8.31 AI Daily Report: The development and regulation of the Crypto Assets industry are parallel, and the global market welcomes a new situation.

1. Headlines

1. The supply of stablecoins on the Ethereum network has surpassed $160 billion, reaching a historical high.

According to data from Token Terminal, the supply of stablecoins on the Ethereum network has surpassed $160 billion, reaching a new all-time high. This is more than double the stablecoin supply in January 2024. This growth is primarily due to Tether's large-scale minting activities on the Ethereum network. In just the past three days, Tether has minted an additional $3 billion of USDT on the Ethereum network.

Analysts believe that Tether's move aims to enhance liquidity and respond to regulatory pressures. As regulatory scrutiny of stablecoins intensifies, Tether needs to demonstrate that its USDT is fully backed by dollar reserves. The large-scale issuance of new USDT helps to elevate liquidity levels and meet potential redemption demands.

The surge in the supply of stablecoins also reflects the growing demand for dollar-denominated digital assets in the cryptocurrency market. In the context of a turbulent macroeconomic environment, investors favor the safe-haven attributes of stablecoins. In the future, as institutional investors continue to flood in, the role of stablecoins in the cryptocurrency ecosystem will become even more prominent.

2. Ethereum Foundation pauses open grant applications to focus on strategic priorities.

The Ethereum Foundation has suspended open grant applications to redesign its funding cost strategy, focusing on long-term priorities, and has reduced annual financial expenditures from 15% to 5%. The new curated grants will be launched in the fourth quarter of 2025, targeting key ecosystem projects.

This decision aims to optimize the efficiency of fund usage and集中资源推进Ethereum's core development goals. The Ethereum Foundation stated it will focus on key areas such as scalability, privacy, and decentralization to lay the foundation for the long-term development of Ethereum.

Industry insiders point out that the Ethereum Foundation's move reflects its emphasis on the long-term sustainable development of the Ethereum ecosystem. With limited funding, prioritizing support for core technological innovation and infrastructure construction is beneficial for enhancing Ethereum's competitiveness. At the same time, this also conveys that the Ethereum Foundation will more cautiously evaluate the value and impact of funded projects.

In the future, the Ethereum Foundation will further improve its funding mechanism while ensuring the transparency of fund usage, attracting more quality projects to inject vitality into the Ethereum ecosystem.

3. The US stock market will be closed for one day on September 1 due to the Labor Day holiday.

Due to the Labor Day holiday in the United States, the US stock market will be closed for one day on September 1, (, which is a Monday. This is a regular holiday arrangement for the US stock market every September.

Labor Day is a traditional holiday in the United States, intended to honor the contributions of American workers to the nation. Since 1894, the U.S. government has designated the first Monday in September as Labor Day. On this day, most businesses and institutions will have a day off.

Analysts say that the Labor Day holiday has a limited impact on the market, mainly reflected in the suspension of trading activities on that day. Investors can take advantage of the holiday to rest, review their portfolios, and prepare for the next trading day.

However, as the Labor Day holiday approaches this year, the US stock market is in a period of turmoil. Against the backdrop of high inflation and a continuing interest rate hike cycle, the US stock market has been under heavy selling pressure since the beginning of the year. In the coming period, factors such as the direction of the Federal Reserve's monetary policy and geopolitical situations will influence the performance of the US stock market. Investors need to remain cautious and closely monitor market trends.

) 4. The discussion on "buying the dip" in cryptocurrencies has surged, which may indicate more risks.

According to the sentiment analysis platform Santiment, as Bitcoin declines, the mentions of "buying the dip" on social media are rising, which may indicate that the cryptocurrency market has not yet hit bottom. Clearly, people in the market are starting to feel uneasy, trying to find some entry points when prices slightly pull back. Santiment analysts suggest that this could be a warning signal for the market.

