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.

Advanced

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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 launched the Bybit Merch Creative Challenge for university students worldwide, offering a $50,000 USDT prize pool.

The S&P 500 dropped 0.22% on Thursday, its fifth straight decline, with investors eyeing Friday’s economic updates. Coindesk Indices, an index measuring broader cryptocurrency market performance was up by 2.03%, with Bitcoin and Ether rising by 2.79% and 2.70%, respectively in the past 24 hours.

Today's top performer is XRP, which surged 1.9% following a rise in price driven by increased open interest and positive market sentiment.

Ripple (XRP), launched in August 2012, is a blockchain technology company focused on improving international payments with its cryptocurrency, XRP. XRP price surged due to increased open interest, a major XRP transfer, and market sentiment linked to Trump's inauguration. Bullish momentum is supported by high short liquidations, with key resistance levels to watch for further price movement.

Check Out the Latest Prices, Charts, and Data of 

 for university students worldwide, offering a $50,000 USDT prize pool. Participants can design exclusive Bybit merchandise, with submissions open until Jan. 15, 2025. Winners will be announced on Feb. 1, 2025, across four prize categories.

Yesterday, Bitcoin Spot ETFs recorded a total inflow of $84.8M, driven by $107.9M from non-GBTC funds, partially offset by a $23.1M outflow from GBTC.

, offering an airdrop for participants who complete tasks like swapping and bridging using the Mango wallet. Points earned through tasks determine airdrop rewards. Join via the Mango wallet and follow steps on the testnet dashboard.

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Bybit Launches $50,000 Merch Design Challenge for University Students Worldwide

Bybit Learn

Blockchain

zkEVM is a scaling solution that combines zero-knowledge technology with EVM compatibility. Learn more about how it works in this article.

 flexibility and versatility have made it one of the most popular 

 developers. However, all of this popularity has led to some issues with network congestion and high 

. A new class of scaling solutions hopes to solve this problem by offering the perfect blend of convenience, security and scalability. Called zkEVMs, this new mechanism has the potential to make it much easier to handle a large volume of Ethereum transactions. To see how zkEVMs work, explore this helpful guide.

 are a type of blockchain scaling solution. They use cryptographic 

 to verify data, bundle together several verifications and post them on the main chain. This makes it easy to confirm transactions without having to process a lot of extra data.

) is a computing environment that uses the Ethereum blockchain to process 

 makes it possible for developers to build decentralized applications (

EVM compatibility essentially means that a system will work with all of the standard protocols on Ethereum. If a project is EVM compatible, all of the Ethereum smart contracts that it writes and deploys can run on Ethereum without any issues.

EVM equivalence takes compatibility one step further. Instead of simply being able to work with Ethereum, EVM-equivalent systems function as if they’re part of the Ethereum ecosystem. EVM equivalence guarantees that even nonessential features, such as 

 modules, tools and smart contract libraries, will run smoothly.

zkEVM is a scaling solution that combines zero-knowledge technology with EVM compatibility. This ensures that people experience all the functionality and convenience of running projects on the EVM while still getting the fast transactions and low data usage of a ZK-rollup.

Ethereum-approved zkEVM options have been discussed almost since ZK-rollups were first created. However, it took a while for developers to design one that could fully handle all the use cases of the Ethereum virtual machine. The very first zkEVMs to be launched on the mainnet were released to the public in March 2023, with zkSync’s Era followed by Polygon’s zkEVM.

There are several different steps involved in creating a zkEVM that’s both EVM compatible and entirely scalable. To successfully create an EVM-compatible ZK-rollup, a system must complete the following process:

. Typically, a zkEVM project can be divided into one of the following four categories.

This sort of zkEVM is designed to be fully compatible with every aspect of Ethereum and with all Ethereum layers. Though a Type 1 zkEVM is conveniently able to function as is on existing infrastructure, it can take a little extra time to handle each zero-knowledge proof computation.

This zkEVM type tends to look like Ethereum from the outside, but inner design details (such as block structure) may differ a little. The minor modifications in a Type 2 zkEVM help to speed up proof generation, but there can be slight incompatibilities when dealing with more detailed use cases.

A Type 3 zkEVM is compatible with most applications. However, certain structures, such as pre-compiles, may not function with existing EVM infrastructure. 

Despite requiring occasional rewriting, this zkEVM has the advantages of being easy to build, and fast to generate validity proofs.

This sort of zkEVM writes smart contract code in a high-level language that can then be compiled into an EVM-compatible language. It's definitely the fastest way of verifying transaction validity, but it has higher levels of incompatibility.

The main reason that so many people are excited about zkEVM projects is because of their potential to solve the 

, the standard challenge with any blockchain that makes it nearly impossible for it to be simultaneously decentralized, scalable and secure.

The Ethereum network is naturally decentralized and secure, which is why it's so popular with web3 developers. However, it had to sacrifice a lot of inherent scalability in order to maintain its reliability. This has led to some problems such as sky-high gas fees when certain internet trends require the network to handle a lot of smart contracts at once.

This is where zero-knowledge rollups come in. These scaling solutions are an easy and fast way to handle transactions on Ethereum. Since they only require transaction verifications to be placed on the mainnet, users don't have to send all of the transaction metadata and other details. Furthermore, the rollup design lets users process all of these verifications at once, so even vast amounts of data can be handled quickly and affordably.

In addition to adding scaling, the zkEVM is also the ideal solution because it interfaces seamlessly with the Ethereum environment. Developers who use a zkEVM don't have to worry about bugs due to misunderstandings between their system and the EVM. They can use the broad suite of development tools available on Ethereum, so creating scalable DApps and other projects is straightforward.

Several different groups have rolled out their own versions of a zkEVM. Following is a brief comparison of a few of the best zkEVM designs.

This open-source zkEVM system is a Type 3 network, and is one of the first zkEVMs to be launched. Additionally, it has the approval of Ethereum creator Vitalik Buterin. Since it relies on Polygon's extremely large 

 set, Polygon zkEVM is very secure. Compared to other zkEVM designs, Polygon’s does an excellent job of performing at high speeds, but it's not always fully EVM compatible.

zkSync’s zkEVM, Era, uses a custom virtual machine to speed up the generation of validity proofs while still supporting many Ethereum protocols. The Era zkEVM is a Type 4 system that turns 

 and Yul code into EVM-compatible code. zkSync tends to have more compatibility issues than other zkEVM projects, but it beats the rest at providing fast, affordable transactions.

Scroll’s developer-focused zkEVM is currently offering an alpha testnet to the public. At this time a Type 3 zkEVM, its levels of speed and compatibility are somewhat similar to Polygon’s zkEVM. However, Scroll has short-term plans to move to a Type 2 zkEVM and long-term plans to become a Type 1 zkEVM. If it can manage these goals, it may become one of the most compatible options on the market.

zkEVMs can provide users with many different benefits:

However, keep in mind that a zkEVM does come with some potential downsides:

Since the first few zkEVM designs were released, there’s been a lot of interest in the concept. Many people are excited because they believe zkEVMs will make it much more affordable to build Ethereum DApps. The ability to combine speed, convenience and affordability has the potential to make the Ethereum mainnet even more popular. If zkEVMs work as well as their creators claim, it could lead to an explosion of new web3 and 

 projects built on existing Ethereum infrastructure.

However, it's worth noting that it took a long time to add ZK-rollups to the EVM precisely because the base design of Ethereum doesn't work well with the idea of a ZK-rollup. People may encounter some bugs when working with Ethereum smart contracts, which could potentially drive people away from zkEVM projects. Ultimately, whether or not this scaling solution takes off will depend upon how effective the first few systems are.

By harnessing the power of zero-knowledge technology, zkEVMs make it possible to scale Ethereum more efficiently. They cut down on the amount of transaction data stored on the Ethereum mainnet, so projects are faster and more affordable. Furthermore, their compatibility with EVM allows developers to build designs that seamlessly interact with the Ethereum environment. This combination of compatibility and scalability could potentially lead to a variety of exciting projects.

zkEVM: The Next Evolution in Ethereum's Scalability Journey

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards