Tron Industry Weekly Report: High interest rate expectations continue, BTC/ETH show volatile differentiation, PAYY and Midas financing reflect the warming of on-chain payment and yield infrastructure

I. Outlook

1. Summary of Macro Level and Future Predictions

From May 4th to 11th, the macro theme can be summarized as "growth remains stable, inflation is sticky, and policies are relatively tight." The U.S. Federal Reserve maintained interest rates at the end of April and emphasized inflationary pressures with a more hawkish tone, particularly regarding the spillover risks from rising energy prices. Meanwhile, the non-farm payroll data released on May 8th showed better-than-expected results for April, with the unemployment rate stable at 4.3%, indicating that the labor market remains resilient, but also pushing market expectations for short-term interest rate cuts further back. Coupled with U.S.-China tariff and trade frictions, as well as the situation in the Middle East driving up oil prices, market sentiment oscillated between "no economic recession" and "inflation difficult to decline quickly."

In the coming week, macro trading may still be characterized by "high rates maintained for longer," with risk appetite remaining highly sensitive to inflation, oil prices, and trade news. If subsequent U.S. inflation data continues to be hot, the market will further reinforce the pricing of "limited room for interest rate cuts this year." Conversely, if inflation shows signs of cooling, the U.S. dollar and long-term rates may have significant room to decline. Overall, economic data is likely to continue supporting the growth narrative, but uncertainties in policy and geopolitics will suppress valuation expansion, making equity markets more likely to exhibit high-level fluctuations and sector rotations rather than a unilateral upward trend.

2. Market Movements and Warnings in the Crypto Industry

From May 4th to 11th, the overall crypto market remained in a "high volatility, sideways" structure. In terms of price, Bitcoin fluctuated around the $80,000 to $82,000 range, currently at about $81,300, indicating that while bulls have not lost key support, selling pressure above is also quite evident. Ethereum appears weaker, currently around $2,310, with intraday highs and lows roughly between $2,300 and $2,344, reflecting that the recovery of altcoins is still lagging behind BTC. Overall, funds are leaning towards more liquid mainstream coins, as the market continues to digest macro interest rate expectations, changes in risk appetite, and the tug-of-war between mid-to-long-term narratives post-halving and short-term profit-taking pressures.

In the coming week, the market's directional warning remains "first watch if BTC can hold around $80,000, then see if it can regain the upper edge of $82,000." If BTC breaks below $80,000 with increased volume, altcoins typically accelerate their declines; if it stabilizes above $81,000 and attempts an effective breakout towards $82,000 to $83,000, short-term sentiment will significantly improve, but it is more likely to manifest as a structural rebound rather than a broad-based rally. The key observation point for ETH can initially be set at $2,300; if it falls below this level, weakness will continue, while regaining stability above $2,350 could drive some high-beta altcoins to recover.

3. Industry and Sector Hotspots

FirstMark led the investment in PAYY, with DBA and Ventures participating, while Midas was led by RRE Ventures and Creandum, with participation from Coinbase, GSR, Oasis, and Framework. These represent two clear main lines in crypto infrastructure: the former focuses on creating a low-cost, high-efficiency on-chain payment network, while the latter aims to connect off-chain government bond yields with on-chain liquidity. Both indicate that the current market focus is shifting from pure trading and speculation to more fundamental aspects of payment efficiency, capital turnover, and yield distribution capabilities.

II. Market Hotspots and Potential Projects for the Week

1. Overview of Potential Projects

1.1. Analysis of PAYY, led by FirstMark, with DBA and Ventures participating—building a low-cost, high-efficiency on-chain payment infrastructure

Introduction

Payy is a privacy-centric stablecoin platform that achieves default private transactions through zero-knowledge technology (ZK). It provides self-custody wallets and Visa cards, allowing users to seamlessly use USDC for payments while maintaining the privacy of on-chain activities.

Payy is also building the Payy Network, a layer-2 Rollup based on Ethereum that hides transaction data through zero-knowledge proofs, including sender, receiver, and transaction amounts.

Currently, Payy has launched its wallet product, the network is about to go live, and it plans to issue tokens with the goal of promoting the mainstream application of privacy stablecoin payments.

