Original author: TRON
1. Outlook
1. Macro-level summary and future forecasts
Last week, the U.S. stock market showed an overall downward trend, especially the weak performance of technology stocks and artificial intelligence-related stocks. However, the U.S. stock market rebounded to a certain extent on Friday, indicating that short-term sentiment has warmed up. The U.S. macro-economy is weak but not out of control. The stock market declines and local rebounds coexist, and macro uncertainty continues to affect market confidence. Investors need to pay attention to the economic data to be released in early March (such as the February non-farm payrolls report), which will provide key clues for the Feds March meeting.
2. Cryptocurrency market changes and warnings
Last week, the crypto market fell significantly due to macro pressure and policy uncertainty, sentiment was low, and capital flows tended to be conservative. Trumps crypto reserve speech on Sunday night became a turning point, triggering a big rebound in cryptocurrencies including BTC, ETH, SOL and ADA, and revitalizing market confidence. However, in the future, we still need to pay attention to the implementation of tariff policies, the adjustment of the Feds interest rate cut expectations and the progress of the regulatory framework. Short-term fluctuations may continue. Investors should pay close attention to the White House Crypto Summit hosted by Trump this Friday and the details of its subsequent policies.
3. Industry and track hot spots
Knidos is committed to redefining the true decentralization of Proof-of-Stake networks through its modular decentralized enhancement layer, and has received strong support from the Avalanche Foundation; Obol Collective is a decentralized operator ecosystem that aims to improve the security, resilience and decentralization of Layer 1 blockchains and infrastructure networks;
Byzantine is a trustless and efficient re-staking layer that supports permissionless strategy creation and has recently raised $3 million in funding.
2. Market hot spots and potential projects of the week
1. Potential track performance
1.1. A brief analysis of how Knidos, the Depin protocol that has received strong support from the Avalanche Foundation, transforms a static staking system into a liquid system to increase user benefits
Knidos is a protocol that strives to redefine true decentralization of Proof-of-Stake networks through its modular decentralization enhancement layer.
The protocol focuses on developing innovative solutions that promote blockchain decentralization. Knidos aims to contribute to the decentralization of Proof-of-Stake blockchains through a trustless, network-agnostic orchestration layer.
Proof-of-Stake networks achieve consensus through validator nodes, which requires a large amount of initial capital as well as deep technical expertise. Knidos Labs’ decentralization enhancement layer addresses these limitations by modularizing validator nodes and separating funding and technical setup. This creates opportunities for liquidity providers who lack technical expertise, as well as developers and operators who lack sufficient liquid capital. In addition, the integrated Node-Fi protocol activates dormant capital without sacrificing true custody or decentralization.
Architecture Overview
Knidos Decentralization Enhancement Layer
Knidos’ decentralization enhancement layer provides a trustless, network-agnostic orchestration environment designed to help decentralize Proof-of-Stake networks. We do this by modularizing validator nodes and activating dormant capital through an integrated Node-Fi mechanism. The tripartite protocol consists of the following sub-layers that work together:
Funding layer
The first sublayer attracts capital by offering the highest annualized rate of return (APR) other than setting up a personal validator node. The fund pool is initiated by the user without permission, and the pool initiator defines the verification configuration. Investors have the flexibility to contribute any funds of their choice and invest in split nodes.
Split node ownership enables users to truly own a portion of a blockchain node, rather than just delegating their coins, which decentralizes access to network consensus by making node consensus more accessible and affordable. Partial ownership of each node is represented by a non-fungible token (NFT) held by the user. All fees and rewards generated by the node are collected by the holder of that NFT.
All processes take place within a trustless framework, ensuring that the Knidos protocol itself cannot access funds at any time.
Node management layer
The second sublayer creates a DePIN market for node operators, enabling them to monetize their hardware and technical capabilities without having to invest working capital.
Operators are paired with capital from a pool to establish Proof-of-Stake validator nodes in any network in a completely non-custodial manner. All processes are trustless, and node keys are transferred to the verification engine via on-chain ZK proofs.
The verification engine starts the verification process and the nodes join the consensus. The operator node will be verified by the Knidos protocol node.
Node-Fi Layer
The third sublayer activates dormant capital in the staking pool without re-hypothecation or sacrificing true custody.
