TL;DR

• Crypto markets experienced a downturn this week, with only a few sectors like Privacy and Yield Farming showing strength.
• Net outflows from Bitcoin and Ethereum spot ETFs, coupled with weak Ethereum prices and external fund withdrawals, exerted downward pressure on the market.
• Ethervista trading volume surpassed $100 million, while its governance token VISTA skyrocketed 1,500% since launch.
• Ethereum’s on-chain lending recorded its second-highest monthly liquidation in August.
• Penpie fell victim to a hack, losing over $27 million.
• Polygon rebranded its token from MATIC to POL on September 4.
• From August 30 to September 5, ten projects secured a total of $48 million in funding.

Market Analysis

Review and Insights

According to Gate.io data as of September 5, 4:00 AM UTC [1]:

• BTC— Experienced significant downward volatility since August 31. The price hovered near $59,000 in early September before entering a continuous decline, dropping to around $55,568 on September 4. As of September 5, 00:00 UTC, the price slightly rebounded from its low. The daily chart shows BTC testing the previous support level of $55,000. Despite a modest recovery in trading volume following a sharp decline, market sentiment remains cautious. Future trends may face ongoing fluctuations and adjustments.[2]

• ETH— ETH exhibited a notable downward trend since August 31. Starting at approximately $2,555, the price took a sharp dive on September 3, reaching a low of about $2,303. While it has since recovered slightly to $2,410, ETH’s overall trajectory remains bearish.[3]

• Altcoins — Influenced by the overall market, altcoins generally trended downward. Excluding ETH, altcoin market cap fell by over 6.82%. This week, Privacy and Yield Farming sectors showed relative strength in price performance.[4]
• ETFs — U.S. Bitcoin spot ETFs saw a net outflow of $317 million this week, with a single-day outflow of $288 million on September 3, marking a three-month high. Ethereum spot ETFs performed poorly due to continuous selling pressure from Grayscale, with a single-day outflow of $47.4 million on September 3 and a cumulative outflow of $84.91 million this week.[5][6]
• Gas Fees — Ethereum on-chain activity remained low last week.[7]
• U.S. Stock Market — Experienced a downturn this week, with the Dow Jones, NASDAQ, and S&P 500 indices falling by 1.41%, 3.34%, and 2.27% respectively.[8]

Trending Concepts**

According to data from Gate.io and CoinGecko, the trending concepts in the past week are:

Privacy — This sector has seen a 7-day increase of approximately 4.3%, with a circulating market cap of about $6.2 billion.

Privacy coins are cryptocurrencies that allow users to conduct private and anonymous transactions. This design ensures that transactions cannot be traced, and the identities of both parties remain confidential. This is achieved by concealing the source and destination of transactions. In some cases, multiple transactions are mixed together to increase the difficulty of on-chain analysis.

The recent arrest of Telegram’s founder may have heightened crypto users’ concerns about privacy rights, sparking increased interest in privacy coins. Among the larger market cap privacy-focused cryptocurrencies, ZANO, XMR, and BDX have shown particularly strong performance, rising by 25.4%, 12.4%, and 4.5% respectively over the past week.

Yield Farming — This sector has seen a 7-day increase of approximately 3.4%, with a circulating market cap of about $10.3 billion.

In the DeFi landscape, liquidity providers can leverage idle assets previously stored on exchanges or hot wallets to earn trading fees and interest by supplying liquidity to protocols like Uniswap. These governance tokens associated with DeFi protocols are collectively categorized under the Yield Farming sector.

With recent market sentiment favoring a DeFi resurgence, DeFi tokens, led by AAVE, have defied the broader market trend and experienced significant gains. As of 2:00 AM UTC on September 5, leading DeFi tokens AAVE and UNI recorded 7-day price increases of 7.4% and 7.9% respectively.

Top Performers

According to data from Gate.io and CoinGecko, the top performers over the past 7 days are:

RDNT — Surged approximately 29.7% over the past 7 days, with a circulating market cap of $96 million.

Radiant Capital recently introduced the RFP-44 proposal, aimed at optimizing token release schedules and enhancing cross-chain liquidity. RFP-44 proposes allocating 25% of future RDNT token supply (about 125 million RDNT) to users who lock their tokens, encouraging greater participation in token staking to improve liquidity and stability within the Radiant Capital ecosystem. [9]

STMX — Increased approximately 25.6% over the past 7 days, with a circulating market cap of $71 million.

StormX is a gamified microtask platform where users can earn cryptocurrency through various means. Merchants on the platform can use tokens to post tasks, while users earn STMX by shopping, watching videos, and completing tasks. StormX’s official community platform had no updates for the past three months. Recently, the CEO announced that they have been planning a merger for the past few months and intend to make significant updates in September, along with initiating voting on proposals. [10]

VELO — Increased approximately 25.3% over the past 7 days, with a circulating market cap of $126 million.

VELO is a financial protocol that enables credit stability and stablecoin issuance on a distributed ledger. In May of this year, they introduced a novel method of holding gold through secure digital currencies. Earlier this year, Velo announced a partnership with investment holding company PTL Holding Co. Ltd. (PTLH) and subsequently released a “Digital Gold Whitepaper.” Recently, Laotian media reported the establishment of a gold and silver bank in September, with Velo as one of the participants.[11][12]

Weekly Spotlights

Hot Topic Review

The September Effect Weighs on Crypto Market Prices
The prevailing belief that markets tend to decline in September has resonated with investors, particularly in the cryptocurrency and traditional finance sectors. Over the past decade, the Nasdaq Composite has exhibited a lower average return in September compared to other months, with negative returns observed in several years. The market declined on September 8 out of 10 years.[13]

Similarly, for the cryptocurrency market, September has historically been a month with elevated seasonal risks. Since 2013, Bitcoin has experienced declines on September 8 out of 11 years, including during bull market cycles. As of 6:00 AM UTC on September 5, BTC has already declined by 3.16% this month.[14]

A combination of seasonal factors, macroeconomic data releases, and annual portfolio rebalancing can exacerbate market volatility. However, the market performance in September 2024 could diverge from historical patterns. On one hand, the Federal Reserve is expected to initiate interest rate cuts in September, which typically has a positive impact on investment markets. On the other hand, given that 2024 is an election year, historical trends suggest a generally positive performance for the U.S. stock market, potentially driven by economic stimulus measures. As the cryptocurrency market is closely correlated with traditional financial markets, it may also be influenced by these macroeconomic factors.

In conclusion, while the “September Sell-off” sentiment is prevalent among market participants, the actual market direction will ultimately depend on macroeconomic conditions and data releases.

Ethervista: A New Hotspot in the Meme Token Launch Platform
Ethervista, an Ethereum-based platform for meme token issuance and trading, has rapidly gained traction since its launch. Popular meme tokens such as VISTADOG, VISTAPEPE, and BONZI were all minted on this platform. The platform has witnessed a surge in trading volume, exceeding $100 million in cumulative trading volume and reaching a peak of $43.27 million on September 2 with over 40,000 transactions. Although trading activity has slightly declined since then, it remains robust.[15] The platform’s governance token, VISTA, has also seen a remarkable 1,500% increase since its launch, attracting significant attention.

Ethervista differentiates itself from Uniswap through its unique trading mechanics:

• Liquidity Locking: The platform mandates a 5-day initial liquidity lock to bolster market confidence and deter short-term arbitrage.
• Trading Fee Distribution: Trading fees, denominated in ETH, are distributed among liquidity providers and the protocol, incentivizing greater participation in liquidity provision.
• Deflationary Mechanism: VISTA is described as a “value compounding deflationary currency,” maintaining its value through an automatic buyback and burn mechanism. To date, 2.17% of the total supply has been burned.

While Ethervista introduces innovative features such as liquidity locking and trading fee distribution, these are not entirely novel in the DeFi space. Many users perceive it as a fusion of Uniswap, PumpFun, and various lending protocols. The popularity of meme token launch platforms like PumpFun and SunPump has fueled market interest in such projects, contributing to the rapid growth of Ethervista.

Ethereum On-Chain Lending Sees Second-Highest Monthly Liquidations in August
According to The Block, Ethereum’s on-chain lending market experienced its second-highest monthly liquidations in August, totaling $436 million. This figure is only surpassed by the record-breaking $671 million in liquidations recorded in May 2021.

Given that ETH and its derivative tokens are the most widely used collateral, fluctuations in ETH prices have a significant impact on the on-chain lending market. In August, ETH prices declined by 22% month-over-month and plummeted by 35% at its lowest point during the month. As a result of these price fluctuations, not only did the on-chain lending market experience liquidations, but the broader market weakness also led to the liquidation of perpetual futures longs on seven different dates in August, totaling over $150 million.

This downward market trend has affected various segments of the market, including on-chain lending, centralized exchange perpetual contracts, and decentralized exchange perpetual contracts. On-chain activity and gas fees were also impacted.[16]

Security Incident

Penpie, a DeFi Protocol within the Pendle Ecosystem, Suffers a Hacker Attack
On September 4, Penpie — a DeFi protocol within the Pendle ecosystem — fell victim to a hack, resulting in the theft of approximately $27 million in crypto assets. The stolen funds included staked Ethereum, Ethena’s sUSDE, and wrapped USDC.[17]

The attackers executed a meticulously planned attack, involving the deployment of a malicious yield contract. Leveraging this contract, the attackers registered fake liquidity pools on Pendle, minted a large quantity of PTs (Principal Tokens), and deposited these tokens into the market to obtain corresponding LPTs (Liquidity Provider Tokens). Subsequently, the LPTs were deposited into the relevant Penpie pool to acquire PRTs (Pendle Reward Tokens) as a deposit certificate.[18]

The root cause of the theft lies in the lax validation processes for market and pool registration within the Penpie project’s code, coupled with the absence of effective reentrancy protection in critical functions. Exploiting these vulnerabilities, the attackers were able to repeatedly reenter the contract through a single transaction, repeatedly acquiring tokens, and ultimately leading to the theft of funds. As of 4:00 AM UTC on September 5, the attacker’s address had transferred 1,000 ETH (approximately $2.44 million) to the Tornado Cash mixer.

Project Highlight

Bitcoin Re-staking Protocol Lombard to Launch Public Beta Soon
The Lombard re-staking protocol is set to launch its public beta on September 5. Lombard aims to enhance Bitcoin’s capital efficiency through its LBTC token. LBTC is a 1:1 Bitcoin-backed liquid re-staking token, where the protocol stakes users’ BTC in the Babylon protocol while maintaining its liquidity and usability in the DeFi space through LBTC.

Holding LBTC offers benefits such as yield generation, enhanced liquidity, and cross-chain accessibility, breaking Bitcoin’s limitations in complex financial applications. As a re-staking protocol within the Babylon ecosystem, Lombard is expected to introduce more DeFi possibilities. Previously, after the first phase of Babylon’s staking opened, the staking amount quickly exceeded 1,000 BTC, with approximately 12,700 addresses participating in staking. It has become one of the leading players in the Bitcoin ecosystem. Additionally, Lombard completed a $16 million seed round led by Polychain Capital in July, a relatively rare funding scale in the Babylon ecosystem. [19]

Polygon (MATIC) Mainnet Upgrade
In September 2023, the Polygon project proposed a token upgrade to change the token name from MATIC to POL, which was officially implemented on September 4 this year. After the upgrade, MATIC on Polygon PoS will be automatically converted to POL, while MATIC on Ethereum, Polygon zkEVM, and major exchanges will be actively migrated to POL through migration contracts. MATIC holders can refer to the official tutorial for token migration. POL will be exchanged at a 1:1 ratio, with an initial supply of 10 billion and an annual release of 2%, of which 1% is for validator staking rewards and the other 1% is for the community treasury to support ecosystem development. [20]

Data Highlights

Bitcoin Buy Sell Ratio
Recently, the Bitcoin buy/sell ratio has indicated volatility in market sentiment. Over the past week, Bitcoin’s price has fluctuated narrowly around $58,000. On September 1, Bitcoin’s price hit a bottom, coinciding with a sharp decline in the buy/sell ratio. The market experienced a surge in selling pressure, with bears dominating and Bitcoin’s price continuing to fall. On September 2, the market saw a reversal, with the buy/sell ratio stabilizing and rebounding, accompanied by a price rebound for Bitcoin. [21]

Weighted Funding Rate
According to Coinglass data, as of September 5 at 00:00 UTC, the weighted funding rate for Bitcoin holdings was 0.0074%, while for Ethereum it was 0.0030%. Over the past week, Bitcoin’s weighted funding rate has generally remained positive. Both Bitcoin and Ethereum have shown weakness, with the market entering a period of volatility following a large-scale liquidation of long positions on September 4. In the past 24 hours, BTC’s global contract holdings decreased by 0.65% to $29.978 billion, while ETH’s global contract holdings fell by 0.96% to $10.506 billion. [22][23]

ETF Data
As of September 4, the total net asset value of Bitcoin ETFs stood at $52.58 billion, accounting for 4.59% of BTC’s market capitalization, with a cumulative net inflow of $17.27 billion. This week, the BTC ETF market experienced continuous net outflows, with a significant outflow of $288 million on September 3. Fidelity, Grayscale, and Ark 21Shares accounted for the majority of the outflows, with $162.3 million, $50.4 million, and $33.6 million respectively. Despite persistent market expectations of potential Fed rate cuts, investor risk aversion has kept Bitcoin prices soft, with insufficient momentum for a short-term market recovery.

