworthy is B²'s active promotion of the transition of Bitcoin to an AI innovation center, supporting AI-driven smart contract development. Furthermore, in the DeFi field, through innovative tokenomics and optimized liquidity solutions, B² aims to provide users with higher yields.

Mode: This week, Mode demonstrated strong development momentum in the DeFAI sector. Firstly, they launched the Season 4 "Agentic Economy" program, offering up to 2 million OP in ecosystem incentives and introducing the Agentic Staking mechanism. In terms of technical layout, Mode announced the development roadmap for the complete DeFAI tech stack by 2025 and further improved the ecosystem infrastructure through collaboration with Matcha. To promote ecosystem prosperity, Mode initiated the $100,000 AI Agent Founder School project to attract developers to participate.

Top Gainer Overview

Top 5 gainers in the market over the past week (excluding tokens with low trading volume and meme coins), data source: Coinmarketcap

ANON: This week Hey Anon focused on technical innovation and governance framework promotion: released the AUTOMATE TypeScript framework for DeFAI, which not only simplifies the integration process of DeFi protocols but also successfully interoperates with the Arbitrum ecosystem and launched a fast-track review mechanism. In terms of governance, Hey Anon initiated the first DAO governance proposal, while also achieving cross-chain circulation support for the $ANON token on platforms like Base, Arbitrum, and Ethereum, laying a solid foundation for building a more complete DeFAI ecosystem.

BUZZ: Hive AI won first place in the Solana AI Hackathon this week, showcasing its technical prowess. Hive AI also introduced several important feature updates, including an AI-native token analytics dashboard, liquidity proxy tool, and innovative Worker Bees automation proxy system. Additionally, the platform added Apple Pay and Google Pay support to enhance user experience. Hive AI achieved a milestone of over 10,000 new users in just 10 days and continues to optimize product features based on Discord community feedback, including USD value calculation for token inputs, interactive transfer tool, and more.

CGPT: This week ChainGPT made significant breakthroughs in ecosystem expansion and technical innovation. Regarding ecosystem expansion, the $CGPT token was successfully listed on Binance spot trading and also launched perpetual contract trading on KuCoin and Bybit, significantly increasing market liquidity. In terms of technical innovation, ChainGPT introduced a smart contract audit tool and a new AI proxy system, and collaborated with ChainAware to launch an anti-fraud solution, further enhancing platform security. ChainGPT was also selected as a top AI project on the BNB Chain and initiated a monthly reward program to boost community participation.

ARC: This week AI Rig Complex mainly focused on technical collaborations and ecosystem expansion, forging strategic partnerships with three key partners: partnered with AbstractChain to introduce EVM compatibility to the Rust-based AI framework "Rig"; integrated cloud infrastructure with Shuttle_dev to enhance developer experience; and collaborated with CryptoEternal AI to advance the decentralization of AI.

GRIFFAIN: This week, GRIFFAIN has made significant progress in releasing three key features: first, in collaboration with Metaplex, it launched the "Agent GM" feature, simplifying the minting process for digital assets; second, it released the "Agent Moby" whale monitoring assistant, integrating AssetDash and WhaleWatchAlert, enhancing market monitoring capabilities; and finally, it introduced the "Agent Backpack" feature, achieving transaction integration with the Backpack Exchange platform. GRIFFAIN continues to enhance its ecosystem through strategic partnerships with well-known projects.

Meme Token Price Surge Leaderboard

Data Source: coinmarketcap.com

This week, the market has been in a wide-ranging trend. After Tuesday, the entire market entered a rebound mode. Projects in the Meme space also followed the market's rebound trend. This week, AI-related AI Meme projects saw the most significant rebound, leading to a wealth effect, attracting market attention and funds into AI Meme projects.

Social Media Highlights

Based on the top five daily growth on LunarCrush and the top five AI scores on Scopechat, the following statistics were obtained for this week (1.11-1.17):

The most frequently mentioned theme is L1s. The tokens on the list are as follows (tokens with too low trading volume and meme coins are not included):

Data Source: Lunarcrush and Scopechat

According to data analysis, this week's highest social media attention was on Layer 1 projects. The overall market trend this week has seen wide fluctuations. After the release of CPI data on Wednesday, the market entered a rebound trend. As the previous Altcoin projects in various tracks experienced significant pullbacks, they all saw decent gains in this rebound, as the price increase led to a rise in APY for various on-chain Defi projects. This attracted more on-chain users to participate. Moreover, most Defi projects' targets are the tokens of various Layer 1 projects, causing the market to refocus its attention and funds on various public-chain projects.

Market Theme Overview

Data Source: SoSoValue

Based on weekly return rate statistics, the PayFi track performed the best, while the RWA track performed the worst.

· PayFi Track: In the PayFi track, XRP, BCH, and XLM have a relatively large share, accounting for 83.37%, 3.96%, and 6.92%, totaling 94.74%. This week, XRP, BCH, and XLM showed very strong performance, with gains of 44.58%, 8.16%, and 23.86%, respectively. Trump's statement prioritizing XRP and SOL as strategic reserves led to the rapid rise of XRP, thereby driving the entire PayFi track.

· RWA Track: In the RWA track, OM, ONDO, and MKR have a relatively large share, accounting for 87.85% in total. However, their declines this week were -2.98%, -1.19%, and -6.93% respectively, with larger declines compared to other track projects. This caused the RWA track to be the worst-performing track this week.

Next Week's Crypto Major Events Preview

Monday (January 20): SEC Chairman Gary Gensler steps down; Trump is inaugurated as President of the United States; CFTC Chairman Rostin Behnam steps down; Web3Hub Davos 2025

Wednesday (January 22): WAGMI 2025

Thursday (January 23): US Initial Jobless Claims

Next Week's Outlook

Macro Analysis

There won't be significant macro data disclosures next week. The main market-moving factors will be Trump's presidential inauguration on Monday, along with SEC Chairman Gary Gensler and CFTC Chairman Rostin Behnam stepping down on the same day. Currently, there is a high probability that Trump will mention cryptocurrency-related policies during his speech or enact new cryptocurrency policy legislation, as expected by the market. If such measures are enacted, it will greatly boost market sentiment. However, if there is no mention of the cryptocurrency industry, it may dampen market sentiment and lead to a decline. Therefore, increased market volatility is expected next week.

Sector Rotation Trend

Although the DeFi sector currently has poor sentiment after several weeks of back-and-forth market movements, investors generally expect a market-wide uptrend in the first quarter of this year following Trump's term. As a result, most investors are still unwilling to sell their tokens. At the same time, in order to increase their holding returns, many are participating in yield farming projects to boost their earnings

The AI sector, specifically the AI Agent track, has continued to attract market attention, with the market size now reaching $15.9 billion, representing a growth of nearly 16.65% compared to last week. The growth has been quite rapid. This week, market focus on the AI track has gradually shifted towards DeFAI. Market investors generally believe that AI is currently the most promising track in the Crypto world, while the DeFi track is where most of the industry's funds are concentrated. Combining AI with DeFi is seen as a way to bring together the funds and traffic in the Crypto market, with a very high probability of creating a highly competitive new track

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