Original title: (Investment Opportunities in the Context of the Volatile Cryptocurrency Market: Liquidity Aggregation Effect in the Base Ecosystem | Frontier Lab Cryptocurrency Market Weekly Report)
Source: Frontier Lab
Market overview
Market overview
This week, the cryptocurrency market exhibited a fluctuating downward trend, with Bitcoin continuing its fluctuating downward movement from last week, and altcoins generally following the market trend.
Stablecoin market dynamics
The overall stablecoin market maintains the upward trend from last week, showing a synchronized rise in USDT and USDC.
· USDT: Market capitalization reached $155.7 billion, with a week-on-week growth of 0.32%. Although it continues to maintain an upward trend, the weekly incremental funds recently fell below $1 billion for the first time, indicating a decrease in the intensity of capital inflows.
· USDC: Market capitalization is $61.4 billion, with a week-on-week growth of 0.33%, ending last week's decline and beginning to show a slight increase.
This phenomenon is worth investors' attention: although USDT's market capitalization continues to maintain an upward trend, it only increased by $500 million this week, ending the previous six weeks of over $1 billion weekly growth, indicating a decrease in the strength of capital inflows predominantly from non-U.S. users. Moreover, USDT has diverse uses, so the actual funds entering the Crypto market may be less than $500 million; the increase in USDC’s market capitalization this week reflects that U.S. investors are tentatively re-entering the market, although it was only $200 million this week, the inflow amount is not large, but this signal requires ongoing monitoring.
Market performance differentiation
This week, the cryptocurrency market showed significant structural differentiation: Bitcoin maintained a fluctuating downward trend, while altcoins experienced substantial declines. This differentiation reflects a risk aversion characteristic where funds concentrate on relatively safe assets, demonstrating Bitcoin's position as a "safe haven" in the cryptocurrency market.
Geopolitical risk escalation
· Escalation of Middle East conflicts: The conflict between Israel and Iran continues to escalate, with the U.S. continuously strengthening military deployments around Iran, heightening market concerns about direct U.S. involvement in the conflict.
· Risk transmission mechanism: Geopolitical tensions directly impact risk assets through the pathway of declining risk appetite, with cryptocurrencies, as high-risk assets, being the first to bear the brunt, especially altcoins with relatively poor liquidity being more susceptible to shocks.
Monetary policy expectations shift
· Fed's stance turning hawkish: Although the interest rate meeting this week maintained a 4.5% rate as expected, the meeting minutes revealed subtle changes in policymakers' attitudes.
· Significant reduction in interest rate cut expectations: The number of officials not favoring a rate cut has increased to 7, with the 2025 rate cut expectation reduced from two cuts to one, directly impacting the market's expectations for liquidity easing.
· Adjustment of economic expectations: The Fed has simultaneously lowered growth expectations while raising inflation expectations, which further exacerbates the market's pessimistic sentiment regarding "stagflation."
Favorable policy factors
· Positive legislative progress: (GENIUS Act) passed significantly in the U.S. Senate, providing policy support for the development of the cryptocurrency industry.
· Outlook for the stablecoin market: Treasury Secretary Bessent expects the stablecoin market size to reach $3.7 trillion by the end of 2029, injecting confidence for the long-term development of the cryptocurrency ecosystem.
· Limited sentiment boost: Despite favorable policies, the positive impact of these factors is relatively limited under the dual pressures of geopolitical risks and tightening monetary policy.
· Investment strategy recommendation: Cautious defense
· Increased risk aversion: With the ongoing escalation of the Middle East geopolitical crisis, global risk aversion may further intensify, continuing to suppress risk assets.
· Increased market vulnerability: Amid multiple intersecting uncertainties, the volatility and vulnerability of the cryptocurrency market have significantly increased, raising concerns about the risk of flash crashes.
· Cautious strategy recommendation: Investors should remain highly cautious, focusing on the development dynamics of geopolitical events, appropriately controlling positions, and preventing sudden risk events from significantly impacting their portfolios.
Market outlook
In the coming week, the cryptocurrency market will continue to face severe challenges, with the further escalation of Middle Eastern geopolitical conflicts and the possibility of U.S. military involvement likely to continue raising global risk aversion. Combined with tightening monetary policy expectations reinforced by the Fed's hawkish stance, Bitcoin is expected to struggle to balance its safe-haven attributes and risk asset characteristics, while altcoins may face greater selling pressure and liquidity exhaustion risks. Under multiple pressures where key technical support levels are being tested, institutional funds remain cautious, and retail panic sentiment may further ferment, there is a risk of flash crashes and chain reactions in the market. Investors should adopt defensive strategies, strictly control positions and leverage, and closely monitor geopolitical dynamics and important economic data to guard against significant market volatility triggered by sudden events.
Next week's forecast targets
Bullish target: AERO
AERO: Analysis of ecological leader value reassessment and strategic opportunities catalyzed by Coinbase integrating Base chain DEX
Last weekend, at the 2025 Cryptocurrency Summit, Max Branzburg, Vice President of Consumer Products Management at Coinbase, announced that Coinbase will integrate DEX on the Base chain into the main application, and future applications will embed DEX trading.
· Fundamental impact of liquidity integration
· Liquidity base brought by platform scale effects
As a leading exchange in the industry, Coinbase has over 100 million registered users and 8 million monthly active trading users, with customer asset values reaching $428 billion. This vast user base and asset scale provide unprecedented liquidity source for Base chain DEX. When these users access Base chain DEX directly through Coinbase’s main application, it will create a large-scale liquidity import effect.
· Structural advantages of institutional funds
Data shows that the proportion of institutional client trading volume on Coinbase continues to rise, reaching 82.05% ($256 billion) in Q1 2024, while retail trading only accounted for 18%. This institution-led trading structure means that funds entering the Base chain have stronger stability and larger single transaction sizes, which is beneficial for enhancing DEX's trading depth and reducing slippage.
· Competitive advantages brought by market concentration
As the largest DEX project in the Base ecosystem, Aerodrome accounts for about 60% of the entire Base ecosystem DEX trading volume. According to the liquidity aggregation effect, newly added liquidity will prioritize platforms with the largest trading volume and best depth. Aerodrome's market leadership makes it the primary recipient of Coinbase's liquidity.
Proportion of trading volume of various DEXs in the Base chain (data source: https://dune.com/x_drome_analytics/base-dex-landscape)
Analysis of Aerodrome's beneficiary economic model
Positive feedback loop mechanism of token economics
Incentive structure for revenue distribution
Aerodrome adopts a 100% revenue distribution mechanism: veAERO holders receive 100% of the fees and bribery revenue from their voting pool, while LPs receive 100% of AERO emission incentives. This design ensures that the growth of protocol revenue can be directly converted into increased earnings for token holders.
· Staking-driven supply tightening
When Coinbase's liquidity import boosts Aerodrome's trading volume and revenue, veAERO holders' APY will significantly increase. High yields will incentivize more users to stake AERO as veAERO, thereby reducing the circulating supply of AERO and forming a positive feedback loop that drives price increases through supply-demand imbalance.
· Value realization of governance weight
veAERO holders decide on the allocation of AERO emissions through voting, and this governance weight is more prominent in high liquidity environments. As protocol revenue grows, the economic value of governance rights will attract more long-term investors to participate in staking.
· Advantages of technical architecture's carrying capacity
· Efficiency improvements from multiple technological integrations
Aerodrome combines the token economics of Curve/Convex, the centralized automated market maker (clAMM) of Uniswap v3, and an optimized Solidly codebase. This technological integration ensures the platform can efficiently handle large-scale liquidity, providing users with better trading execution.
· Competitive advantage of capital efficiency
The clAMM technology achieves capital-efficient swaps, providing lower slippage and better price execution under the same liquidity conditions. After Coinbase injects liquidity, this technological advantage will be further amplified, consolidating Aerodrome's competitive position in the Base ecosystem.
· Long-term assurance of scalability
Aerodrome's technical architecture possesses good scalability, capable of accommodating large-scale capital inflows without affecting system stability. This provides technical foundational assurance for its long-term benefits from Coinbase integration.
· On-chain data analysis
Aerodrome's TVL (data source: https://defillama.com/protocol/aerodrome)
From the above chart, it can be seen that after reaching a low point at the beginning of April, Aerodrome's TVL started to rebound rapidly, now reaching $1 billion, with a rebound of 56%.
Aerodrome's trading volume (data source: https://defillama.com/protocol/aerodrome)
As shown in the above chart, Aerodrome's trading volume saw a rapid increase after Coinbase announced the integration of DEX on the Base chain into the main application, aligning closely with Coinbase's trading times. Trading volume peaks are often concentrated from Monday to Friday, while trading volume on weekends shows a marked decline, indicating a clear influx of funds from Coinbase into Aerodrome.
Aerodrome's project revenue (data source: https://defillama.com/protocol/aerodrome?dexVolume=false&tvl=false&revenue=true)
As shown in the above chart, Aerodrome's project revenue saw a rapid increase in trading volume after Coinbase announced the integration of DEX on the Base chain into the main application, which aligns well with Coinbase's trading times.
Ranking of Base ecosystem projects by revenue (data source: https://defillama.com/chain/base)
As shown in the above chart, Aerodrome's project revenue ranks first among all projects on the Base chain, with daily revenue around $500,000 (approximately $600,000 on average)
Ranking of Base ecosystem DEX projects by trading volume (data source: https://defillama.com/chain/base)
From the above chart, it is clear that Aerodrome's trading volume has far surpassed Uniswap, reaching $525 million (with an average daily trading volume of around $600 million), ranking first among DEX projects in the Base ecosystem.
AERO token holding addresses (data source: https://dune.com/thechriscen/aerodrome-analysis)
As shown in the above chart, the number of addresses holding AERO tokens rapidly increased after Coinbase announced the integration of DEX on the Base chain into the main application, indicating that this policy has promoted user holdings of AERO tokens.
Summary
From the analysis of Coinbase integrating the Base chain DEX policy, on-chain data shows that theoretical analysis closely aligns with actual data, validating the real effectiveness of the favorable policy: After the integration policy was announced, Aerodrome's trading volume surged to an average of $600 million, surpassing Uniswap, project revenue remained the highest on the Base chain at around $600,000 per day, TVL rebounded by 56% to break $1 billion, and the number of AERO holding addresses rapidly increased, with data showing clear characteristics of Coinbase's trading times directly confirming the capital inflow effect.
Bearish targets: ALT, REZ
ALT: Token unlock risk warning and price downside trend analysis under triple pressure
Project fundamental analysis
AltLayer, as a decentralized Rollup-as-a-Service (RaaS) protocol, focuses on providing scalable second-layer solutions for blockchain applications. The project has certain innovative and practical value on a technical level, but currently faces major challenges due to unfavorable market conditions.
Factors worsening the market environment
The overall performance of the Ethereum ecosystem is currently weak, and doubts about Layer-2 solutions are increasing. The main issues center on the perception that Layer-2 is the root cause of the stunted development of the Ethereum ecosystem, resulting in a severe fragmentation of market liquidity. This negative market sentiment directly affects the market performance and capital inflow of all Layer-2 related projects, including AltLayer.
Declining project usage and attention
Due to the overall decline in enthusiasm for the Layer-2 track, AltLayer's actual usage rate is significantly insufficient, with both market attention and capital injection showing a significant decline. This vicious cycle further weakens the fundamental support and market confidence of the project.
Token unlock pressure analysis
· Unlock scale and timing: On June 25, 195 million ALT tokens will be unlocked, accounting for 1.95% of the total locked amount, with a relatively large unlock scale.
· Unlock target structure: According to the linear unlock chart in the white paper, the main beneficiaries of this unlock are investment institutions and project teams, who usually have a strong cash-out motivation.
Summary
Considering the triple pressure from the deteriorating market environment, declining project attention, and large token unlocks, the ALT token faces significant price downside risk. Potential selling behavior from institutions and teams may trigger a chain reaction in a market environment with limited liquidity, significantly negatively impacting token prices.
REZ: Price downside risk analysis due to fundamental deterioration and large unlocks
Project fundamentals and positioning
Renzo, as a liquidity re-staking protocol based on EigenLayer, has its core value in simplifying complex staking mechanisms for end-users and facilitating rapid cooperation with EigenLayer node operators and Active Validation Services (AVS). The project relies on EigenLayer's innovative infrastructure in its technical architecture, possessing certain ecological value and application prospects.
External environment pressure analysis
· Overall weakness in the Ethereum ecosystem: The current performance of the Ethereum ecosystem continues to be sluggish, directly affecting the activity and capital inflow of the entire Ethereum DeFi ecosystem.
· Shrinking staking market: The ETH staking ratio has decreased to 28.35%, reflecting a lack of confidence in staking returns, which directly impacts the fundamental demand for the Restaking track, leading related projects to lose market attention and capital support.
ETH staking fund flows (data source: https://dune.com/hildobby/eth2-staking)
Deterioration of project operational data
TVL shrank significantly: Renzo's TVL plummeted from $1.83 billion at the beginning of the year to $945 million, a decrease of nearly 50%, reflecting continuous capital outflow and serious lack of market confidence.