Analysts point out that "buying the dip" during a bear market is often a dangerous practice. The current cryptocurrency market is in a period of adjustment, influenced by multiple factors such as the macro economy and regulation, with downside risks still present. Blindly chasing price increases may put investors in a passive situation.

In contrast, a more prudent approach is to gradually build positions after waiting for the market to stabilize. At the current stage, investors can closely monitor changes in the fundamentals and technicals to look for genuine reversal signals. At the same time, it is important to manage risk exposure and maintain patience until the timing is right.

Overall, investing in the cryptocurrency market requires calm and rational thinking. Any impulsive behavior of chasing highs and selling lows may lead to serious losses. Only by maintaining patience and discipline can one steadily make profits in a volatile market.

5. Ethereum partners with Google developers to promote blockchain as the cornerstone of the AI agency economy.

According to reports, Ethereum and Google developers have jointly proposed a new initiative aimed at making blockchain the cornerstone of the artificial intelligence agent economy. Tech giants such as Google and Amazon are betting on AI agents, while Ethereum developers believe that their blockchain has unique advantages in supporting this new type of machine economy.

Artificial intelligence agents are seen as the future direction of computing development. They can autonomously perform various tasks, significantly increasing productivity. However, to achieve true autonomy, agents need to operate in a trusted environment, which is exactly the assurance that blockchain can provide.

The Ethereum blockchain has characteristics such as decentralization and immutability, ensuring that the operation of agents is not controlled by any single entity. At the same time, smart contract technology provides agents with a programmable execution environment. Agents can automatically perform specific operations based on pre-set conditions, significantly reducing the cost of manual intervention.

Industry insiders believe that the combination of blockchain and artificial intelligence agents will inject new momentum into future economic development. Agents can efficiently complete various repetitive tasks, freeing human creativity. Meanwhile, blockchain provides a secure and trustworthy infrastructure for the agent economy.

In the future, Ethereum may become the core platform of the agency economy. Developers need to further explore the integration of the two, creating a true "machine economy." Innovations in this field will profoundly impact the production and lifestyle of future society.

2. Industry News

1. The rebound of Bitcoin prices has sparked optimism in the market, but analysts warn that there are still downside risks.

The price of Bitcoin rebounded above $109,000 on August 31, with a 24-hour increase of over 1%. This rebound alleviated recent downward pressure and sparked optimism in the market about the resumption of a bull market.

Analysts point out that the short-term rebound of Bitcoin is mainly driven by technical factors. As the price breaks through key resistance levels, long positions begin to strengthen. In addition, the funding rate on exchanges has turned positive, indicating that long positions are dominant.

However, analysts also warn that the macro environment facing Bitcoin remains severe. The expectation of continued interest rate hikes by the Federal Reserve and the increasing risk of a global economic slowdown may limit Bitcoin's upside potential. Some institutional investors are also gradually withdrawing their positions, putting pressure on the demand for Bitcoin.

Overall, Bitcoin may continue to rebound in the short term, but it will take time to restart a bull market. Investors need to closely monitor changes in the macroeconomic situation and cautiously manage risks.

2. Ethereum price breaks through $4450, futures open interest surges raising liquidation risks.

The price of Ethereum broke through the $4450 mark on August 31, with a 24-hour increase of over 3%. Meanwhile, the open interest of Ethereum futures contracts also saw a significant increase, indicating strong speculative demand.

Analysts say that the rise in Ethereum prices is primarily driven by positive developments in the Ethereum ecosystem. The continuous activity of applications such as DeFi and NFTs on Ethereum has attracted a significant influx of capital. In addition, the anticipation of Ethereum's EIP-4844 upgrade has also contributed to the upward momentum in prices.

However, the surge in futures open interest also means an increased risk of forced liquidation. Once there are significant price fluctuations, it may trigger a chain reaction, exacerbating market volatility.

Analysts urge investors to remain cautious and closely monitor changes in the futures market. They also recommend that investors diversify their investments and manage their risk exposure.