Liquidity providers can stake their NFTs (see 3.3. Funding Layer) and continue to earn rewards, supporting network consensus and security. They can also borrow directly from the integrated Node-Fi engine for use in the broader DeFi ecosystem, and the entire structure is completely trustless. Lenders provide capital to smart contracts, and the interest paid by borrowers incentivizes lenders. This introduces a new layer of financialization for dormant assets, increasing the networks TVL (total value locked) and user activity.
Revenue Model
The protocol generates revenue by charging fees on staking rewards generated by validator nodes and through its Node-Fi engine. Fees can be adjusted dynamically through governance to activate liquidity and operators, drive activity and TVL, and promote decentralization.
Investor Rewards Fee: Deducted from the investor’s staking rewards.
Carrier Incentive Fee: Deducted from the carriers fee.
Node-Fi Lending Fees: Added to the base rate to further increase financial reserves and ensure solvency.
$KNIDOS
Expected to launch in Q2 2025, $KNIDOS will serve as the backbone of the entire protocol, providing access to tooling, governance, and protocol revenue:
Operator Registration: To register as a node operator in the Knidos protocol, users need to lock up $KNIDOS tokens as a security deposit.
Revenue Sharing: $KNIDOS stakers will be able to receive a portion of the revenue generated by the protocol upon governance approval.
Governance: Stakers will participate in key decisions regarding the future of the platform, giving the community a voice in shaping the direction of the Knidos protocol, including fee adjustments, the design of incentive mechanisms, and the strategic deployment of liquidity to promote TVL growth and/or developer activity.
Reviews
Knidos integrates three sub-levels into a large enhancement layer. Through the dynamic mechanism of this enhancement layer, it liberates the profit limitations of the traditional staking model, infinitely amplifies the profits of nodes and node delegators, and maintains extreme decentralization.
The role of the Depin network in Knidos is more like a tool to generate additional income for nodes, not the core function of the protocol. This is the first protocol in the industry to use the Depin business as a subsidiary business to generate income. Therefore, from the perspective of income, the protocol has great potential, and with the close cooperation with Avalanche, users who are interested in Staking can pay attention to it.
1.2. Can the uniqueness of Torch Finance, the stablecoin exchange protocol on Ton, reignite the liquidity of new and old stablecoins?
Obol Collective is a decentralized operator ecosystem that aims to improve the security, resilience, and decentralization of Layer 1 blockchains and infrastructure networks. By providing modular tools and technologies such as the Charon middleware client and Techne credentials, Obol enables node operators to run high-performance, slash-resistant nodes. The ecosystem facilitates collaboration between staking protocols, node operators, and home stakers, aiming to efficiently scale decentralized networks.
Participants can earn OBOL tokens through programmatic incentives and rebate funding, driving the growth and sustainability of decentralized infrastructure.
Expanding infrastructure network
Obol is focused on scaling consensus by providing permissionless distributed validators (DVs), which not only prevent client issues and key management errors, but also have Byzantine Fault Tolerance. We believe that distributed validators should and will become an important part of the mainnet validator configuration, and as the Ethereum community transitions to distributed validators, a new trust paradigm is opened up.
Charon, a distributed validator middleware client
By enabling squad staking, the security, resilience and decentralization of the Ethereum validator network are improved. The ecosystem is driven by Obols economic model, which supports ecological projects through retroactive funding, forming a positive flywheel effect, accelerating the adoption of DVs and expanding infrastructure networks like Ethereum.
Core Elements
Execution client
Execution clients run the EVM (Ethereum Virtual Machine) and manage the transaction pool of the Ethereum network. These clients provide execution payloads to consensus clients for inclusion in blocks.
Consensus client
The responsibility of a consensus client is to run Ethereum’s Proof of Stake consensus layer, commonly referred to as the Beacon Chain.
DV middleware client
The DV client intercepts the standardized REST API communications between any consensus client and validator client pair and coordinates with other Charon clients in the cluster to reach consensus, determine what validators need to sign, and aggregate the returned signatures.
Validator client
The validator client works as normal, using the validator key share to sign the message it receives from Charon, and then transmits it back to Charon for aggregation.
Comparison of Obol with other DV implementations
No private key on chain
Obols Distributed Key Generation (DKG) events generate key shares for each node in the DV cluster. The private keys of the entire validator never exist in one place. Keys are generated locally on the node and can be backed up. The private keys of Obol DVs are never uploaded to the internet or exposed on-chain.
An alternative approach is to split the private key into multiple shares, encrypt each share with the node operators public key, and then publish the encrypted private key to the chain. The operators node key can decrypt the private key. However, we believe that this approach is not safe. We believe that the safest way is to avoid the existence of a single private key, and private keys should never be published on the public chain.