Protocol Framework Overview

1. Payy Network Architecture

Payy Network is a layer-2 zero-knowledge Rollup based on Ethereum, with the following roles in its architecture:

• Sequencer: Submits blocks to L1 for verification and ensures the determinism of transaction order.
• Rollup Prover: Validates the correctness of sorted blocks.
• Client: Responsible for generating valid UTXO transaction proofs.
• Encrypted Registries (optional): Used to store transaction data, allowing users to participate in transactions even while offline.
• Ethereum: Provides security and data availability for the entire network.

Core Logic: Achieves privacy protection and efficient scaling on the secure foundation of Ethereum through ZK proofs + Rollup architecture.

2. Privacy Architecture

Payy achieves privacy protection through zero-knowledge proofs (ZK) while maintaining compatibility with the EVM. Its privacy system includes three core mechanisms:

• Private Transfers: Supports fully private transfers of ERC-20 and native tokens.
• Stealth Transactions: Achieves anonymous transactions at the EVM layer through one-time addresses.
• Native ZK: Provides low-cost ZK verification capabilities, supporting custom privacy applications.

Core Architecture Components

• Privacy Layer: High-performance privacy Rollup, creating independent privacy pools for each ERC-20.
• PrivacyBridge: A bridging component connecting the EVM layer and the privacy layer.
• Privacy Vault: Stores private data and converts ordinary transactions into private transactions through ZK proofs.

Privacy Levels

• Private Transfers (Fully Private)
  Executed within the privacy layer, hiding sender, receiver, amount, and assets, with high throughput and no additional EVM overhead.
• Stealth Transactions (Semi-Private)
  Executed at the EVM layer, but funds originate from the privacy layer, making real identities untraceable.
• Native ZK
  Depends on the specific application scenario.

Encrypted Lineage

Payy uses a nullifier mechanism to prevent transaction paths from being traced, ensuring that funds do not expose their source while flowing between the privacy layer and the EVM layer.

In special cases (such as preventing malicious fund flows), encrypted lineage can be decrypted through on-chain governance proposals to balance privacy and compliance.

Private Transfer Mechanism

In Payy, there are two ways to implement private transfers:

1. Directly calling PrivacyBridge: Authorizing fund transfers through ZK proofs.
2. Using the "transparent upgrade" method of Privacy Vault (no need to change wallets).

Transparent Upgrade (Core Mechanism)

Payy supports "seamless privacy upgrades" for existing wallets:

• Users still use standard ERC-20 transfers (transfer(address, uint256)) or native transfers.
• Transactions are sent normally through eth_submitRawTransaction().
• No need to modify wallets or operating habits.

When the system detects a transfer transaction (such as function selector 0xa9059cbb):

• RPC automatically calls Privacy Vault to request ZK proofs.
• Privacy Vault verifies the signature and generates a private transaction proof.
• Finally, the transaction is submitted to PrivacyBridge to complete the private transfer.

Receiving Mechanism

Since transaction data is encrypted:

• The receiver needs to obtain the corresponding Note (credential data) to withdraw funds.
• Privacy Vault determines the receiving address through the Privacy Vault Registry.
• The receiver's Privacy Vault will return a signature confirmation to complete the fund reception.

Stealth Transactions

Payy achieves privacy transaction capabilities by introducing a one-time address mechanism at the EVM layer. The core idea is to seamlessly transfer funds between the privacy layer and the EVM layer, generating a brand new temporary address for each transaction.

For example, when a user makes a private exchange from PUSD to PAYY:

• Funds are first withdrawn from the privacy layer to a newly generated one-time address.
• The exchange operation is completed at the EVM layer.
• The exchanged PAYY tokens are then returned to the fund pool of the privacy layer.

Since each transaction uses a different one-time address, external observers cannot associate the flow of funds, thus achieving transaction privacy protection.

Native ZK

Payy natively supports zero-knowledge proofs (ZK), enabling developers to directly build privacy applications on its network while balancing performance and cost efficiency.

On traditional blockchains, the cost of ZK proofs is extremely high, potentially consuming over 5 million gas (about 10% of block space), making it difficult for most privacy applications to verify transactions one by one, and they can only rely on Rollup solutions.