3. The activity level of the Solana ecosystem has increased, but the price of SOL is under pressure and difficult to break through.

Despite the continuous increase in the activity of the Solana ecosystem, the price of the SOL token still failed to effectively break through the resistance level of $218 on August 31. The price of SOL fluctuated around $201, with a 24-hour increase of less than 1%.

Analysts believe that the development of the Solana ecosystem has laid the foundation for the rise in SOL prices. The continuous expansion of DeFi, NFT, and other applications on Solana has attracted a significant influx of funds. Moreover, Solana's high performance and low transaction fees give it a competitive edge.

However, the upward momentum of SOL's price is still insufficient. Factors such as the uncertainty of the macro environment and cautious investor sentiment are limiting SOL's upward potential.

Analysts suggest that investors closely monitor the development trends of the Solana ecosystem while also paying attention to risk control. In the current volatile market, maintaining a moderate position may be a more prudent approach.

4. XRP price stabilizes, regulatory clarity may become a future driving force

On August 31, XRP price stabilized around $0.57, with a small fluctuation range over the past 24 hours. Although XRP price has faced certain pressure recently, analysts believe that regulatory clarity may become an important driving force for XRP's future.

Analysts point out that XRP has unique advantages in the cross-border payment field, and its characteristics of efficiency and low cost have been widely recognized. With the gradual clarification of the regulatory environment, XRP is expected to gain more favor from institutional investors.

In addition, the development of the XRP ecosystem is also worth paying attention to. The application scenarios of XRP are constantly expanding, including XRPL, XRPL sidechains, etc., which helps to enhance the practical value of XRP.

However, XRP still faces some uncertainties, such as the lawsuit dispute with the U.S. Securities and Exchange Commission. Investors need to closely monitor related developments and cautiously manage risks.

Overall, the long-term prospects for XRP remain promising, but in the short term, it may continue to experience a volatile market.

3. Project News

1. EigenCloud announces multi-domain expansion plan to promote We innovative development.

EigenCloud is a new protocol built on the EigenLayer restaking protocol. On June 17, Eigen Labs announced the launch of EigenCloud and secured a $70 million investment from Andreessen Horowitz. EigenCloud integrates features such as data availability, general computation, and dispute resolution, aiming to provide infrastructure support for the We ecosystem.

Recent news shows that EigenCloud plans to expand applications in multiple fields, including artificial intelligence, agent economy, decentralized finance, zero-knowledge proof, physical assets, decentralized artificial intelligence, decentralized personal identity, intelligent agents, scalability solutions, and oracles. This ambitious plan reflects EigenCloud's determination to drive innovation development in We.

EigenCloud's multi-domain expansion plan may have a profound impact on the We ecosystem. It provides robust infrastructure support for various innovative applications, helping to attract more developers and businesses into the We domain. At the same time, cross-domain technology integration is expected to promote the integrated development of different fields, giving rise to new business models and application scenarios.

Industry analysts welcome EigenCloud's expansion plans. They believe that EigenCloud injects new vitality into the We ecosystem and is expected to drive innovation and development across the industry. However, some analysts caution that EigenCloud needs to place a high priority on security and scalability to ensure its infrastructure can operate reliably.

2. The Sui ecosystem continues to expand, with Move projects leading the new wave.

As an emerging Layer 1 blockchain, the Sui ecosystem is rapidly developing. Recent news shows that several star projects have emerged on Sui, such as Cetus, Navi, and Scallop. In addition, Sui has launched the SuiPlay gaming platform and established the largest gaming booth at the KBW conference in South Korea.

The rapid development of Sui is attributed to its innovative Move language. The Move language is highly related to the Rust language, enabling projects in the Solana ecosystem to migrate to Sui more conveniently. In fact, some well-known projects in the Solana ecosystem, such as Solend, have already launched new applications on Sui.

Industry analysts believe that the continuous expansion of the Sui ecosystem marks a new wave of development led by Move-based projects. The advantages of the Move language are expected to attract more excellent projects to join Sui and other Move-based ecosystems, bringing more innovative applications to We.

However, some analysts pointed out that the currently tradable assets in the Sui ecosystem are too limited, which may affect its development momentum. They suggest that the Sui team should increase incubation efforts to cultivate more star projects, thereby enhancing the vitality of the ecosystem.

3. The development path of the Aptos ecosystem needs to be clarified urgently, and Movement is highly anticipated.

As another Layer 1 ecosystem based on the Move language, Aptos has also attracted industry attention. However, the current development path of the Aptos ecosystem does not seem to have received full recognition from the community, and there are some doubts among users and the community regarding the direction of its foundation's efforts.

At the same time, Movement, as the only Move project that has not yet issued tokens, is highly anticipated. Industry insiders believe that Movement may give birth to some star-level application cases in the future, further promoting the development of the Move ecosystem.

Overall, the Move ecosystem is becoming a new hotspot in the We domain. With its innovative language advantages, Move projects are expected to bring more innovative applications to We and promote the development of the entire industry. However, the Move ecosystem also faces some challenges, such as limited asset variety and unclear development paths, which require relevant parties to take measures to address.

4. We social innovation continues, Connect to Earn model attracts attention

At the TOKEN2049 conference, We Social remains a hot topic. Despite previous failures of the We Social project, more participants continue to innovate in this field.

Among them, founder Yawn proposed the concept of "Connect to Earn," which allows users to earn rewards through interesting methods such as map-based social interactions, thereby achieving large-scale adoption of We products. However, Yawn also admitted that how to implement Connect to Earn without disrupting the entire ecological economy still requires further contemplation and verification.

In addition, social projects like FriendTech have also sparked discussions among the participants. Although We social has always been seen as a track with only one winner, the participants still have high hopes for its future, believing it has tremendous potential.

Analysts point out that the key to We social lies in finding the right incentive model that allows users to truly enjoy the social experience while also gaining benefits. Only in this way can We social achieve true mass adoption. At the same time, ensuring the sustainable development of the ecological economy is also an issue that needs to be taken seriously.

4. Economic Dynamics

1. The Federal Reserve's expectation of interest rate hikes in September is rising, and inflation pressures persist.

The current U.S. economy is facing persistent inflationary pressures. According to the latest data, the Consumer Price Index ### CPI ( rose by 8.5% year-on-year in July, exceeding expectations and reaching a new high in over 40 years. The core CPI increased by 5.9% year-on-year, also surpassing expectations. The continued rise in inflation is mainly due to supply chain bottlenecks, labor shortages, and soaring energy and food prices caused by the Russia-Ukraine conflict.

To curb inflation, the Federal Reserve has raised interest rates four times this year, bringing the federal funds rate to a range of 2.25%-2.5%. The market widely expects the Federal Reserve to once again raise interest rates significantly by 75 basis points in September, aiming to bring rates up to a higher level of 3.75%-4% by the end of the year. Analysts at Goldman Sachs ) indicate that the Federal Reserve still needs to continue aggressive rate hikes to prevent inflation expectations from heating up and further exacerbating inflationary pressures.

The rising expectations of interest rate hikes by the Federal Reserve in September have put pressure on the stock market. The S&P 500 index fell by 3.1% in August, marking the largest monthly decline since March 2020. Bond yields have also continued to rise, with the 10-year U.S. Treasury yield approaching 3.2%. The dollar index has increased by nearly 8% since mid-June, reaching a 20-year high.

However, Goldman Sachs analysts believe that inflationary pressures may have peaked and are expected to gradually cool down in the second half of next year. UBS's chief economist stated that the Federal Reserve's interest rate hikes are expected to take effect early next year, at which point economic growth will slow down and inflationary pressures will ease.

( 2. The energy crisis in Europe intensifies, and the risk of economic recession increases.

The European energy crisis continues to worsen, with Russia imposing natural gas supply restrictions on the EU, causing gas prices to soar. Germany's natural gas import prices in August skyrocketed by 161.6% year-on-year, reaching a record high. Energy costs for households in the UK could also surge by more than 80% this winter.

Energy prices have surged, exacerbating inflationary pressures in Europe. The inflation rate in the Eurozone soared to 9.1% in August, a record high. Germany's inflation rate in August reached 8.8%, while the UK hit as high as 10.1%. In response to inflation, the European Central Bank raised interest rates by 75 basis points last month and hinted at continuing significant rate hikes.

The soaring energy and living costs are eroding the purchasing power of European consumers, and the manufacturing sector is also facing pressure from skyrocketing production costs. German economists predict that the German economy may fall into recession in the fourth quarter of this year. According to data from the EU statistics office, the Eurozone economy only grew by 0.6% in the second quarter, indicating a slowdown in growth.

Investment bank Goldman Sachs expects that the Eurozone economy will fall into recession in the fourth quarter of this year and the first quarter of next year. UBS, on the other hand, predicts that the Eurozone economy will shrink by 0.7% for the whole of 2023. However, UBS analysts believe that the recession in Europe may be relatively mild, mainly due to the labor market remaining relatively robust.

) 3. The pace of China's economic recovery is slowing, and policy support may increase.

China's economy ended months of decline in the second quarter, but the pace of recovery slowed in the third quarter. In August, the official Manufacturing Purchasing Managers' Index ( PMI ) fell to 49.4, below expectations, slipping back into contraction territory. The services PMI also declined from 53.8 in July to 52.6.

China's economic recovery is weak, mainly affected by the continued slump in the real estate market, pandemic control measures, and a slowdown in global demand. Data on industrial production and consumption in August also indicate that economic momentum has weakened.

In order to boost the economy, China's central bank unexpectedly lowered several lending market interest rates last month and reiterated that it will maintain a prudent monetary policy. However, most analysts believe that the central bank still has room for further easing.

Goldman Sachs analysts expect that to ensure the achievement of this year's economic growth target of 5.5%, the Chinese government will further increase fiscal spending in the second half of the year and may launch a new round of infrastructure investment plans. UBS analysts, on the other hand, stated that the recovery of the Chinese economy will still be a gradual process, with expectations of renewed growth momentum in the first half of next year.

4. Japan's inflationary pressures are increasing, and the central bank maintains an accommodative stance.

Japan's core inflation rate rose to 2.8% in August, exceeding the central bank's target of 2% for the fifth consecutive month. Driven by rising global commodity prices and the depreciation of the yen, inflationary pressures in Japan continue to mount.

However, the Bank of Japan still insists on an ultra-loose monetary policy stance, maintaining short-term interest rates at a low of -0.1%, and reiterates that it will patiently wait for inflation to continue rising. Bank of Japan Governor Haruhiko Kuroda believes that the current inflation is mainly driven by costs and is expected to gradually cool down next year.

The Bank of Japan's stance is at odds with other major economies, raising market questions about its policies. Goldman Sachs analysts have stated that if inflation in Japan continues to rise, the central bank will eventually have to tighten its monetary policy. UBS analysts, on the other hand, believe that the Bank of Japan may raise its long-term interest rate target next year.

The exchange rate of the yen against the US dollar has depreciated by more than 20% since the beginning of the year, reaching a 24-year low. The Japanese government announced emergency measures last month to alleviate the impact of the yen's depreciation on households and businesses. However, most analysts believe that the Japanese government and central bank still need to take further action to prevent inflation from rising further.

5. Regulation & Policy

1. The Hong Kong Securities and Futures Commission has released a regulatory framework for virtual asset trading platforms.

The Securities and Futures Commission of Hong Kong (SFC) has officially released a regulatory framework for virtual asset trading platforms. As the regulatory authority of Hong Kong's financial center, the SFC has established this framework to set compliance standards for virtual asset trading activities and protect investors' rights.

