Jan 6, 2025: Our weekly Institutional Insights explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

Weekly Highlight — Markets Snap Five-Day Loss Streak 

Investors are now seizing the opportunity to buy the dip in U.S. stocks after a five-day decline that erased over $1 trillion in market value. Wall Street has broken its longest losing streak since April, with the Nasdaq-100 rebounding 1.7% and the S&P 500 rising 1.3% on Friday, January 3. These gains slightly offset the week's sell-off, which had continued into the new year following a tough December.

Despite concerns about slowing earnings growth among tech giants like the Magnificent Seven, traders remain optimistic, especially regarding AI leader NVIDIA Corporation. The market believes that, as long as retail investors keep investing in AI, the associated stock market boom is expected to persist. 

Stocks reached their session highs in the afternoon after Mike Johnson was reelected as speaker of the U.S. House of Representatives, indicating potential support for a business-friendly agenda. Meanwhile, bond yields rose, with the 10-year hitting 4.6% following comments from Richmond Fed President Tom Barkin about maintaining restrictive rates. U.S. manufacturing showed modest growth, with new orders at their highest since early last year, while investors assessed economic strength against the possibility of slower interest-rate cuts.

Weekly Crypto Highlight — AI Agent Spring Coming

Many investors are eagerly anticipating an Alt Season, a period when altcoins typically surge in value. However, current market dynamics suggest we may not see a widespread altcoin rally. The sheer number of tokens, combined with limited liquidity, has led to what's known as altcoin dispersion, making it crucial to select the right sectors and tokens.

, which are thriving even as the broader market declines. This nascent sector is experiencing rapid advancements, and its associated tokens face less pressure from venture capital unlocks. Many of its top protocols lack centralized exchange listings, indicating more buyers may enter the market.

Those investors who missed previous opportunities, such as the DeFi summer of 2020 and the Alt Layer 1 trade, now have another chance. Instead of targeting individual AI agents, the best risk/reward strategy lies in investing in infrastructure plays, which serve as the foundational tools for the sector.

The leading AI agent player is Virtuals Protocol, a platform for launching tokenized AI agents on the Base network. By purchasing tokens like Luna by Virtuals (LUNA) and VaderAI (VADER), users gain governance rights over specific agents, which allows them to both influence development and share in profits. 

Recently, daily protocol fee revenues dropped significantly in mid-December 2024 as activity slowed for the holidays. However, speculation around agent-associated tokens surged as the new year approached. Currently, Virtuals Protocol generates over $1 million in daily fees, though this is 50% less than figures for early December. Despite these challenges, the VIRTUAL token has more than doubled in value, reaching a market capitalization of $4.6 billion.

Other highlighted opportunities include Zerebro, which is pivoting to a full-stack framework for AI agents; ARC, with its Rust-based framework; and 

 (GRIFFAIN), a natural language on-chain search tool. These projects are well-positioned for future growth in the evolving landscape of AI technology.

 as we delve into leading AI agent tokens and the past week’s market movements. 

Advanced

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Weekly Institutional Insights: Market Snaps Five-Day Loss Streak; AI Agent Spring Coming

Our weekly crypto derivatives analytics report delves into macro events, the current state of crypto and trading signals from spot trading volume, and futures, options and perpetual contracts.

December's end-of-year options expiration brought an unexpected drop as realized volatility fell to the lowest levels of the month. Perpetual swap open interest remained stable, indicating these markets weren't heavily used for hedging against expired options, likely contributing to the muted volatility. 

While most expired open interest in Bitcoin (BTC) and Ethereum (ETH) hasn't been reinvested, the balance of calls and puts remains consistent. Notably, ETH options are pricing in higher implied volatility as compared to BTC, particularly for shorter expirations, leading to a flat term structure for ETH, while BTC is offering cheaper options exposure.

In the perpetual markets, low volatility and minimal spot movements have led funding rates for nearly all tokens to mirror broader market sentiment throughout the holiday season. On the options side, BTC's term structure is noticeably lower and steeper than ETH's, with realized volatility now dipping below implied volatility levels, highlighting an intriguing shift in market dynamics.

Please check out the report’s highlights.

Open Interest Solid Amid Year-End Options Expiration

Although open interest for both BTC and ETH perpetual swaps hasn’t returned to early December 2024 highs, it remained robust throughout the significant end-of-year options expiration event. This suggests that these markets weren’t heavily utilized to 

 of the expiring options contracts, likely contributing to the lack of volatility observed during this period. Instead, trading volumes have dipped noticeably during the winter holiday season, coinciding with a collapse in realized volatility back to December 2024’s lowest levels.