Cluster independence: Clusters can be upgraded independently and do not rely on the public P2P chat network 
In Obols DV cluster, nodes communicate directly using Lib P2P, and communications are end-to-end encrypted via TLS. Clusters are independent of each other and can run different versions of Charon without having to upgrade together. This means that when Obol releases a new Charon version, the Obol DV cluster can upgrade independently according to its own schedule without having to upgrade with other clusters. Charon will never require hard forks or simultaneous updates between clusters.
This direct communication between nodes improves latency and makes cluster communication less vulnerable to denial of service (DOS) attacks. In addition, this allows Obol DV clusters to run in private networks. This can save data egress fees for operators who run cluster nodes in multiple cloud provider locations.
Obol Segmentation
Obol develops and maintains a set of smart contracts for use with Distributed Validators (DV). These contracts include:
Withdrawal Recipients: A contract for the validator’s withdrawal address.
Split contracts: Contracts used to distribute ether to multiple entities, developed by Splits.org.
Split controllers: Contracts that can change the splitter configuration.
The two key goals of validator reward management are:
Ability to differentiate between reward ether and stake ether, so that node operators can be paid based on a percentage of rewards they have accumulated for stake providers, rather than a percentage of stake + rewards.
Ability to withdraw rewards in an ongoing manner without the need to exit the validator.
The following section outlines different contracts that can be combined to form solutions to achieve either or both of these goals.
Withdrawal Recipients
Validators have two income streams, consensus layer rewards and execution layer rewards. Withdrawal receivers focus on the former, continuously receiving balances from validators holding more than 32 ether, and receiving the principal of validators when they exit.
Optimistic Withdrawal Recipient
This is the primary withdrawal recipient used by Obol as it allows for the separation of rewards from principal and allows for the continuous withdrawal of accumulated rewards.
Reviews
Obols unique features, such as Charon middleware, backtracking funding mechanism, queue staking, and decentralized collaboration, make it stand out from other DV implementations. It provides a more modular, secure, and scalable solution for building resilient blockchain infrastructure, especially in the context of Ethereums transition to distributed validators, Obol provides stronger fault tolerance and decentralization. Obols focus on Byzantine fault tolerance and distributed trust makes it an important choice for the future development of blockchain infrastructure.
1.3. What is the innovation of Byzantine Finance, a decentralized yield aggregator that has recently raised $3 million and claims to be able to “pledge any asset at any location”?
Byzantine is a trustless and efficient re-staking layer that supports permissionless policy creation. We support the deployment of minimal, independent, and isolated re-staking policy vaults by specifying the following:
A re-staking strategy consists of the following components:
A set of AVS / Network
One or more re-pledge agreements
A mortgage asset
Portfolio flexibility (non-modifiable or modifiable strategies)
Investor permissions (open or whitelisted stakers)
(Optional) Liquidity Token
The Byzantine Protocol is trustless and is designed to be more efficient, modular, and flexible than any other decentralized restaking platform. All vaults are completely independent of each other: funds are completely isolated between them and risks are completely independent. Vaults are not affected by governance.
Separating risk management from infrastructure
The Strategy Vault is just one example of permissionless risk management built on Byzantine. Any protocol, DAO, or individual can build on the Byzantine infrastructure layer to help users manage risk or integrate re-staking income into existing services.
Crucially, risk management is performed outside of Byzantine. Therefore, Byzantine has no relation to any particular investment outcome.
Basic components
Byzantine is a decentralized protocol that allows permissionless creation of separate cross-protocol re-staking strategy vaults.
It separates the roles of investors (stakers), risk managers (strategy managers), and the infrastructure layer. Users can create strategy vaults without permissions based on their needs, and can selectively open these vaults to other stakers.
ByzVault Factory: A smart contract for permissionless deployment of ByzVaults.
ByzVault: A deployed vault with a specific re-staking strategy. Handles reward settlement for PoS rewards (if ETH is collateral) and re-staking rewards.
AVS and Network Strategies: A combination of AVS/Networks and protocols that a specific strategy vault re-stakes into.
Operator Registry: A permissioned registry of institutional node operators, allowing permissionless vault deployers to select one or more from among them.
Ethereum Validator: Ethereum validator for ETH staking.
Re-pledge operator: The operator of the re-pledge strategy.
Trusted Marketplace Protocols: Protocols like EigenLayer, Symbiotic or Babylon.
Native vs. Liquidity Re-staking
The Byzantine protocol uniquely supports both native and liquidity re-staking strategies.
Liquidity Re-Pledge
Liquidity re-staking allows stakers to stake Liquidity Staking Tokens (LSTs), stablecoins, or other ERC-20 tokens and receive additional rewards from re-staking. This increases the utility and capital efficiency of the underlying tokens and is the simplest method of re-staking.
Byzantine Strategy Vault can deploy various ERC-20 assets as underlying collateral tokens.
Native Re-staking
Native re-staking enables stakers to stake and re-stake ETH in the same operation. The process is as follows:
Staking ETH: Stakers stake ETH through the Byzantine vault. Validators are handled by operator partners that can be selected by the strategy manager.
Delegating Staked ETH: Through Byzantine’s smart contract, validators with staked ETH are automatically delegated to the trust market selected by the strategy manager. Staked ETH thus ensures the AVS and network required by the strategy manager.
Earn Re-Staking Rewards!
The Byzantine Strategy Vault processes native re-collateralization strategies through a group of permissioned Ethereum operators. At vault deployment time, strategy managers can choose specific operator partners if they wish.
Advantages of Native Restaking
Double-layer rewards: Stakers receive both staking rewards and re-staking rewards.
Risk isolation: While LSTs pool deposited assets, the native Byzantine vault uses validators specifically set up for the vault. Therefore, the risks of staking and re-staking are completely isolated.
Greater transparency: Strategy managers and stakers have clear visibility and control over their dedicated validators.
Higher yield potential: By staking and re-staking on one protocol, stakers do not have to pay fees across multiple protocols. Additionally, removing the need for integration between protocols reduces friction and can improve capital efficiency.
Reviews
On Byzantine, users can choose any re-staking protocol, network, operator, and collateral asset and deploy your strategy instantly.
Byzantine Vault easily integrates into DeFi. You can trade and leverage your vault shares, or build your own custom services, products, or even assets based on Byzantines flexible architecture.
Depositors can withdraw their funds at any time. Since depositors own a stake in the vault, depositors have full control over their assets. Vault owners can change strategies but can never withdraw a users assets, adding an extra layer of security.
Every part of the Byzantine protocol is audited multiple times before going live. No single person has access or decision-making power on how users’ assets are handled. All deployed vaults can only be upgraded by the vault owner, which means no one but you can change the functionality of the vault. Your vault liquidity is never mixed with other vaults, nor are rewards shared.
2. Detailed explanation of the projects of interest this week
2.1. Can the uniqueness of Torch Finance, the main stablecoin swap protocol on Ton, reactivate the stagnant liquidity on the chain?
Introduction
Torch Finance is a cutting-edge decentralized exchange (DEX) designed specifically for the TON blockchain. With innovation at its core, Torch Finance focuses on enabling stablecoin trading, allowing users to trade Liquid Staking Tokens (LSTs), Stablecoins, and Yield-bearing Tokens (YBTs) with unparalleled ease and efficiency.
Key Features
StableSwap: Provides efficient and low-slippage trading of stablecoins, Liquid Staking Tokens (LSTs), and Yield-bearing Tokens (YBTs), optimizing for maximum capital efficiency.
Cross-chain transactions (coming soon): Seamlessly bridge assets on different chains to achieve a truly interconnected DeFi ecosystem.
Technical Analysis
1. Torch Finance’s solution
Torch Finance: Stablecoin Hub
Torch Finance is the ultimate stablecoin exchange on the TON blockchain, designed to solve the inefficiencies of existing platforms. By leveraging the industry-leading StableSwap algorithm, Torch Finance provides:
Customized price curves: Tailored for each pool, ensuring unparalleled flexibility.
Maximum capital efficiency: Reduce slippage, saving users funds, especially during high trading volumes.
With Torch Finance, users can enjoy a seamless and efficient trading experience, revolutionizing the way stablecoins are traded on TON.
Beyond Stablecoins: Exploring LSTs and YBTs
The TON blockchain is not only the center of stablecoins, it is also a growing ecosystem that covers assets such as Liquid Staking Tokens (LSTs) and Yield-Bearing Tokens (YBTs). These asset classes have the potential to simplify the DeFi yield experience and attract 900 million users on Telegram to the DeFi ecosystem, and Torch Finance is born to unlock their value.