In Payy:

• Provides native ZK verification capabilities, significantly reducing costs
• Developers can directly call ZK proofs in EVM smart contracts
• Achieves trustless validation of off-chain transactions

Tron Commentary

The core advantage of Payy lies in its construction of a privacy stablecoin payment system based on zero-knowledge technology, achieving default privacy transactions through "privacy layer + Stealth address + native ZK verification," while being compatible with EVM and supporting seamless upgrades for existing wallets, significantly lowering the user entry barrier; combined with self-custody wallets and Visa cards, it creates a closed loop between "on-chain privacy assets and real-world payments," and enhances performance and reduces costs through the L2 Rollup architecture.

Its potential disadvantage is a strong reliance on ZK infrastructure and privacy liquidity, high system complexity, and elevated development and audit thresholds; at the same time, privacy features may face compliance uncertainties in different regulatory environments. Overall, Payy is a cutting-edge stablecoin infrastructure that balances privacy, payments, and scalability, but it is still in the early stages of technological and ecological development.

2. Key Project Details of the Week

2.1. Detailed Explanation of Total Financing of $63.75 Million, led by RRE Ventures and CREANDUM, with participation from Coinbase, GSR, OASIS, and Framework—Midas, a bridge connecting off-chain treasury yields with on-chain liquidity

Introduction

Midas is a platform for composable on-chain investment products. It allows strategy managers to tokenize institutional-level investment strategies, enabling investors to achieve complete transparency, instant redemption capabilities, and native composability within the DeFi ecosystem.

Midas is positioned at the core of the on-chain financial market, connecting institutional-level strategy managers, DeFi protocols, and investors through the provision of on-chain investment products, thereby building a unified financial ecosystem.

Core System Architecture Analysis

1. Open Liquidity Architecture

Midas provides high liquidity, composable on-chain investment products through its Open Liquidity Architecture, addressing the efficiency issues between on-chain continuous settlement and traditional financial settlement delays, achieving instant access and efficient capital utilization.

Core Mechanism

This architecture addresses the liquidity and settlement lag issues in traditional finance by introducing flexible redemption methods:

1. Standard Redemption

• No fees
• Executed according to the natural settlement cycle of the underlying assets (which may take several days or weeks)
• Calculated based on the NAV (Net Asset Value) at the time of final settlement

1. Instant Redemption

• Provides on-demand liquidity without waiting
• Immediately exchanged for stablecoins (such as USDC)
• Relies on dedicated liquidity pools
• Charges a fixed fee
• Smart contracts execute automatically:
• Reads the current NAV
• Destroys mToken
• Instantly returns stablecoins

2. Midas Staked Liquidity (MSL)

Midas Staked Liquidity (MSL) is a set of on-chain liquidity infrastructure designed to achieve instant redemption (atomic settlement), aimed at solving the "cash drag" problem in traditional portfolios—holding idle cash to cope with redemptions, thereby reducing overall returns.

When a user initiates an instant redemption, the MSL pool provides USDC to the user (after deducting fixed redemption fees) while destroying the corresponding mToken; subsequently, the asset manager repays MSL through smart contracts after off-chain asset settlement, forming an on-chain auditable short-term liquidity lending relationship.

For liquidity providers (LPs), MSL offers a risk-isolated earning opportunity: no need to bear the risk of underlying assets, earning redemption fee income solely by providing short-term liquidity, with their funds having priority repayment rights in the structure. Overall, MSL is essentially a "high-frequency liquidity supply layer with no market risk," serving the time difference between on-chain assets and real-world asset settlements.

3. Transparency Mechanism

The core of Midas's transparency system is:
Upgrading the "disclosure" of traditional asset management to "on-chain verifiable real-time transparency."

Core Mechanism

On-chain Proof (Attestation Engine)

• Maps off-chain asset data (such as treasury bonds, funds) to on-chain states through the Midas Attestation Engine
• Regularly generates on-chain "checkpoints"
• Used to verify:
• NAV (Net Asset Value)
• Collateral asset scale
• Reserve status

Third-party Validation

• Introduces third-party institutions (such as oracle/risk control agencies) for independent verification
• Reduces single-point trust risks
• Enhances data credibility and institutional acceptability

Full-link Data Transparency
Disclosure dimensions include:

• Composition of underlying assets (such as T-Bills, MMFs, etc.)
• Position structure and distribution
• Changes in net value
• Fund flows

Essentially:
From "black box asset pool" → "visualized, traceable asset structure"

High-frequency Updates and Historical Tracking

• Data continuously updated on a cycle (close to real-time)
• Provides historical records and time series
• Supports auditing and retrospection

Key Limitations

• Disclosure ≠ legal ownership
• Users do not directly hold underlying assets
• Essentially still a structured financial product

4. Investment Risk Management

The core of Midas's risk management is:
Achieving a "traditional asset management-like" risk control framework through asset selection, structural isolation, and operational constraints.