As of September 4, the total net asset value of Ethereum ETFs was $6.73 billion, with a cumulative net outflow of $562 million. The Ethereum ETF market continued to weaken this week, with a net outflow of 4,551 ETH (approximately $11.11 million) on September 4. Grayscale saw a particularly large outflow of 6,412 ETH (about $15.65 million). Overall, since trading began on July 23, Ethereum ETFs have shown a trend of net outflows, with net inflows only occurring briefly in early August.

Changes in Stablecoin Market Capitalization
Over the past 7 days, the market capitalization of stablecoins has slightly decreased by 0.19%, falling to $169.45 billion. USDT continues to dominate with a 69.69% market share. Compared to last week, USDT’s market cap decreased marginally by 0.08%, while USDC’s increased by 0.7%. Overall, the stablecoin market remained relatively stable this week, with only minor adjustments in market capitalization and little change in fund scale. [24]

Ethereum Gas
Overall, Ethereum gas fees fluctuated significantly over the past week, with several notable peaks, especially reaching the week’s highest levels from September 4 to September 5. This is related to factors such as the launch of popular projects like Ethervista and the considerable price volatility in cryptocurrencies this week, which led to more frequent on-chain transaction activities. However, generally speaking, Ethereum gas fees remain at relatively low levels. In the past week, the ETH supply increased by 16,554 ETH, equivalent to an annual inflation rate of 0.718%. [25]

Market Opportunties

Project Airdrops

Airdrop projects to watch this week: Lumoz and Grass

Lumoz is a modular computation layer and ZK-RaaS platform, focusing on asset diversity and infinite scalability. It aims to provide a user-friendly environment for high-throughput Web3 applications. Lumoz network, combined with DePIN network, offers a powerful, secure, and flexible computing platform, providing robust computing power for cutting-edge technologies like artificial intelligence and supporting zero-knowledge proof services. In May this year, Lumoz completed a Pre-A funding round at a valuation of $120 million, with participating institutions including Hashkey Capital, OKX Venture, Polygon Cofounders, Comma3, Waterdrip, YBB, and others.

Its incentivized testnet officially began on August 27, offering 50 million Lumoz points, equivalent to 50 million MOZ tokens (at a 1:1 exchange rate), as rewards. [26]

How to participate:

• Visit the Lumoz‘s website, connect your wallet, and start completing tasks to earn points.
• Log in to the Lumoz Telegram Bot and complete basic tasks such as following social media accounts and joining community groups to earn points.

Note:
The airdrop plan and participation methods may be updated at any time. Users are advised to follow Lumoz's official channels for the latest information. At the same time, users should participate cautiously, be aware of risks, and conduct thorough research before participating. Gate.io does not guarantee the subsequent distribution of airdrop rewards.

On September 5, Grass unveiled its airdrop eligibility check webpage, allowing users to verify their qualification for the airdrop. At present, the query page displays allocation details solely for the Closed Alpha stage and Rounds 1-7, excluding information on the ongoing Bonus Epoch and yet-to-be-disclosed allocations. The GRASS token boasts a total supply of 1 billion, with 10% earmarked for the initial airdrop.

Airdrop allocation breakdown:

• Closed Alpha: 1.5%
• Epochs 1 to 7: 7%
• Bonus Epoch: 0.5%
• Not yet announced: 1%

Note:
The airdrop claim has not yet started. Users need to be vigilant against scams and should obtain information from Grass's official channels for queries.

Weekly Fundraising Report

Several projects successfully completed funding this week, covering a wide range of applications including solutions, AI, and stablecoins. According to RootData statistics, from August 30 to September 5, a total of 10 projects secured funding, amounting to $48 million. Here are the top three in terms of funding size: [27]

Hypernative — On September 3, Hypernative successfully raised $16 million in a Series A round led by Quantstamp, with other notable investors joining. This new funding will be used to enhance its AI-driven security solutions tailored for the Web3 ecosystem. Over the past year, the Hypernative Platform has doubled its network coverage to over 40 chains and added 100 new detectors to identify the largest set of risks across multiple categories in the industry. [28]

IDA — On September 2, Hong Kong-based digital asset company IDA announced the completion of a $6 million seed round. The round was co-led by CMCC Global’s Titan Fund and Hashed, with participation from institutional investors including Hack VC, Anagram, GSR, and angel investors such as Solana co-founder Raj Gokal. IDA plans to use this funding to drive the development and issuance of its first fiat-backed stablecoin, HKDA. [29]