Instant liquidity of LSTs
Liquid staking tokens typically take up to 36 hours to complete the verification process before they can be converted back to TON. For users who need instant liquidity, Torch Finance provides a seamless solution.
By using Torch, users can instantly exchange LSTs for TON with minimal slippage, ensuring fast access to liquidity when it is needed most.
YBTs professional market
Yield-bearing tokens (YBTs) are a key innovation in DeFi, providing passive income through the yield of underlying assets. However, due to their unique value dynamics and reliance on yield strategies, YBTs often face liquidity challenges.
Torch Finance leverages its StableSwap infrastructure to create customizable liquidity pools optimized for YBTs trading. These pools provide:
Efficient pricing mechanism: taking into account the gradual accumulation of benefits.
Enhanced liquidity: Ensure that users can accumulate profits in YBTs while still being able to trade without significant slippage.
By providing a customized trading environment for YBTs, Torch Finance not only improves their accessibility, but also ensures fair and competitive pricing. This approach simplifies the trading experience of YBTs and attracts more users to participate in the broad DeFi ecosystem on TON. With Torch Finance, the TON blockchain is no longer limited by the inefficiencies of traditional exchange mechanisms. By focusing on stablecoins, LSTs, and YBTs, Torch Finance has made itself the go-to platform for optimized trading, helping users unlock the full potential of their assets on TON.
2. Torch Finance Architecture
TON Virtual Machine (TVM): The Foundation of Scalability
The TON Virtual Machine (TVM) powers smart contracts on the TON blockchain and features cutting-edge features such as the Infinity Sharding Paradigm, enabling dynamic scalability and ultra-fast transaction processing. This unique approach ensures that TON can cope with growing demand, making it a strong foundation for innovative DeFi platforms like Torch Finance.
However, TVM also brings unique challenges:
No transaction rollback (between addresses): Failed transactions cannot be rolled back between different addresses, which requires more care in designing contracts.
No cross-contract state access: Contracts cannot directly retrieve state information from other contracts, so innovative solutions are needed to handle complex interactions.
Advantages of Torch Finance Architecture
Torch Finance’s architecture is designed to overcome these challenges and maximize the capabilities of TVM. Its architecture provides several key advantages:
High-speed trading
Torch Finance leverages TVM’s Infinity Sharding for ultra-fast transaction processing, ensuring scalability even during peak demand periods.
Unilateral liquidity provision
Users can provide liquidity through a single token without using token pairs.
Quasi-Atomic Swaps Support Multi-Token Pools
Supports multi-token pools, allowing seamless exchange between any tokens in the pool. Faster exchanges, reduced routing complexity. Nearly atomic execution ensures reliable transaction results.
Meta Pool Liquidity Aggregation
Aggregating liquidity into smaller products increases its usability while generating higher returns for liquidity providers.
Fuel Optimization
By building on DeDust and introducing further optimizations, Torch Finance reduces gas costs for both single-pool and cross-pool operations.
3. Core elements
Torch Finances architecture is built around five key components: Factory, Vaults, Pools, LP Account, and Oracle. Each component plays a vital role in managing liquidity and facilitating seamless asset exchange and transactions, ensuring that the protocol remains stable and efficient.
a. Factory
Factory is the core coordinator of Torch Finance, responsible for deploying all contracts, including Vaults, Pools, and LP Accounts.
Factory can be likened to a store manager in a supermarket, deciding which checkout counters (Vaults) should be set up, which cash registers (Pools) need to be activated to process discounts and exchanges, and arranging delivery services (LP Accounts) to deliver all purchased goods to users in a centralized manner, thus ensuring faster and more efficient transactions.
When a new asset enters the system, Factory deploys a new Vault (checkout desk) to manage and store that asset, ensuring it has a dedicated space to process.
If a new liquidity pool is needed, Factory will set up the corresponding Pool (cashier), which is responsible for asset exchange, discount calculation and transaction processing.
According to the needs of different users, Factory will create special LP Accounts (delivery services). These accounts will efficiently deliver assets to users at one time after all transactions are completed, ensuring smoother and simpler transactions.
Whether deploying new liquidity pools or LP Accounts, Factory can quickly allocate and deploy resources to ensure the smooth operation of the Torch system and ensure seamless coordination between components.
b. Vaults
Vault is a key component in Torch Finance, responsible for managing user assets and utilizing TON’s sharding mechanism.
Each Vault stores and manages a specific type of asset, protects user funds, and performs transfer operations according to the instructions of the Torch contract.
In Torch, TON and Jetton are treated as different asset types:
TON is a unique asset type managed by TON Vault, which is used to store and process users TON assets.
Jetton represents another asset type, managed by Jetton Vaults. Each Jetton has a dedicated Vault, such as USDT Vault or tsTON Vault.
The main function of the Vault contract is to store user assets and handle deposit, exchange, and withdrawal operations when users interact with the system.
c. Pools
In Torchs design, asset management is handled by the Vault contract, which directly informs Pools of the type and amount of user assets. This separation allows Pools to focus on trading and liquidity algorithms without having to deal with the storage or retrieval of assets.
This design decouples Pools from Vaults, giving Torch exceptional flexibility and scalability when creating liquidity pools.
d. LP Account
Due to the asynchronous nature of TON, asset deposits require a separate transaction to transfer assets to the Vault.
When users deposit assets in batches, LP Account acts like a delivery service. It will not deliver all assets to the user’s home (Pool) at one time for asset exchange or liquidity provision until all items are checked out and packaged.
If the user only deposits one asset, an LP Account is not required - the Vault will send the asset directly to the Pool for processing, thus simplifying the transaction process.
e. Oracle
In Torch Finance, general stable pools do not require oracles. However, if a pool contains assets that appreciate over time, using these assets directly will cause slippage to increase over time.
To solve this problem, Torch Finance has partnered with Pyth, the leading oracle in the blockchain industry, to launch the Yield Bearing Stable Pool. By leveraging Pyth to reference the redemption rate of yield-generating assets, the exchange rate can be calculated based on the underlying assets, thereby significantly improving the users trading experience.
Summarize
Torch Finance revolutionizes decentralized trading by providing a seamless, user-centric experience. Inspired by the innovative pool abstraction model of Curve Finance and Balancer, Torch Finance enables efficient, low-slippage trading of stable assets while paving the way for cross-chain interoperability.
3. Industry data analysis
1. Overall market performance
1.1 Spot BTCÐ ETF
As of November 1, EST, the total net outflow of Ethereum spot ETF was $10.9256 million
1.2. Spot BTC vs ETH price trend
BTC
Analysis
Last week, BTC fell more than 18% in the entire trading day cycle. Although the unfavorable fundamental factors have always suppressed the currency price, the negative factors were almost all shattered by Trump’s speech on Sunday night. In view of the release of several major economic indicators this week, it is still difficult to predict whether the rebound can continue. However, assuming that the non-agricultural and initial jobless claims are in line with expectations, BTC’s pullback can stabilize above $90,000. It can be expected that the rebound will continue to break through the upper edge of the descending wedge pattern this weekend. Once the breakthrough is confirmed to be effective, the short-term downward trend can be said to be reversed. The subsequent rebound points can continue to focus on the three key resistance ranges in the figure.
On the contrary, if the above two economic indicators fail to meet expectations and trigger a decline in the capital market, then there is also a probability that BTC will fall below the support range of 90,000 or even 88,000 US dollars again. Of course, judging from the Trump administration’s positive attitude towards protecting the crypto market, this is a low-probability event, but the market is changing rapidly and users still need to be vigilant.
ETH
Analysis
For ETH, the rebound after falling to nearly $2,000 was also suppressed by the bottom of the February consolidation range, which is $2,550. It has now entered a correction market, but judging from the current correction strength, it is highly likely that the price will stabilize above $2,400. However, there are many resistance ranges above, especially the large-cycle downward trend line marked in black. Although this trend line was once invalid at the end of January, its effectiveness was verified again in the market on February 25. Therefore, the breakthrough at the end of January can be determined to be a false breakthrough to a certain extent.
Therefore, the trend of ETH is relatively clear. Before it effectively breaks through and stabilizes above the downward trend line again, ETHs trend will be weak. Otherwise, it will be highly likely to hit or even break through $3,000 again.
1.3. Fear Greed Index
Analysis
This week the index fell to 22, indicating that the market is in a state of extreme fear. This decline reflects the uneasiness of investors, mainly due to the following reasons:
Increased market volatility: Major cryptocurrencies such as Bitcoin and Ethereum have seen sharp declines in prices, sparking concerns about a downward spiral. Such high volatility usually causes investors to become more cautious, exacerbating fear in the market.
Declining trading volume: There has been a noticeable decrease in recent trading activity, indicating a lack of investor confidence. Lower trading volume can amplify price volatility, making the market more vulnerable to large declines and further fueling investor panic.
Macroeconomic uncertainty: Global economic instability, including concerns about monetary policy, interest rates, and geopolitical tensions, has prompted investors to reassess their investments in riskier assets such as cryptocurrencies. This risk aversion has led to rising fear in the market.
Currently, panic sentiment is decreasing as prices stabilize. This week, we will focus on the strength of Bitcoin’s rebound. If the rebound is strong, it may mean that the index of 22 will become history. Otherwise, it may continue to fall.
2. Public chain data
2.1. BTC Layer 2 Summary
Analysis
Between February 24 and February 28, 2025, the Bitcoin Layer 2 ecosystem experienced significant developments and challenges.
Bitlayers BitVM implementation and strategic partnership
On March 1, Bitlayer announced significant progress in implementing BitVM, a technology that enhances Bitcoin’s programmability and scalability without the need for a fork. This progress was supported by strategic partnerships with the following blockchain platforms:
Base: Bitlayer’s BitVM bridge enables Bitcoin to be transferred within the Base ecosystem, allowing Bitcoin holders to participate in decentralized finance (DeFi) applications.
Arbitrum: This integration enables users to bridge assets between Bitcoin and Arbitrum, enhancing liquidity and opportunities in decentralized finance while maintaining a trust-minimized framework.
Starknet: Bitlayer’s collaboration with Starknet aims to provide Bitcoin users with fast transactions and low fees, and ensure security through STARK proofs, promoting the development of Bitcoin’s DeFi center.
Plume Network: Through its partnership with Plume Network, Bitlayer is committed to optimizing liquidity for real-world asset (RWA) use cases, bringing institutional-grade products to the Bitcoin ecosystem.
2.2. EVM non-EVM Layer 1 Summary
Analysis
Between February 24 and February 28, 2025, important developments related to multiple EVM and non-EVM Layer 1 blockchains attracted industry attention.
EVM Layer 1 related progress:
Autonomy Labs Developer Sync Meeting: On February 24, Autonomy Labs hosted its bi-weekly developer meeting at the ETH Denver event to discuss various updates and innovations within the community, with a particular focus on progress on its decentralized autonomous organization (DAO) governance model.
Cross-chain integration of EVM and non-EVM networks: Recent integrations have enabled trustless cross-chain messaging between EVM and non-EVM Layer 1 networks (such as Solana), facilitating secure interactions between different blockchain ecosystems.
Non-EVM Layer 1 related progress:
Discussion on the potential of Stacks smart contracts: A study has explored in depth the smart contract potential of Stacks as a Bitcoin Layer 2 solution, emphasizing that it integrates with the Bitcoin main chain by submitting anchor transactions, ensuring immutability, and allowing transactions to be settled on the Bitcoin main chain.
2.3. EVM Layer 2 Summary
Analysis
The following is a comprehensive summary of the main developments and trends of the EVM Layer 2 ecosystem head protocols from February 24 to February 28, 2025:
1. MetisDAO: Optimizing withdrawal speed and governance innovation
Application of Ranger Mechanism: MetisDAO further shortens asset withdrawal time based on Optimistic Rollup by introducing the Ranger role. Ranger verifies transactions locally on Layer 2 to improve transaction credibility, thereby reducing the waiting period for users to withdraw assets from Layer 2 to the Ethereum mainnet.
DAC Ecosystem Expansion: MetisDAO emphasizes the concept of decentralized autonomous company (DAC), and is committed to providing a customized execution layer for specific application scenarios to further attract enterprise-level users and developers to participate in ecological construction.
Governance experiment: During this period, the team may explore the deep integration of DAO governance and Layer 2 technology to promote a more decentralized network operation model.
2. Optimism: Public Goods Funding and Ecosystem Access
Public Goods Funding Allocation: The Optimism team may announce a new round of public goods funding plans during this period, continuing its commitment to use profits to support open source projects and infrastructure and attract community developers to participate.
Adjustment of ecological access mechanism: Optimize the review process of DApp deployment, balance openness and security, and may introduce new governance tools to improve the quality of ecological projects.
Cross-chain bridge integration: Cooperate with cross-chain bridges such as Hop Protocol to improve the efficiency of users transferring assets between different Layer 2s and alleviate the problem of liquidity fragmentation.
3. Rollux (Syscoin): Bitcoin-powered security innovation
Merged Mining Technology: Rollux further consolidates its position as a high-performance EVM Rollup by combining Bitcoin’s hashrate security. More partners or technical details of Bitcoin-based merged mining may be announced during this period.