BTC Option Curve Remains Steep During Call-Put Parity

The expiration of December's end-of-year options didn’t trigger the anticipated surge in volatility; instead, realized volatility has plummeted to the lower end of its recent range. The implied volatility term structure remains steep compared to both its recent behavior and ETH's, with longer-dated implied volatility around 57%, and 1-week at-the-money options trading about five points lower. Much of the expired open interest hasn’t yet been rolled into new positions, maintaining a neutral balance between puts and calls. Consequently, BTC's options market positioning is relatively neutral, lacking the leverage it had at the start of December 2024.

Huge ETH Option Expiring Doesn’t Cause Volatility

A late December spike in realized volatility didn’t carry into the new year, with ETH’s spot price currently exhibiting volatility below that of short-tenor implied volatility. Interestingly, the implied volatility term structure has undergone a steepening and re-flattening over the past week, contrasting with BTC’s slightly steeper profile. This suggests that ETH’s options market is anticipating higher short-term volatility in spot price movements. 

Despite the significant expiration of options open interest at the end of December 2024, which didn’t lead to a rollover into later expirations, call options continue to dominate the market and have increased at the start of 2025.

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Bybit X Block Scholes Crypto Derivatives Analytics Report (Jan 2, 2025): BTC Options Continue to See Call-Put Parity, With Lower Short-Term Volatility Expected

Dive into FLock, a decentralized platform that revolutionizes the way AI models are developed, trained and deployed.

Artificial intelligence (AI) is poised to transform countless industries, but its development often raises questions about privacy, control and inclusivity. 

 is a unique decentralized platform that democratizes AI training, fine-tuning and inferencing. With its blockchain-powered infrastructure, FLock ensures transparency, security and community-driven decision-making, paving the way for AI models that align with established societal values. 

In this article, we’ll explore how FLock decentralizes AI training, its key features and its potential impact on developers, communities and users.

 platform that revolutionizes the way AI models are developed, trained and deployed. By leveraging blockchain technology and a novel approach called 

, FLock addresses critical issues in AI development, such as centralized control, lack of transparency and privacy concerns.

At its core, FLock’s mission is to democratize AI by enabling communities to participate directly in the creation and refinement of AI models. Through federated learning, FLock trains AI models across multiple decentralized devices or servers. This method ensures that data remains local, eliminating the need for raw data exchange while still enabling robust model training. By decentralizing the training process, FLock not only protects individual privacy, but also fosters a more inclusive ecosystem in which diverse contributors can collaborate.

What sets FLock apart is its integration of 

. This ensures that all contributions — whether data, compute power or feedback — are transparently recorded and fairly rewarded. Blockchain tech’s immutable ledger enhances trust among participants and safeguards the process against manipulation. Additionally, the platform’s on-chain incentive mechanisms encourage participation from a wide range of contributors, ensuring that rewards are distributed equitably.

Ultimately, FLock empowers communities to develop bespoke AI models tailored to their specific needs. By decentralizing the process and prioritizing transparency and collaboration, FLock breaks the monopoly of large corporations, creating an AI ecosystem that aligns with public ethics and societal values.

, an Oxford alumnus with a robust background in AI and blockchain technology. Sun, who serves as FLock's CEO, has an impressive career trajectory, having worked as the Director of AI for the Royal Bank of Canada and as an AI Research Fellow at Imperial College London. His vision for FLock stems from a deep understanding of both the technical and ethical challenges of AI development.

The founding team also includes other Oxford alumni, boasting over a decade of combined experience in AI research and the cryptocurrency industry. This team brings a collective blend of academic excellence and practical expertise that positions FLock to lead the decentralized AI movement.

FLock has successfully raised $11 million in funding across two rounds, reflecting strong investor confidence in its vision. In May 2024, FLock secured a $6 million seed round co-led by Lightspeed Faction and Tagus Capital, with additional backing from Digital Currency Group (DCG), Volt Capital, OKX Ventures and Inception Capital.

Later, in December 2024, FLock announced a $3 million successful funding round led by DCG and joined by prominent names like Animoca Brands, Fenbushi Capital, GnosisVC and GSR. These investments are being channelled into enhancing the platform’s testnet and federated learning client, accelerating FLock’s mission of enabling secure, collaborative AI development.

With this funding and over 1,500 nodes contributing from platforms like Numerai and Kaggle, FLock is rapidly scaling its impact on decentralized AI training.

FLock AI revolutionizes AI development through its decentralized training framework. This approach allows participants to contribute to AI model training without ever sharing their personal data. Instead, models are trained locally across devices using federated learning, which ensures that data remains with its owners while still enhancing the accuracy of the model overall. 

FLock’s reward system is designed to incentivize active participation. Contributors who provide data, computational power and/or feedback are compensated with FLOCK tokens, ensuring a fair distribution of rewards. 