The framework stipulates that virtual asset trading platform operators must obtain a license issued by the Securities and Futures Commission in order to engage in trading services in Hong Kong. Applying for a license requires compliance with multiple regulatory requirements, including prudent risk management, adequate capital reserves, and effective anti-money laundering measures. Licensed platforms must also adhere to ongoing regulatory requirements related to investor protection, product compliance, and anti-money laundering.

The Securities and Futures Commission stated that this framework will create a favorable regulatory environment for Hong Kong's virtual asset industry and promote healthy industry development. Industry insiders generally believe that this regulatory framework lays the foundation for Hong Kong to attract virtual asset companies to establish themselves, which is beneficial for Hong Kong to develop into an Asian virtual asset hub. However, strict regulatory requirements may also increase compliance costs for the industry.

Mr. Zhang, a fintech expert, believes: "The regulatory framework set by the Securities Regulatory Commission establishes clear rules for virtual asset trading activities, which will enhance industry transparency and investor confidence. However, at the same time, industry participants need to strengthen internal management to ensure compliance with regulatory requirements."

( 2. The U.S. Securities and Exchange Commission plans to regulate cryptocurrency exchanges.

Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), stated that the SEC is examining the implementation of regulations on cryptocurrency exchanges. This initiative aims to enhance the regulation of the cryptocurrency market and protect investors' rights.

According to Jensler, the SEC will require cryptocurrency exchanges to comply with rules similar to those of traditional securities exchanges, including disclosure requirements, investor protection measures, anti-money laundering regulations, and more. The SEC believes that the operation of cryptocurrency exchanges is similar to that of securities exchanges and therefore should be subject to similar regulation.

This regulatory plan has attracted widespread attention in the cryptocurrency industry. Supporters believe that regulation helps enhance market transparency, protect investor rights, and promote the long-term healthy development of the industry. However, there are also concerns that excessive regulation may stifle innovation and limit the growth potential of the cryptocurrency market.

Cryptocurrency analyst Mr. Zhao stated: "Regulation indeed presents challenges for the industry, but it also means that cryptocurrencies are being integrated into the mainstream financial system. Industry participants need to proactively adapt to regulatory requirements and continue to innovate under the premise of compliance."

) 3. The EU approves the Crypto Assets Market Bill, establishing unified rules for industry development.

The Council of the European Union has officially approved the Crypto Assets Market Bill ### MiCA ###, establishing a unified standard for cryptocurrency regulation among EU member states. The bill will come into effect in 2024, becoming the EU's first comprehensive regulatory framework for crypto assets.

The main contents of the MiCA regulation include: requiring cryptocurrency issuers and service providers to obtain licenses from regulatory authorities; regulating the issuance, trading, and custody activities of cryptocurrency; strengthening anti-money laundering and consumer protection measures; clarifying regulatory requirements for stablecoins, among others. The regulation aims to promote transparency, stability, and fair competition in the EU cryptocurrency market.

Industry insiders generally believe that the MiCA legislation has established clear rules for the development of the cryptocurrency industry in the EU, which is beneficial for attracting more businesses to operate in Europe. However, strict regulatory requirements may also increase compliance costs for the industry.

Blockchain expert Mr. Li stated: "The MiCA legislation creates a unified regulatory environment for the cryptocurrency industry in the EU, which will be beneficial for the long-term healthy development of the industry. However, companies need to closely monitor the specific implementation details of the legislation and adjust their business strategies in a timely manner to comply with regulatory requirements."

Overall, the above regulatory policies reflect the increasing importance that regulatory agencies place on the cryptocurrency market, aiming to regulate market order and protect investors' rights by establishing clear rules. Responses from various parties inside and outside the industry vary, but it is generally believed that reasonable regulation will create a favorable environment for the long-term development of the industry.