Original Article Title: "Exploring Investment Opportunities in a Volatile Cryptocurrency Market: Base Protocol's Ecological Liquidity Aggregation Effect | Frontier Lab Cryptocurrency Weekly Report"

Original Source: Frontier Lab

Market Overview

Market Summary

This week, the cryptocurrency market showed a volatile downward trend, with Bitcoin continuing last week's volatile decline, and altcoins generally following the market in a volatile downward trend. The market sentiment index decreased slightly from last week's 30% to 28%, remaining in the bearish zone.

Stablecoin Market Dynamics

The stablecoin market overall maintained last week's upward trend, showing a synchronous rise in USDT and USDC:

· USDT: With a market capitalization of $155.7 billion, 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 decreasing intensity of fund inflows.

· USDC: With a market capitalization of $61.4 billion, a week-on-week growth of 0.33%, ending last week's downward trend and showing a slight increase.

This phenomenon deserves investors' attention: Although the market capitalization of USDT continues to rise, it only increased by $5 billion this week, ending the previous six weeks of over $10 billion weekly growth, indicating a decreased intensity of funds entering the market, mainly from non-U.S. users. Since USDT has a more diverse range of use cases, the actual funds entering the crypto market may be less than $5 billion; the market capitalization of USDC saw an increase this week, reflecting the re-entry of funds, mainly from U.S. investors. Although only $2 billion entered this week, the inflow amount is not large, but this signal needs to be continuously monitored.

Market Performance Divergence

This week, the cryptocurrency market showed significant structural differentiation: Bitcoin maintained a volatile downward trend, while altcoins experienced a sharp decline. This differentiation reflects the risk-averse nature of capital concentration in relatively safe assets in an uncertain environment, with Bitcoin's status as crypto's "safe haven" being evidenced.

Geopolitical Risk Escalation

· Escalation of Middle East Conflict: The conflict between Israel and Iran continues to escalate, with the U.S. military deployment around Iran intensifying. Market concerns about direct U.S. involvement in the conflict are increasing.

· Risk Transmission Mechanism: Geopolitical tensions directly impact risk assets through a path of decreased risk appetite, with cryptocurrencies being at the forefront as high-risk assets. Particularly, meme coins with relatively poor liquidity are more vulnerable to such impact.

Monetary Policy Expectation Shift

· Fed's Stance Turning Hawkish: While this week's interest rate meeting maintaining the 4.5% rate met expectations, the meeting minutes revealed a subtle shift in policymakers' attitude.

· Sharp Cut in Rate Cut Expectations: The number of officials favoring no rate cuts increased to 7, and the 2025 rate cut expectation reduced from two cuts to one. This shift directly hit the market's expectations of loose liquidity.

· Economic Expectation Adjustment: The Fed simultaneously lowered its growth forecast and raised its inflation forecast, exacerbating market's worries about "stagflation" and further deepening the market's pessimism.

Policy Favorable Factors

· Positive Legislative Progress: The "GENIUS Act" passed by a large margin in the U.S. Senate, providing policy support for the development of the cryptocurrency industry.

· Stablecoin Market Outlook: Treasury Secretary Bennett expects the stablecoin market to reach $37 trillion by the end of 2029, injecting confidence into the long-term development of the cryptocurrency ecosystem.

· Limited Sentiment Boost: Despite the presence of policy positives, under the dual pressures of geopolitical risks and monetary policy tightening, the uplifting effect of positive factors is relatively limited.

· Investment Strategy Recommendation: Proceed with caution

· Escalating Risk Aversion: With the continued escalation of Middle East geopolitical crisis, there is a possibility of further escalation in global risk aversion, which will continue to suppress risk assets.

· Increased Market Vulnerability: Amidst multiple uncertain factors, the cryptocurrency market's volatility and fragility have significantly increased, and the risk of flash crashes cannot be ignored.

· Cautionary Strategy Recommendation: Investors should maintain a high level of caution, focus on the evolving dynamics of geopolitical events, manage positions appropriately, and guard against sudden risk events causing significant impacts on the portfolio.

Market Outlook

In the upcoming week, the cryptocurrency market will continue to face severe challenges. The further escalation of the Middle East geopolitical conflict and the possibility of U.S. military intervention will persistently elevate global risk aversion. Combined with the strengthened hawkish stance of the Fed leading to expectations of monetary policy tightening, Bitcoin is expected to struggle in balancing between its safe-haven properties and risk asset characteristics, while meme coins may face greater selling pressure and liquidity drought risks. Under the pressure of key technical support testing, cautiousness of institutional funds, and the potential further escalation of retail panic sentiment, there is a risk of flash crashes and chain reactions in the market. Investors should adopt a defensive strategy, strictly control positions and leverage, closely monitor geopolitical dynamics and key economic data, and guard against sharp market volatility triggered by unexpected events.

Next Week Forecast Pick

Bullish Pick: AERO

AERO: Ecosystem Leader Valuation Reassessment and Strategic Opportunity Analysis under the Coinbase Integration of Base Chain DEX Catalyst

Over the weekend, at the 2025 Cryptocurrency Summit, Coinbase's VP of Consumer Product Management, Max Branzburg, announced that Coinbase will be integrating the DEX on the Base Chain into its main application, with future apps embedding DEX trading.

· Foundational Impact of Liquidity Integration

· Liquidity Infrastructure from Platform Scale Effects

As a leading industry exchange, Coinbase boasts over 100 million registered users and 8 million monthly active trading users, with customer assets totaling $4280 billion. This massive user base and asset scale provide unparalleled liquidity sources for the Base Chain DEX. When these users directly access the Base Chain DEX through the Coinbase main application, it will lead to a scalable liquidity import effect.

· Structural Advantage of Institutional Funds

Data shows that institutional client trading volume on the Coinbase platform has been steadily increasing, reaching 82.05% ($256 billion) in Q1 2024, while retail trading accounts for only 18%. This institution-dominated trading structure means that funds entering the Base Chain have greater stability and larger single-trade volumes, which is conducive to increasing the DEX's trading depth and reducing slippage.

· Competitive Edge from Market Concentration

Aerodrome, as the largest DEX project in the Base ecosystem, accounts for approximately 60% of the entire Base ecosystem DEX trading volume. According to liquidity aggregation effects, new liquidity will flow preferentially to the platform with the highest trading volume and best depth. Aerodrome's market leadership position makes it a primary recipient of Coinbase liquidity.

DEX Trading Volume Distribution in the Base Chain (Data Source: https://dune.com/x_drome_analytics/base-dex-landscape)

Aerodrome Beneficiary Economic Model Analysis

Tokenomics Positive Feedback Loop Mechanism

Incentive Structure for Revenue Distribution

Aerodrome adopts a 100% revenue distribution mechanism: veAERO holders receive 100% of the fees and bribe rewards from their voting pools, while LPs receive 100% of AERO emission incentives. This design ensures that the growth of protocol revenue directly translates into increased returns for token holders.

· Stake-Driven Supply Contraction

As Coinbase liquidity import boosts Aerodrome's trading volume and revenue, veAERO holders' APY will significantly increase. The high yield will incentivize more users to stake AERO as veAERO, reducing the circulating supply of AERO, creating a supply-demand imbalance driving a price increase positive feedback loop.

· Governance Weight Value Realization

veAERO holders determine the allocation of AERO emissions through voting, with this governance weight more pronounced in a high liquidity environment. As protocol revenue grows, the economic value of governance rights will attract more long-term investors to participate in staking.

· Technical Architecture Scalability Advantage

· Efficiency Improvement through Multiple Technology Integration

Aerodrome combines Curve/Convex's tokenomics, Uniswap v3's concentrated liquidity provider (clAMM), and optimized Solidly codebase. This technological fusion ensures that the platform can efficiently handle large-scale liquidity, providing users with better trade execution performance.

· Capital Efficiency Competitive Advantage

clAMM technology achieves capital-efficient exchanges, providing lower slippage and better price execution under the same liquidity conditions. With Coinbase liquidity injection, this technological advantage will be further amplified, consolidating Aerodrome's competitive position in the Base ecosystem.

· Scalability Long-term Safeguard

Aerodrome's technical architecture has good scalability, able to accommodate large-scale fund inflows without compromising system stability. This provides a technical foundation for its long-term benefits from Coinbase integration.

· On-chain Data Analysis

Aerodrome TVL (Data Source: https://defillama.com/protocol/aerodrome)

From the chart, we can see that Aerodrome's TVL reached a low point in early April, followed by a rapid rebound, now standing at $1 billion with a rebound rate of 56%.

Aerodrome Trading Volume (Data Source: https://defillama.com/protocol/aerodrome)

From the chart, it is evident that Aerodrome's trading volume experienced a significant surge after Coinbase integrated a DEX on the Base chain into its main application. The trading volume surge aligns closely with Coinbase's trading hours, with peak volumes concentrated from Monday to Friday, while weekends show a noticeable decrease in trading volume, indicating a clear flow of funds from Coinbase into Aerodrome.

Aerodrome Project Revenue (Data Source: https://defillama.com/protocol/aerodrome?dexVolume=false&tvl=false&revenue=true)

From the chart, it can be seen that Aerodrome's project revenue also experienced a rapid increase following Coinbase's integration of a DEX on the Base chain into its main application, aligning with the trading volume surge and Coinbase's trading hours.

Base Ecosystem Projects Ranked by Revenue (Data Source: https://defillama.com/chain/base)

From the above graph, it can be seen that Aerodrome's project revenue ranks first among all projects on the Base chain, with daily revenue fluctuating around $500,000 (daily average around $600,000).

Base Ecosystem DEX projects ranked by trading volume (Source: https://defillama.com/chain/base)

From the above graph, it can be seen that Aerodrome's trading volume has far exceeded that of Uniswap, reaching $525 million (daily average trading volume around $600 million), ranking first among DEX projects in the Base ecosystem.

AERO Token Holdings Addresses (Source: https://dune.com/thechriscen/aerodrome-analysis)

From the above graph, it can be seen that the number of AERO token holding addresses has seen a rapid increase after Coinbase announced the integration of the Base chain's DEX into its main application, indicating that this policy has promoted user holdings of the AERO token.

Summary

From the analysis of Coinbase integrating the Base chain DEX policy, it can be seen from on-chain data that theoretical analysis aligns closely with actual data, verifying the real effectiveness of the bullish scenario: post integration policy announcement, Aerodrome's trading volume surged to a daily average of $600 million, surpassing Uniswap; project revenue remained at the top of the Base chain, reaching a daily average of $600,000; TVL rebounded by 56% exceeding $1 billion; AERO's holding addresses grew rapidly, with the data showing a clear Coinbase transaction time feature directly confirming the influx of funds effect.

Bearish Targets: ALT, REZ

ALT: Token Unlock Risk Warning and Price Downtrend Analysis Under Triple Pressure

Project Fundamental Analysis

AltLayer, as a decentralized Elastic Rollup-as-a-Service (RaaS) protocol, focuses on providing scalable layer-two solutions for blockchain applications. The project demonstrates a certain level of innovation and practical value at the technical level, but currently faces the main challenge of unfavorable market conditions.

Market Deterioration Factors

The current Ethereum ecosystem as a whole is showing weakness, with increasing doubts in the market about Layer-2 solutions. The main issue revolves around Layer-2 being seen as the root cause of hindering the development of the Ethereum ecosystem, leading to a significant fragmentation of market liquidity. This negative market sentiment has directly impacted the market performance and capital inflow of all Layer-2 related projects, including AltLayer.

Project Utilization and Attention Decline

Due to the overall cooling down of the Layer-2 track, AltLayer's actual utilization as an RaaS project is significantly insufficient, leading to a notable decrease in market attention and capital infusion. This vicious cycle further weakens the project's fundamental support and market confidence.

Token Unlocking Pressure Analysis

· Unlocking Scale and Time Points: On June 25th, 195 million ALT tokens will be unlocked, accounting for 1.95% of the total locked amount, making the unlocking scale relatively large.

· Unlocking Recipients Structure: According to the whitepaper's linear unlocking chart, the main beneficiaries of this unlocking are investment institutions and the project team, who typically have a strong incentive to cash out.

Summary

Taking into account the triple pressure of deteriorating market conditions, declining project attention, and large-scale token unlocking, the ALT token faces significant downward price risk. Potential selling pressure from institutions and teams may trigger a chain reaction in a low-liquidity market environment, significantly impacting the token price negatively.

REZ: Analysis of Price Downside Risk Resulting from Fundamental Deterioration and Large Unlock

Project Fundamentals and Positioning

Renzo, as a liquidity re-staking protocol based on the EigenLayer ecosystem, aims to simplify complex staking mechanisms for end users and facilitate quick collaborations with EigenLayer node operators and Active Validation Services (AVS). The project relies on EigenLayer's innovative infrastructure in its technical architecture, presenting certain ecosystem value and application prospects.

External Environment Pressure Analysis

· Overall Weakness of the Ethereum Ecosystem: The current performance of the Ethereum ecosystem continues to be weak, directly affecting the overall activity and capital inflow of the Ethereum DeFi ecosystem.

· Staking Market Contraction: The ETH staking rate has dropped to 28.35%, reflecting a lack of confidence in staking rewards. This downward trend directly impacts the Restaking track's fundamental demand, causing related projects to lose market attention and financial support.

ETH Staking Fund Flow (Data Source: https://dune.com/hildobby/eth2-staking)

Project Operation Data Deterioration

TVL Sharply Shrinks: Renzo's TVL plummeted from $18.3 billion at the beginning of the year to $9.45 billion, a nearly 50% decrease, reflecting continuous outflows of funds and severe lack of market confidence.

Renzo's TVL (Data Source: https://defillama.com/protocol/renzo?revenue=false&devMetrics=false&devCommits=false&tvl=true&fees=false)

Income Continues to Decline: The project's daily average income has remained around $5,000, showing a continuous downward trend, indicating a significant decline in user activity and protocol usage. The continuous deterioration of income data directly reflects a continuous decrease in market users' frequency of using the Renzo protocol, forming a negative feedback loop.

Renzo Project Income (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, 4.23 billion REZ tokens will be unlocked, accounting for 4.24% of the total lockup amount. Considering the current total circulation rate is only 32.63%, this unlock will significantly increase the market's circulating supply.

· Unlock Recipients' Risk: According to the whitepaper's linear unlock plan, this unlock mainly involves investment institutions and the project team, which have strong motivations for cashing out and selling pressure in the current market environment.

· Market's Limited Absorption Capacity: In a context of low Restaking track heat and few participants, the daily trading volume of REZ tokens is only around $2.25 million, and the market's capacity to absorb the increase in a large token supply is severely insufficient.

Daily Trading Volume of REZ Token (Data Source: Coingecko)

Summary

Renzo is facing challenges including a deteriorating macro environment, continuously worsening fundamental data, and a large token unlock. Against the backdrop of a weak performance in the Ethereum ecosystem with both project TVL and revenue declining, the centralized unlock of 4.23 billion REZ tokens may trigger significant selling pressure, leading to a significant negative impact on the token price.

Market Sentiment Index Analysis

TOTAL3 (Data Source: TradingView)

The market sentiment index decreased slightly from 30% last week to 28% this week. BTC fell by 0.78% this week, ETH fell by 0.97%, and TOTAL3 rose by 0.73% this week. Altcoins are overall in a bearish zone, maintaining a level of panic.

Overall Market Theme Overview

Data Source: SoSoValue

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

· PayFi Track: XRP, BCH, XLM, and LTC have a relatively large share in the PayFi track, accounting for a total of 99.09%. Their weekly price changes were: -3.41%, 12.35%, -8.96%, -3.12% respectively. It can be seen that projects in the PayFi track had mixed price movements, with projects showing a downward trend outperforming others, thus making the PayFi track the best performer.

· AI Track: TAO, FET, RENDER, WLD, VIRTUAL, and FARTCOIN have a relatively large share in the AI track, accounting for a total of 91.63%. Their weekly price changes were: -10.79%, -7.96%, -14.59%, -12.28%, -17.68%, -20.83% respectively. It can be seen that the average price drop of projects in the AI track was higher than other tracks, hence making the AI track the worst performer.

Next Week's Crypto Major Events Preview

· Monday (June 23rd) NFT NYC 2025 held in New York, USA

· Tuesday (June 24th) Federal Reserve Chair Powell delivers semiannual monetary policy testimony to the House of Representatives

· Friday (June 27th) US May Core PCE Price Index; US June University of Michigan Consumer Sentiment Final

Summary

This week, the cryptocurrency market saw a structural decline amid multiple negative factors. The market sentiment index slightly decreased from 30% to 28%, entering the bearish zone. While the stablecoin market maintained its growth trend, the incremental funds in USDT fell below the $1 billion threshold for the first time, reflecting a significant weakening in fund inflows. The slight recovery of USDC implies tentative entry of US funds. Geopolitical risks, hawkish Fed stance, and fundamental divergence in various tracks collectively constitute the three-fold pressure facing the current market.

In the current market environment, investment strategies should focus on precise identification of structural opportunities and effective risk avoidance. AERO, as the leading DEX in the Base ecosystem, benefited from the Coinbase integration policy catalysis. On-chain data verified a significant improvement in its 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 24th, the core PCE data on June 27th, and the latest developments in the Middle East geopolitical situation. These key events will directly impact market risk appetite and liquidity expectations. It is advisable to adopt a "defense first, selection second" strategy. While strictly controlling positions and leverage, focus on high-quality targets with policy catalysts and fundamental improvements. Stay highly vigilant of projects facing substantial unlocks, and seek robust investment returns through precise risk management and opportunity identification in a challenging market environment.

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