Renzo's TVL (data source: https://defillama.com/protocol/renzo?revenue=false&devMetrics=false&devCommits=false&tvl=true&fees=false)
Continuously declining revenue: The project's average daily revenue remains at a low level of around $5,000, showing a continuous downward trend, indicating a significant decline in user activity and protocol usage. The continuous deterioration of revenue data directly reflects the decreasing frequency of market users using the Renzo protocol, forming a negative feedback loop.
Renzo project revenue (data source: https://defillama.com/protocol/renzo?revenue=true&devMetrics=false&devCommits=false&tvl=false&fees=false)
Token unlock risk assessment
· Unlock scale and structure: On June 29, 423 million REZ tokens will be unlocked, accounting for 4.24% of the total locked amount. Considering that the current total circulation rate is only 32.63%, this unlock will significantly increase the market's circulating supply.
· Unlock target risk: According to the white paper's linear unlock plan, this unlock primarily involves investment institutions and project teams, which have a strong motivation to cash out and sell pressure in the current market environment.
· Insufficient market absorption capacity: In the context of low enthusiasm for the Restaking track and few participants, the daily trading volume of REZ tokens is only about $2.25 million, and the market's capacity to absorb the increase in large token supply is severely inadequate.
Daily trading volume of REZ token (data source: https://www.coingecko.com/en/coins/renzo)
Summary
Renzo faces the dilemma of deteriorating macro environment, continuously worsening fundamental data, and large token unlocks. Against the backdrop of weak performance in the Ethereum ecosystem, with both project TVL and revenue declining, the concentrated unlocking of 423 million REZ tokens may trigger severe selling pressure, significantly negatively impacting token prices.
Market sentiment index analysis
TOTAL3 (data source: https://cn.tradingview.com/chart/KBpzaW4x/?symbol=ICEUS%3ADXY)
The market sentiment index slightly decreased from 30% last week to 28%. BTC fell 0.78% this week, ETH fell 0.97%, TOTAL3 rose 0.73% this week, and Altcoins overall remain in a bearish range, maintaining panic levels.
Overall market theme overview
Data source: SoSoValue
In terms of weekly return statistics, the PayFi track performed the best, while the AI track performed the worst.
· PayFi track: In the PayFi track, XRP, BCH, XLM, and LTC account for a large share, totaling 99.09%. This week, their price changes were: -3.41%, 12.35%, -8.96%, -3.12%. It can be seen that the projects in the PayFi track performed better than other tracks, making the PayFi track perform the best.
· AI track: In the AI track, TAO, FET, RENDER, WLD, VIRTUAL, and FARTCOIN account for a large share, totaling 91.63%. This week, their price changes were: -10.79%, -7.96%, -14.59%, -12.28%, -17.68%, -20.83%, indicating that the average decline was higher than that of projects in other tracks, making the AI track perform the worst.
Next week's major Crypto events preview
· On Monday (June 23), NFT NYC 2025 will be held in New York, USA.
· On Tuesday (June 24), Fed Chairman Powell will present his semi-annual monetary policy testimony in the House.
· On Friday (June 27), the U.S. core PCE price index for May; the final consumer confidence index for June from the University of Michigan.
Summary
This week, the cryptocurrency market exhibited a structural decline amid multiple negative factors, with the market sentiment index slightly decreasing from 30% to 28%, entering a bearish range. The stablecoin market, while maintaining a growth trend, saw USDT's incremental funds first drop below the $1 billion threshold, reflecting a significant weakening of capital inflow intensity, while the slight rebound in USDC suggests that U.S. funds are beginning to tentatively enter the market. Geopolitical risks, the Fed's hawkish stance, and fundamental differentiation across various tracks collectively constitute the triple pressure currently facing the market.
In the current market environment, investment strategies should focus on accurately seizing structural opportunities and effectively avoiding risks. AERO, as the leading DEX in the Base ecosystem, benefits from the catalyst of the Coinbase integration policy. On-chain data validates its significant improvements in trading volume, revenue, and TVL, representing a typical case of seeking policy-driven growth in a highly uncertain market.
Looking ahead to the coming week, investors should closely monitor Powell's monetary policy testimony on June 24, the core PCE data on June 27, and the latest developments in the Middle East geopolitical situation. These key events will directly influence market risk appetite and liquidity expectations. It is advisable to adopt a "defensive-first, selective supplementary" strategy, focusing on high-quality assets with policy catalysts and fundamental improvements while maintaining high vigilance on projects facing large unlocks. Through precise risk management and opportunity identification, seek stable investment returns in a challenging market environment.
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