Market Overview

The cryptocurrency market has shown a clear warming trend this week, with the sentiment index rising from 11% to 35%. Although it is still in the panic zone, the improvement is significant. The market capitalization of stablecoins continues to grow, indicating that institutional funds are still entering the market. The market recovery is mainly driven by two factors: first, the US CPI data is in line with expectations, and second, there is an optimistic expectation that Trump may ease cryptocurrency regulations if he wins. Overall, small-cap tokens have outperformed the major market, especially with significant gains in DeFi and AI-related tokens, indicating a trend of funds starting to shift from large-cap to small-cap tokens.

The total locked value in the DeFi sector has slightly increased to $53.5 billion, a month-on-month growth of about 1%. It is worth noting that DeFAI, as a product combining DeFi and AI, saw its market value surge from $600 million to $3.2 billion within a week, demonstrating strong market demand for innovative DeFi applications.

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 cryptocurrency field into phase 2.0, mainly reflected in four directions: user-friendly AI interfaces, portfolio management, infrastructure construction, and market analysis and forecasting. The development paths of leading projects such as Griffain, Anon, and AXIBT indicate that the market is transitioning from the proof-of-concept phase to the actual application phase.

The Meme coin sector has performed relatively flat this week, with market attention clearly retreating from the highs of the last quarter of last year. This indicates that investors' risk appetite is shifting from purely speculative Meme tokens to projects with practical application scenarios. However, as discussions related to Trump heat up, market expectations may see a new wave of Meme coin speculation centered around political themes.

Layer 1 public chains are showing an overall stable upward trend, but the increase is not as significant as that of the DeFi and AI sectors. Among mainstream public chains, those with advantages in AI and DeFi ecosystems are performing better, reflecting that the value of underlying public chains increasingly relies on the prosperity of their upper application ecosystems. It is worth noting that public chains supporting AI computing have begun to attract market attention, indicating that a new round of public chain competition may revolve around AI computing capabilities.

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 projects with actual application scenarios in the DeFAI project selection, avoiding chasing purely conceptual speculation. In terms of DeFi investment, attention can be paid to the yield opportunities of machine gun pool projects, but leverage risks must be strictly controlled. Regarding timing selection, it is advised to take a short-term wait-and-see approach to the policy changes brought by Trump's inauguration, avoiding blind chasing of highs, and ensuring the safety of the investment portfolio.

Market Sentiment Index Analysis

• The market sentiment index rose from 11% last week to 35%, still in the panic zone, but has improved.
• Small-cap tokens outperformed the benchmark index this week, with most tokens showing greater gains than the overall market. This is mainly due to this week's CPI data and the optimistic market sentiment brought about by the expected relaxation of regulations on the crypto market after Trump takes office as President of the United States next week, resulting in a price increase in the market. Given the current market structure, small-cap tokens are expected to remain in sync with the benchmark index in the short term.

Overview of Overall Market Trends

• The cryptocurrency market is in an upward trend this week, with the sentiment index still in the panic zone.
• DeFi-related cryptocurrency projects have shown outstanding performance compared to other sectors, demonstrating the market's ongoing focus on improving base yields.
• The DeFAI project has seen high public sentiment this week, indicating that investors are starting to actively seek the next market breakout point.

Hot Tracks

DeFAI

This week, the overall market is in a trend of fluctuating upward movement, with all sectors in an upward state. Due to the significant decline in the AI sector last week, the rebound this week is also very strong. Moreover, the current hotspots in the AI sector are beginning to shift from the asset issuance model of AI Meme to the DeFAI model, which combines AI with DeFi. Since DeFAI has just started to emerge in the market, and it combines the most promising sector in the current cryptocurrency space—AI—with the sector that gathers the most funds in the cryptocurrency industry—DeFi, the attention on DeFAI in the market is currently at its highest.

This week, DeFAI has become the focus of the market, with its market capitalization rising from 600 million dollars last week to 3.2 billion dollars, achieving more than four times growth within a week. It is evident that DeFAI is currently in high demand in the market. The DeFAI sector can be divided into four categories of projects: abstract/user-friendly AI, yield optimization and portfolio management, DeFAI infrastructure or platforms, and market analysis and forecasting. DeFAI is still in an early stage, with most DeFAI projects focusing on abstract/user-friendly AI and market analysis and forecasting, among which the most representative projects are: Griffain, Anon, and AXIBT. Although DeFAI has seen rapid growth recently and garnered significant market attention, its current applications are still in the concept validation stage, and most functionalities have not yet been realized. Therefore, in the upcoming investment process, we should avoid blindly following trends and instead pay more attention to the implementation of DeFAI projects in various fields and be mindful of the market's speculative risks.