FLock empowers its community through a robust governance framework. Decisions regarding AI model development, deployment and ethical considerations are driven by the community, ensuring alignment with established societal values. Through blockchain-based voting mechanisms, contributors can influence the direction of AI projects, fostering transparency and public accountability. 

FLock’s modular architecture allows contributors to participate in specific aspects of AI model development. Whether providing raw data or computational power or even refining algorithms, the platform enables a collaborative and scalable development process. 

At the core of FLock’s philosophy is its commitment to privacy and security. By leveraging blockchain technology, the platform ensures that no single entity controls the AI development process. Data remains local and protected by cryptographic measures, while the immutability of blockchain guarantees transparency in every transaction and model update. 

 begins with a blockchain and an AI layer.

The blockchain layer underpins FLock’s incentivization and security mechanisms.

The AI layer facilitates model training, refinement and deployment, leveraging both centralized and federated approaches.

Let’s have a look at the supply and demand for the FLOCK token.

FLock adopts a 1:2 ratio model between team/investors (33.3%) and community (66.7%), prioritizing community-driven growth and ecosystem expansion. The majority of tokens are allocated to incentivize user participation and long-term ecosystem success.

FLock aims to improve the future of AI development by decentralizing the training process and ensuring transparency, privacy and inclusivity. By leveraging blockchain and federated learning, FLock empowers communities to contribute to AI creation without compromising on privacy. Its innovative reward system and community-driven governance foster a fair and collaborative ecosystem. 

With significant backing and a growing network of contributors, FLock is positioning itself as a leader in decentralized AI, offering a more ethical and secure alternative to traditional AI development models. As it continues to scale, FLock is set to transform the way AI models are built and deployed.

 — and earn a share of a 10 million FLOCK prize pool. For more details, visit 

Intermediate

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FLock AI: Decentralized AI Training

In this tutorial, we’ll explore how you can complete a series of tasks in Network3 for Bybit Web3 Airdrop Arcade.

Task 1: Register for a Network3 Account and Connect Your Bybit Wallet 

: Navigate to the campaign page and click on the 

task. Click on the task, and Galxe will ask to redirect you to the Network3 register page.

: Register for a Network3 account using your email address. You may indicate a 

Task 2: Download the Network3 App and Run a Node for One Hour

 and choose your operating system to download the Network3 app.

 or powerbutton, depending upon which operating system you’re using. For ease of reference, we’ve used macOS and iOS as examples below.

: Keep running the node until the timer reaches 

Beginner

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How to Complete Network3 Tasks for Bybit Web3 Airdrop Arcade

Bybit Learn

Altcoins

Crypto

Algorithm money market technology ensures optimized interest rates based on the principles of supply and demand. How Venus Protocol does it? Learn more.

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 (DeFi) is revolutionizing the way that people conduct business. The Venus Protocol aims to make it even easier for people to borrow or lend money in a fast, convenient and transparent way. Using the 

, the Venus lending protocol is one of the fastest and least expensive ways to leverage your digital currency holdings.

 is a decentralized platform that allows individuals to leverage their current crypto holdings according to their preferences or needs. For example, users can pledge their existing holdings as collateral to borrow against a pool of currencies supported on the BNB Chain.

This is referred to as an overcollateralized loan, with borrowing limits based on whatever limits apply to the currency against which you want to borrow. For instance, if the collateral value of a given coin is 50%, you can take a loan worth up to half of the amount that you’ve pledged.

One of the key benefits of the Venus platform is that it doesn't require any permissions. Thus, anyone with a digital currency wallet will likely be able to connect to this specific blockchain and participate as a borrower or lender.

By minting an XVS stablecoin, you can use it to vote on the future of this protocol. The coin itself is a 

 token that gives you an opportunity to vote on a number of issues, such as whether governance tokens should be locked or what the interest rate on existing loans should be.

In effect, you can think of yourself as a shareholder or member of the protocol's board of directors. Each coin that you own has a value of roughly $3.53. However, its exact value can rise or fall based on a variety of market forces.

Understanding the Algorithmic Money Market

You’re likely already familiar with the concept of a money market, which is simply an account vehicle for traders to buy and sell short-term debts. In many cases, these debts mature in a matter of hours or days. However, it may also be possible to purchase securities that don't mature for several weeks or months.

The idea behind money markets is to provide liquidity for banks, hedge funds and large companies. For example, a bank may need money for a few hours to stay afloat from the time it closes until it receives new deposits in the morning. Although not technically a part of a money market, the government does something similar when it issues treasury notes that expire anywhere from several days to several weeks after issuance.

An algorithmic money market uses smart contracts to determine interest rates and other terms that apply when money is moved from a borrower to a lender. Unlike a traditional market, however, an algorithmic money market is controlled by lines of code, as opposed to the authority of a bank or other type of financial institution.

The algorithm determines the prevailing interest rate based on simple supply and demand. The higher the demand for a given coin or token, the higher the interest rate will be to borrow it. As demand falls, the interest rate for a given instrument falls. This is similar to how traditional money markets work, except that interest rates are often determined by multiple factors that may be outside of a borrower's control. For example, rates may be slashed in an effort to stimulate borrowing, and possibly prevent or delay a recession. This may occur even if there’s already sufficient demand in the market.

A money market algorithm helps ensure that there’s sufficient liquidity at all times, which can maximize efficiency and keep costs down as borrowers have multiple loan options. Meanwhile, lenders still have access to their funds, which means they can withdraw them if needed.

The Venus Protocol is built on the BNB Chain, formerly known as Binance Smart Chain (BSC). Using the overcollateralized loan model, you typically have to pledge 150% of any amount you want to borrow. For instance, if you want to borrow $1,000, you’ll first need to pledge $1,500.

However, since the money that you’re putting into the market provides it with liquidity, you may be entitled to stakeholder rewards even if you’re a borrower. If you hold the XVS stablecoin, you may be entitled to lower interest rates and fees on any loans that you take out.

To use this protocol, you’ll need to connect your digital wallet to the chain and make a collateral pledge. Although this platform is available to most people, there are restrictions on members from certain countries, and it's also possible that federal law in your country of origin may limit or forbid your use of DeFi platforms.

Venus is so much faster and easier to use than many other DeFi platforms because it uses the BNB Chain. A typical block on many blockchains can take more than 10 seconds to create. However, a block can form in as little as three seconds on the BNB Chain. This reduced lag time means that transactions can be processed and verified more efficiently and cost-effectively.

Another benefit to using BNB Chain is that it can 

. Therefore, developers can create products that work across various markets, which may help to increase the number of people who can use Venus effectively. This also means you can move funds between various platforms on the blockchain without having to liquidate your Venus account.

Finally, the BNB Chain has a large community of users and developers to reach out to if you have any issues. Therefore, you won't have to wait hours to resolve a problem related to a 

, or other technical problems you may run into. Furthermore, the ability to interact with an enthusiastic and knowledgeable community may make it easier to create and implement ideas to make Venus better.

There are a number of lending options available to those who wish to make use of Venus. For instance, you could simply choose to put your money into the equivalent of a crypto savings account where it can earn interest instead of sitting idly in your crypto wallet.

You also have the option to invest some or all of your holdings into various investment pools that have varying interest rates and other perks. If you wish, you can simply put all of your holdings into the pool that offers the highest rate of return. Alternatively, you could allocate your holdings among various pools to create a diversified portfolio.

If you’re looking to borrow, you can search various pools to find lenders who offer the currency that you’re looking for. Venus offers a multitude of currencies to choose from in an effort to help you obtain the coin that you want to leverage, using your underlying collateral.

This may provide you with an opportunity to engage in a digital currency version of a carry trade, which involves exchanging one type of currency for another that offers a higher interest rate. The difference between the interest on your existing loan and the interest collected on the second currency is your overall profit.

One of the benefits to using Venus is that there’s no credit check, which means you can receive funds in less time. Furthermore, you’ll have a wider array of options to fit your needs and repayment schedule. In most cases, there’s no need to make monthly payments, but as with any type of loan, it's generally best to repay what you owe as quickly as possible.

The Role of $XVS Governance Token in the Ecosystem

One of the more intriguing features about Venus Protocol is that no coins were minted specifically for early founders or investors. Therefore, this platform is truly governed by the people who use it. When you acquire an XVS token, you obtain the right to participate in the ecosystem's governance.

Technically, any decisions made by the community are referred to as Venus Improvement Proposals (

). In most cases, votes are taken whenever a proposal is submitted by a user, and a proposal is only submitted if you have at least 300,000 tokens. After meeting that threshold, voting is held for 72 hours. In order for a proposal to pass, it must receive 600,000 tokens worth of votes.

You get one vote for every XVS token that you have, with the right to either vote yourself or to delegate your voting rights to someone else. Assuming that a proposal is successful, it will go into effect two days after a quorum is reached.

Venus Protocol aims to make it easier for people to get the most from their digital currency holdings. It also strives to make it easy for people to interact with other platforms without having to take money out of the Venus ecosystem. Although the platform is smaller than others currently in existence, it has a strong commitment to security and governance that make it an attractive option for borrowers and lenders alike.

Venus Protocol: An Introduction to Algorithm Money Market Technology

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards