Web3 AI Daily Review (2024/9/5)

1. Attention Value - Market Highlights

1. Market Conditions

(1) Macroeconomic Environment:

l US Stocks Fail to Rebound

A series of economic data released in the US on Wednesday added to signs of economic slowdown, intensifying concerns about a potential recession. Firstly, the US trade deficit continues to widen, with the trade deficit in goods and services increasing by 7.9% month-on-month in July, analysts suggest that trade may again drag down GDP growth by 0.35% in the third quarter. Secondly, the number of job openings in the US JOLTS for July was 7.673 million, significantly below the expected 8.1 million, marking the lowest level since early 2021, while layoffs rose to 1.76 million, the highest level since March 2023, adding further signs of a cooling labor market. Major US stock indices opened lower but rallied at one point, only to turn back down again by midday, with only the Dow Jones barely closing up. The chip index fell over 1% before turning up 1.8%, ultimately closing up 0.3%, while the "fear index" VIX rose.

l Interest Rate Cut Expectations Strengthen

The Federal Reserve's Beige Book assessment of the economy was not optimistic, with the number of regions reporting flat or declining economic activity increasing from 5 in July to 9, and most regions seeing a slowdown in consumer spending. The labor market showed mixed signals, with uncertainty about the economic outlook causing businesses to hesitate in hiring, although layoffs remain rare. In 2024, voting member and Atlanta Fed President Bostic stated that there is now stronger confidence that inflation will sustainably return to the 2% target, and officials cannot wait for US inflation to fall to 2% before cutting rates.

Expectations for rate cuts have significantly heated up, with the CME FedWatch Tool showing the probability of a 50 basis point cut in September rising from 38% on Tuesday to 45%, while the probability of a 25 basis point cut fell to 55%. Following the data release, "safe-haven trading" picked up, with major US indices failing to rebound during the day and continuing to decline at the close. The dollar index DXY and US Treasury yields plummeted during the day, the yen significantly outperformed the market, and both the Swiss franc and euro rose. Safe-haven demand caused gold prices to slightly turn up during the day, reclaiming the $2500 mark, while the "pessimistic outlook" for the US economy weighed on oil demand, pushing US oil down nearly 2.2% at one point, falling below $70.

Figure 1: After the JOLTS data shock, the probability of a significant 50 basis point rate cut by the Fed in September briefly rose to 50%

Source: Wall Street Journal, Dot Labs

(2) Web3 Sector:

l ETH ETF Daily Outflow of $37.5 Million

As of September 4, according to Farside data, the daily outflow from Bitcoin spot ETFs was $37.29 million, with a current total net asset value of $5.263 billion.

l Glassnode: Market Expected to Further Weaken

According to the latest analysis report released by Glassnode, despite increasing downward pressure on Bitcoin over the past six months, the total unrealized losses only account for 2.9% of Bitcoin's market value, at a historical low. This indicates that even in the face of continuous price declines, overall investors can still achieve relatively favorable profits. However, when the analysis is narrowed down to short-term investors, it is found that their unrealized losses have rapidly increased over the past few months, indicating that they are currently the most vulnerable group and will be the main source of selling pressure during market downturns. So far, the unrealized losses of short-term investors relative to market value have not yet entered a comprehensive bear market zone. Meanwhile, the MVRV ratio of short-term holders has fallen below the breakeven point of 1.0, indicating that the average position of new investors is in a state of unrealized loss. Glassnode analysts summarize that this tells us that new investors are holding unrealized losses on average. Generally, it is expected that the market will further weaken before the spot price recovers to the STH cost basis of $62,400.

Source: Glassnode, Dot Labs

2. Hot Events

Web3 Sector:

The US Commodity Futures Trading Commission (CFTC) has charged Uniswap Labs, the developer of the decentralized exchange Uniswap, and reached a settlement, with Uniswap Labs fined $175,000 for providing "illegal digital asset derivative trading."

On September 5, CoinDesk reported that Robinhood's cryptocurrency trading subsidiary had previously prevented customers from withdrawing the tokens they purchased. Although Robinhood Crypto LLC abandoned this policy in 2022, its past practices have resulted in a $3.9 million fine from California.

The California Department of Justice investigated Robinhood's "historical practices" in its cryptocurrency business from 2018 to 2022. According to a press release from the California Department of Justice, Robinhood allowed customers to purchase cryptocurrencies but did not allow them to personally hold the assets, which violated California commodity laws. Under the settlement agreement, Robinhood must continue to allow its customers to withdraw cryptocurrencies from the app and update disclosures regarding its custody practices.

3. Hot Narratives

Grass is a decentralized bandwidth market where users can sell their idle internet connections to help AI labs acquire network data for training models. Grass utilizes users' IP addresses to sell excess bandwidth, thereby bypassing many websites' restrictions on data center IP addresses. The entire process is anonymous and 100% private, ensuring user privacy and data security.

The bandwidth collected is used to extract raw data from the internet and convert it into AI datasets. These datasets are extremely useful for AI developers and researchers who require large amounts of training data. Grass's core technology is Socrates, developed by Wynd Labs, an AI development tool adept at collecting unstructured data from the web and structuring it for easier reading. Thus, Grass becomes an AI data repository, providing the data needed for model training to other AI systems.

Grass is the first project deployed on Solana that combines AI, Depin, and Solana technology, positioning itself as the data layer for AI. The AI data layer is a crucial starting phase in the AI development process, primarily responsible for data collection and preparation, laying the foundation for model training. In the field of AI, data quality is paramount, as the model's capabilities entirely depend on the relevance and patterns within the training data. Even the most advanced AI models can yield inaccurate predictions if their training data is biased or of low quality.

Moreover, in the integration of AI and Web3, data serves as a core component, alongside computing resources, forming a key resource in AI competition. Although most industry attention is focused on the computational aspect, the raw data obtained during the data acquisition process offers many interesting value directions, primarily including access to public internet data and data protection.

Accessing public internet data: This direction aims to build a distributed crawling network that can crawl the entire internet within days, obtaining massive datasets or accessing very specific internet data in real-time. However, crawling large datasets from the internet requires significant network demand, needing at least hundreds of nodes to start meaningful work. Fortunately, Grass has established a distributed crawling network with over 2 million nodes, actively sharing internet bandwidth, aiming to crawl the entire internet. This demonstrates the enormous potential of economic incentives in attracting valuable resources.

4. Potential Catalysts

According to Mars Finance, on September 5, the new token protocol Etheism in the Ethereum ecosystem launched its token E, currently priced at $4426, with a 7-hour increase of 80,299% and a trading volume of $9.6 million.

On September 5, according to market information, the Ethereum ecosystem's new token issuance platform TaxFarm.ing launched its token FARM at a price of $0.0039, with an increase of over 214% in the past hour.

ChainCatcher reports that according to RootData, the Ethervista token (VISTA) has seen a 24-hour increase of 129.47%, currently priced at $30.43. Additionally, according to the Web3 asset data platform RootData, Ethervista is a decentralized trading platform that supports a 5-day lock-up of initial liquidity provided by pool creators. Ethervista also offers smart contract customization, allowing creators to manage fees and integrate various DeFi applications, such as staking or automatic purchases.

2. Attention Value - Hot Projects

1. Social Media Highlights

The Ethereum ecosystem is a decentralized platform that supports the development of smart contracts and DApps. There are over 1,400 projects in the Ethereum ecosystem, primarily categorized into DeFi, NFT, GameFi, infrastructure, and development tools. DeFi is the largest project category on Ethereum, with DeFiLlama data showing that Ethereum's DeFi project TVL exceeds $25 billion, with daily trading volume over $1 billion and approximately 300,000 active user addresses; as of July 2024, Ethereum's staking volume has increased from 25 million ETH in 2023 to 33.7 million ETH, indicating enhanced community confidence in the Ethereum network, especially after the transition to the Proof of Stake mechanism, where staked ETH accounts for 28.28% of the total supply. Overall, the Ethereum ecosystem will continue to attract the attention of investors and developers in 2024.

Key Projects:

· $WELL

WELL3 is a Web3 health platform that transforms health data into valuable rewards by leveraging decentralized physical infrastructure networks (DePIN) and decentralized identity (DID), along with sophisticated AI analytics, fundamentally changing health data management.

Recently, the noteworthy event for WELL3 is the resubmission and approval of the MIP-B23 and MIP-O02 proposals, which may positively impact the price. The recent sentiment towards WELL3 is optimistic, with views that its community incentives, reduced selling pressure, and enhanced stickiness in the airdrop plan are excellent, leading to a relatively optimistic market sentiment. WELL3 is building a dynamic ecosystem that provides real value to users, which will be key to its long-term development.

2. Smart Money Accumulation

· Smart Money Holdings

Source: ChainEDGE, Dot Labs

Project Overview:

1. BANANA (@BananaGunBot /X)

Banana Gun is a Telegram bot that can sniper upcoming tokens or safely purchase already launched tokens. BANANA aims to make users the preferred snipers/manual buyers on the Ethereum network, potentially gaining more chains in the process. BANANA features a top-performing Anti Rug & Reorg Protection system, ensuring safer transactions and reducing the risk of users being scammed, with a success rate of 85%, providing top-notch security.

2. HUSBY (@HusbyApp /X)

HUSBY is at the forefront of revolutionizing the cryptocurrency mining industry by utilizing biogas energy and advanced AI technology, aiming to provide cost-effective and environmentally friendly solutions for crypto mining. HUSBY generates electricity from biogas, combined with advanced AI algorithms, significantly reducing electricity costs, enhancing mining profitability, and substantially decreasing carbon emissions to promote sustainability.

· Smart Money Inflows

Source: ChainEDGE, Dot Labs

Project Overview:

1. EBULL (@EthBullToken /X)

$EBUL is a meme coin built on Ethereum, brought to life by Vitalik - Ethereum's official bull. Following his principles and beliefs about what memes should be, Vitalik Buterin holds 1.5% of the token supply. There are no fancy utilities, just a simple symbol for the wild journey of the market.

2. ZOAI (@zenoaiofficial /X)

Zeno AI is built slightly differently; they do not use ChatGPT but instead employ zero-error enhanced neural orchestration, combining AI with a deep understanding of the crypto market to provide exceptional investment partnerships. Zeno AI aims to provide every cryptocurrency trader with the insights they need. With its proprietary PACF model (Partial Autocorrelation Function), it changes the way traders enter the market, transforming raw data into actionable strategies.

3. Attention Value - Sector Rotation

1. Hot Sectors

Source: Dune, Dot Labs

Source: Dune, Dot Labs

2. Internal Sector

Source: Dune, Dot Labs