TrendX — On September 2, Web3 trend tracking and smart trading platform TrendX announced the completion of a $5 million Series A round. The round was participated by institutions including Promontory Technologies and Coinstash. TrendX has now raised a cumulative total of $6 million. Since its establishment in 2022, TrendX has processed over 20 TB of data and provides reliable investment advice to users through intuitive interactions. The new round of funding will be used to drive technological development, expand market share, and recruit talent. [30]

What to Watch Next Week

Token Unlock

According to Token Unlocks data, next week (September 6-12, 2024) will see several important token unlock events in the market, with most token unlocks valued below $1 million, totaling $1.12 trillion. The top 3 unlocks for this week are as follows: [31]

APT will unlock 11.31 million tokens on September 11 at 10:00 AM UTC, accounting for 2.33% of the circulating supply. Core contributors will unlock 3.96 million tokens, representing 35% of this unlock. After this round of release, the unlock rate will slow down.

IMX will unlock 32.47 million tokens on September 6 at 12:00 AM UTC, accounting for 2.06% of the circulating supply. Project developers will unlock 16.56 million tokens, representing 51% of this unlock.

XAI will unlock 35.88 million tokens on September 9 at 9:30 AM UTC, accounting for 6.31% of the circulating supply. Investors will unlock 3.31 million tokens, representing 48.3% of this unlock.

Crypto Calendar

The blockchain and cryptocurrency industry is set to witness several significant events in the coming week (September 6-12, 2024). On September 7, the claiming window for the first phase, first season of EIGEN tokens on the liquid staking protocol EigenLayer will close.[32] Furthermore, on September 9th, Fractal Bitcoin, a Bitcoin scaling network, will officially launch its mainnet.[33]

Several crucial macroeconomic data releases will also have a substantial impact on the industry. Notably, a speech by Federal Reserve Governor Waller is scheduled to take place. His address will cover key areas such as economic growth, inflation, and the job market, providing valuable insights into the Federal Reserve’s future monetary policy direction.[34][35]

References

1. Gate.io, https://www.gate.io/price
2. Gate.io, https://www.gate.io/price/bitcoin-btc
3. Gate.io, https://www.gate.io/price/ethereum-eth
4. CoinGecko, https://www.coingecko.com/en/categories
5. SoSoValue, https://sosovalue.xyz/zh/assets/etf/us-btc-spot
6. SoSoValue, https://sosovalue.xyz/assets/etf/us-eth-spot
7. Ultrasound, https://ultrasound.money/
8. Yahoo Finance, https://finance.yahoo.com/markets/
9. Gate.io, https://www.gate.io/trade/RDNT_USDT
10. Gate.io, https://www.gate.io/trade/STMX_USDT
11. X, https://x.com/veloprotocol/status/1825411624473137281
12. Gate.io, https://www.gate.io/trade/VELO_USDT
13. Bloomberg, https://www.bloomberg.com/quote/NDX:IND
14. Coinglass, https://www.coinglass.com/today
15. Dune, https://dune.com/obchakevich/ethervista
16. The Block, https://www.theblock.co
17. X, https://x.com/Penpiexyz_io/status/1831058385330118831
18. Blocksec, https://app.blocksec.com
19. X, https://x.com/Lombard_Finance/status/1830941331893752033
20. The Block， https://www.theblock.co/post/314595/polygon-developers-transition-matic-token-to-pol
21. Cryptoquant, https://cryptoquant.com
22. Coinglass, https://www.coinglass.com/zh/pro/AvgFunding/BTC
23. Coinglass, https://www.coinglass.com/zh/pro/AvgFunding/ETH
24. DefiLlama, https://defillama.com/stablecoins
25. Dune，https://dune.com/queries/3917119
26. Lumoz, https://lumoz.org/quidditch-join
27. Rootdata, https://www.rootdata.com/zh/Fundraising
28. Hypernative,https://www.hypernative.io
29. Rootdata, https://www.rootdata.com/Projects/detail/IDA?k=MTQyNjA%3D
30. Rootdata, https://www.rootdata.com/Projects/detail/TrendX?k=Njg5MQ%3D%3D
31. Token Unlocks, https://token.unlocks.app/
32. X, https://x.com/eigenfoundation/status/1788977898470215779
33. X, https://x.com/fractal_bitcoin/status/1828110003527672183
34. PANews, https://www.panewslab.com/zh/calendar/index.html
35. Jin10, https://rili.jin10.com/day/2024-09-02

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