Low cost and high throughput: The team continues to optimize transaction fees (as low as $0.07/time) and TPS (up to 576) to attract high-frequency trading DApps to migrate to its network.
Integration of AI and blockchain: Explore the application of Layer 2 in emerging fields such as social finance (SocialFi) through AI-enhanced social platforms such as SuperDapp.
4. Macro data review and key data release nodes next week
The annual rate of the US core PCE price index in January released last week was 2.6%, indicating that inflation is slowly falling, in line with expectations and hitting a six-month low, but the monthly rate of 0.3% shows that inflationary pressure has not completely subsided. Combined with the strong performance of personal income but weak spending, the US economy presents a complex situation. The macro environment is dominated by the uncertainty of Trumps policies, and the market is less sensitive to inflation data. In the future, we need to pay attention to the actual impact of the Fed meeting in March and the implementation of tariff policies.
Important macro data nodes this week (March 3-March 7) include:
March 5: US ADP employment figures for February
March 6: U.S. initial jobless claims for the week ending March 1
March 7: US February seasonally adjusted non-farm payrolls
V. Regulatory policies
The market suffered a sharp drop on the 28th this week, but the US regulators reached a settlement with multiple crypto platforms or suspended investigations. Under this series of influences, the market did not recover. It was not until the evening of March 2 that Trump announced the US crypto reserve plan and explicitly proposed five assets including BTC and ETH. This means that the United States has officially launched the national reserve of Bitcoin, and the market has ushered in a big rise, from falling below $80,000 to $950,000.
United States: Establishing a Strategic Crypto Reserve
US President Trump announced the establishment of the US Strategic Crypto Reserve, which aims to establish the United States leadership in digital asset innovation. The reserve will initially include Bitcoin (BTC), Ethereum (ETH), XRP, Solana (SOL) and Cardano (ADA). This move has led to a sharp increase in the market value of these cryptocurrencies and shows a trend of policy shifting from past regulation to more support for the crypto industry.
On February 21, the SEC announced the withdrawal of the lawsuit against Coinbase and terminated the investigation into Uniswap Labs and Gemini in the past week. The platforms that also terminated the charges include OpenSea and RobinHood Crypto. On the other hand, on February 27, the SEC requested to suspend the lawsuit against Justin Sun and the TRON Foundation to seek potential solutions.
European Union: Implementation of MiCA regulation
The EUs Market in Crypto-Assets Regulation (MiCA) came into full effect on December 30, 2024. MiCA provides a comprehensive regulatory framework for crypto assets, aiming to promote the adoption of blockchain technology while protecting the rights of investors. The regulation covers all types of participants in the market, including issuers, trading platforms, exchanges, and custodial wallet service providers.
UAE: Officially Approves USDC and EURC
The Dubai Financial Services Authority (DFSA) has officially approved Circles stablecoins USD Coin (USDC) and EURC as the first batch of approved stablecoins. The new regulations will enable companies in the Dubai International Financial Center (DIFC) to use these two stablecoins in a variety of digital asset applications such as payments and fund management. Since its establishment in 2004, DIFC has attracted nearly 7,000 active companies and strictly allows only approved crypto tokens to operate.
Hong Kong, China: Will issue the second policy statement on the development of virtual assets
Hong Kong Financial Secretary Paul Chan announced in the 2025-26 Budget that he will soon publish a second policy statement on the development of virtual assets to explore how to combine the advantages of traditional financial services with technological innovation in the field of virtual assets, and to improve the security and flexibility of real economic activities. He will also encourage local and international companies to explore the innovation and application of virtual asset technology. Paul Chan reiterated that the government will consult on the licensing system for virtual asset over-the-counter trading and custody services within the year. In terms of stablecoin regulation, the Hong Kong government has submitted a draft bill to the Legislative Council. After the bill is passed, the HKMA will review the license application as soon as possible.
International News: OECD Launches Crypto-Asset Reporting Framework (CARF)
The Organization for Economic Cooperation and Development (OECD) has launched the Crypto-Asset Reporting Framework (CARF) to promote automatic information exchange between countries to address tax evasion risks associated with digital assets. According to CARF requirements, crypto-asset service providers (CASPs) must collect users personal information (such as tax residence and ID number) and report this data to domestic tax authorities, which will then exchange information internationally to improve tax compliance and regulatory efficiency.