Core Mechanism

High-quality Asset Screening (RWA Priority)

• Primarily allocates low-risk assets:
• Short-term treasury bonds (T-Bills)
• Money market funds (MMFs)
• Emphasizes stable returns rather than high-volatility returns

Essentially:
Returns come from "assets with extremely low credit risk."

Asset Isolation (Ring-fencing)

• Each mToken corresponds to an independent asset pool
• Risks do not transmit between different products

Avoids:

• Systemic risk diffusion
• Single asset collapse affecting the whole

Liquidity Management (Core Focus)

• Solves redemption issues through MSL (liquidity layer)
• Avoids traditional "cash drag"
• Ensures instant redemption capabilities

Achieves:
Multi-return + high liquidity balance

Counterparty and Operational Risk Control

• Uses compliant custodial institutions
• Introduces professional fund managers
• Limits strategy scope

Essentially:
Reduces human operation and credit risk

Interest Rate and Market Risk Management

• Mainly exposed to:
• Interest rate fluctuations
• Macro market changes
• Reduces volatility through short-duration assets

Technical and Structural Risks

• Smart contract risks
• Oracle risks
• On-chain/off-chain synchronization risks

Through:

• Auditing
• Multi-party validation
• Modular design
  Reduces risks

Key Risk Points (Implied)

• Still relies on off-chain assets and custodial institutions
• Not fully decentralized
• Liquidity pressure may still arise under extreme market conditions

Tron Commentary

The core advantage of Midas lies in its combination of traditional institutional-level asset management (such as treasury bonds, MMFs) with on-chain transparency mechanisms, achieving near real-time asset visualization and auditability through on-chain proof (Attestation), multi-party validation, and high-frequency disclosure, while leveraging the MSL liquidity layer to solve redemption and "cash drag" issues, enhancing yield efficiency while ensuring liquidity; its risk control system is also relatively robust, emphasizing low-risk asset allocation and asset isolation.

However, its potential disadvantage lies in its reliance on off-chain assets and custodial institutions, essentially remaining a structured product rather than fully decentralized, with users not directly holding legal rights to the underlying assets; additionally, factors such as oracle, settlement cycles, and extreme market liquidity pressures may still pose systemic risks under special circumstances.

3. Industry Data Analysis

1. Overall Market Performance

1.1. Spot BTC vs ETH Price Trends

BTC

ETH

2. Summary of Hot Sectors

1. ZK / Privacy Computing

• Multiple projects advancing ZK recursive proofs and cross-chain verification capabilities, focusing on enhancing multi-chain asset aggregation and low-cost verification (in conjunction with EIP -1108 / 4844)
• Privacy Identity (DID + ZK) begins to expand from single-chain to multi-chain data unified verification, evolving towards the "on-chain identity layer"

2. RWA (Real World Assets)

• RWA protocols begin to strengthen the on-chain compliance execution layer (rule engine + custody + order book)
• Technical focus shifts from "asset on-chain" to settlement, liquidity, and DeFi composability

3. AI + Crypto

• AI Agent gradually transitions from a tool to an on-chain execution entity
• Emergence of an infrastructure combination of "AI services + on-chain payment/account systems" (such as LLM Service type architecture)
• Technical direction focuses on: automated trading, on-chain calls, and payment loops

4. DeFi / Derivatives

• DEX continues to evolve towards multi-functional platforms (trading + lending + prediction markets)
• Derivative protocols strengthen on-chain matching and risk engine modularization

5. Infrastructure (Multi VM / Execution Layer)

• "Blended Execution (unified execution across multiple VMs)" becomes a new trend (E VM + WASM + S VM)
• Technical focus on: unified state, cross-language contract interaction, and zk proof optimization

4. Macroeconomic Data Review and Key Data Release Nodes for Next Week

Last week, the macroeconomic landscape overall presented a pattern of "repeated inflation expectations + high interest rate maintenance expectations":

• In the United States, employment and consumption-related data remain resilient overall, showing no significant signs of cooling, causing the market to continue delaying short-term interest rate cut expectations
• U.S. Treasury yields remain high and volatile, with the 10Y yield fluctuating but not effectively declining, putting pressure on risk assets
• Gold experienced a phase correction, indicating a marginal retreat in market risk aversion sentiment
• The U.S. dollar index operates overall on the strong side, with funds still leaning towards dollar assets

Next week, focus on three types of data (directly affecting market direction):

1. U.S. Inflation Data (CPI / PPI)

• Impact: Determines the market's judgment on the Federal Reserve's policy path
• Key points:
• If inflation exceeds expectations → interest rates maintained longer → bearish for risk assets
• If there is a significant decline → interest rate cut expectations rise → bullish for the market

2. Retail Sales

• Impact: Reflects whether consumption is starting to weaken
• Key points:
• Strong → strong economic resilience → delayed interest rate cuts
• Weak → economic cooling → bullish for liquidity expectations

3. Initial Jobless Claims / Marginal Employment Data

• Impact: Observes whether employment is starting to weaken
• Key points:
• If it continues to rise → supports interest rate cut expectations
• If it remains low → interest rates continue to be high

5. Regulatory Policies

United States

May 5: U.S. stablecoin regulation enters the implementation detail phase.
Discussions around the regulatory details of the GENIUS Act continue, with institutions like BlackRock submitting opinions to the OCC, focusing on the scope of stablecoin reserve assets, custody requirements, and the compliant use of tokenized government bond assets. Market attention has shifted from "whether to regulate" to "how to implement."

May 6: CFTC continues to advance discussions on the responsibility boundaries of non-custodial wallets.
U.S. regulators continue to discuss the division of responsibilities between non-custodial wallets and neutral software developers, focusing on clarifying which behaviors fall under "financial intermediaries" and which merely involve providing technical interfaces. This direction significantly impacts the DeFi and on-chain wallet ecosystem.

European Union / Italy

May 6: The European Union continues to advance preparations for the comprehensive implementation of MiCA.
EU regulatory agencies and member states continue to coordinate on the final implementation of MiCA, focusing on stablecoin reserves, information disclosure, CASP (Crypto Asset Service Provider) licensing, and operational resilience requirements.

May 7: The Bank of Italy promotes discussions on "tokenized SEPA."
The Bank of Italy publicly calls for an assessment of extending the SEPA payment system to tokenized financial scenarios, hoping that the EU payment system can adapt to on-chain settlement and digital asset circulation.

Hong Kong

May 8: Hong Kong's stablecoin regulatory framework enters a substantial advancement phase.
After the passage of the Hong Kong Stablecoin Bill, the HKMA continues to advance subsequent licensing and implementation rules, emphasizing AML, reserve transparency, and issuer governance requirements. Hong Kong is further strengthening its position as an "Asian compliance crypto center."

South Korea

May 8: South Korea continues regulatory discussions around the issuance of the Korean won stablecoin.
The Bank of Korea (BOK) and financial regulatory agencies (FSC) continue to have differences over whether to "only allow banks to issue stablecoins" or "allow technology companies to participate." This topic has become one of the key focuses of South Korea's crypto policy.

Japan

May 9: Japan continues to advance the implementation of FIEA crypto asset reforms.
Japanese regulators continue to promote the reform of crypto asset financial products, including exchange responsibility reserve requirements, stablecoin rules, and tax adjustments, as Japan strengthens its institutionalized and compliant digital asset market structure.

United Arab Emirates (UAE)

May 10: The Abu Dhabi stablecoin plan continues to advance.
Abu Dhabi sovereign fund ADQ and First Abu Dhabi Bank are promoting the dirham stablecoin project, as the UAE continues to strengthen its layout in the Middle East's digital assets and payment settlement fields.

Singapore

May 10: MAS continues to strengthen stablecoin and payment license regulation.
The Monetary Authority of Singapore (MAS) continues to advance the stablecoin and payment service license framework, focusing on reserve assets, fund segregation, and consumer protection, as Singapore maintains an "open but high compliance threshold" regulatory path.