DeFi Track

TVL Growth Ranking

The top 5 projects by TVL growth in the market over the past week (excluding projects with a TVL below $30 million):

1. Folks Finance (Token Not Yet Issued): (Recommendation Index: ⭐️⭐️⭐️)

   • Project Introduction: Folks Finance is a decentralized finance (DeFi) platform built primarily on the Algorand blockchain. It offers a range of permissionless DeFi tools, including lending, deposits, staking, and trading functionalities.
   • Latest Developments: This week, Folks Finance primarily focused on two directions: ecological cooperation and community incentives. On one hand, they reached a collaboration with DeBank, enabling users to monitor their xChain accounts on the DeBank platform, accompanied by the launch of social task activities; on the other hand, they continued to deepen their partnership with Algorand, emphasizing the promotion of the gALGO liquidity staking governance mechanism, and launched a governance incentive program with rewards of up to 4 times, along with social task activities integrated with the Galxe platform (from January 14 to February 15).

2. Beets (Not Issued): (Recommended Index: ⭐️⭐️⭐️)

   • Project Introduction: Beets is a hub for Sonic-based liquidity staking tokens on the Sonic chain, supporting users to stake into liquidity pools focused on LST to earn actual returns.
   • Latest development: This week, Beets' Liquid Staked S token (stS) on the Sonic platform surpassed 88.99 million in staking volume in less than a month, exceeding FTM's nearly three-year record on Fantom. At the same time, Beets is actively expanding ecosystem collaborations, reaching a partnership with PaintSwap and introducing SolvProtocol, launching the scUSDC|USDC liquidity pool and offering 6 times points and approximately $165,000 worth of stS token rewards.

3. AlphaFi (ALPHA): (Recommendation Index: ⭐️⭐️⭐️)

   • Project Overview: AlphaFi is an automated yield optimization platform based on the SUI blockchain, designed to simplify digital asset management. Through intelligent strategies and automated operations, users can maximize asset returns without the need for frequent interventions.
   • Latest Developments: This week, AlphaFi is primarily focusing on technological optimization and ecosystem development: On the technical level, an optimized liquidity solution has been launched, including features such as optimized ranges, active rebalancing, and automatic compound rewards, which has contributed approximately 10% of the trading volume for its Liquid Staking (LST) products on the Sui chain; in terms of ecosystem development, it has promoted DeFi growth through deep integration with the Sui ecosystem, while demonstrating strong community engagement (with a nearly 1:1 ratio of followers to stakers), and revealed that approximately $1.8 million in protocol revenue will be shared with the community through ALPHA token airdrops.

4. Echelon Market (Token Not Issued): (Recommendation Index: ⭐️⭐️)

   • Project Introduction: Echelon Market is a decentralized financial market project built on the Move language. Users can indirectly borrow and lend assets through non-custodial pools and earn interest from it. In addition, Echelon Market also provides users with leveraged trading services.
   • Latest developments: This week, Echelon Market mainly focused on ecosystem construction and community development: The Echelon project team officially announced that it will be launched soon and is actively recruiting hardcore software engineers to develop comprehensive DeFi applications. In terms of community building, Echelon organized in-depth discussion sessions with GlenMoves and redactedrain to explore the project roadmap and conduct community Q&A. At the same time, the project announced that the annualized yield based on lending income and APT incentives is as follows: USDC 12.88%, USDT 11.39%, WETH 8.76%, attracting more on-chain user participation through high interest rates.

5. Astherus (Unissued Token): (Recommendation Index: ⭐️⭐️⭐️)

   • Project Introduction: Astherus is an innovative multi-asset liquidity hub designed to maximize the real yield of crypto assets by enhancing the utility of digital assets. At the same time, Astherus has launched AstherusEx and AstherusEarn. AstherusEx is a decentralized exchange for perpetual contracts that supports derivative trading of mainstream assets; while AstherusEarn is a strategy yield product that allows users to stake assets to earn returns.
   • Latest developments: This week Astherus launched the USDF stablecoin (supports 1:1 USDT conversion and no minting fees), its TVL quickly surpassed 100 million USD, Astherus's 24-hour trading volume reached 1.2 billion USD, becoming the second largest perpetual contract trading platform in the market, collaborating deeply with the BNB chain to launch the asBNB minting feature, and partnering with Kernel DAO. At the same time, Astherus introduced the new Rh Points system to incentivize user participation and adjusted the Au multiplier of ALP.

In summary, we can see that the projects with rapid TVL growth this week are mainly concentrated in the machine gun pool projects.

Overall Performance of the Track

• Liquidity is gradually increasing: The arbitrage rates of on-chain DeFi projects are constantly increasing due to the rising value of cryptocurrency assets, and returning to DeFi will be a very good choice.

• Funding Situation: The TVL of DeFi projects has increased from $53 billion last week to $53.5 billion now, with a growth rate of 0.94%, ending the negative growth situation of TVL in various DeFi sectors last week. This is mainly due to the overall upward trend in the market after a downward spike on Monday, especially after the release of the U.S. CPI on Wednesday, which led to a broad market rally, attracting funds to re-engage in DeFi projects. Additionally, there is a generally optimistic sentiment in the market regarding Trump taking office as President of the United States next Monday, resulting in an influx of funds into the DeFi industry, driving up the TVL of the DeFi market.

Performance in Other Tracks

Public Chain

The top 5 public chain TVL gains in the market over the past week (excluding