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

DeFi

Explainers

Altcoins

Thetanuts Finance (NUTS) is a multichain protocol that provides decentralized options trading and yield generation opportunities.

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 (DeFi) industry features a wide variety of trading protocols. While the most popular and well-recognized DeFi platforms focus primarily on token swaps or basic lending and borrowing operations, a sizeable segment of the industry serves the needs of more sophisticated traders.

Thetanuts Finance is a DeFi solution for 

. Having begun in 2021 as a protocol focused on selling European 

 (OTM) options to accredited market markers, Thetanuts Finance radically expanded its offerings in early 2024 to cover both the sell side and buy side of the altcoin options market.

Besides options market trading opportunities, Thetanuts Finance offers additional yields through options premiums, 

 (AMM)-based liquidity provision, lending and borrowing and more.

 is a multichain options protocol that supports both trading in altcoin options and a variety of yield generation opportunities linked to these crypto finance products. 

 blockchains, including the majority of the leading 

The platform started out in September 2021, concentrating on selling European OTM options to accredited market makers. Protocol users earned yields from premiums on these options — i.e., when an accredited market maker bought options from Thetanuts Finance, the premium charged was distributed to owners of on-platform vaults.

The options vault market was a booming niche back in 2021 and 2022, with both institutional and retail investors joining the game and significantly boosting trading volumes and 

 (TVL) figures. However, as the niche matured and became more competitive, focusing only on specific sell-side options opportunities was no longer enough for the protocol to grow further. Therefore, the project team decided to pursue a more diversified approach by introducing a wider variety of trading options and yield opportunities. 

From late 2023 through early 2024, Thetanuts Finance implemented several protocol upgrades on the way to the launch of its version 3 mainnet. In April 2024, Thetanuts Finance introduced its third and final alpha version of v3. On May 20, 2024, the protocol launched its native token, NUTS, and as of late May 2024, the platform's v3 mainnet launch is imminent. 

Thetanuts v3 is a comprehensive options protocol that offers buy and sell options, as well as additional yield sources via its Lending Market, AMM liquidity provision, options premium vaults and leveraged 

 (LRT) vaults. Traders and liquidity providers will also have additional yield opportunities via NUTS token 

One helpful feature for beginning options traders provided by the platform is its Lite Mode interface. Using the Lite Mode, a trader can express their bullish view toward an altcoin option by selecting a long call on it. Alternatively, if bearish, the trader can choose a long put option. Lite Mode is an excellent way to simplify trading options without going too deeply into the details of all the available variations and alternatives.

Basic Vaults generate yields for users in the form of options premiums. Every Friday, Thetanuts Finance offers European OTM options to off-chain accredited market makers. The premiums that are generated from the options sold at these auctions are distributed among the owners of Basic Vaults.

When you open a Basic Vault, you’re issued a liquidity asset — the Basic Vault LP token — that serves as a confirmation of your vault ownership, and can be used to generate additional 

 within the Thetanuts ecosystem. Key additional yield opportunities include the following:

The Lending Market allows users to put their funds to further use by lending their Basic Vault LP tokens for additional yield. Borrowers access the funds provided by the lenders, and can utilize them in two main ways:

Thetanuts' Lending Market supports two types of assets — liquidity tokens originating on the platform, such as Basic Vault LP Tokens, and the 

 (UNI) liquidity pools, based on Basic Vault LP tokens and USDC, in order to enable traders to open long and short positions for 

 options. The use of the AMM aligns with Thetanuts' v3 strategy of moving options trading activity to decentralized, on-chain sources.

In addition to supporting options traders, the AMM can be used by liquidity providers as a key source of yield. These providers receive a share of the trading fees proportional to the amount of liquidity they contribute. To add liquidity for call options, users need to deposit funds in Basic Vault LP tokens. For put options, they need to supply liquidity in USDC. The process of adding liquidity for call and put options can easily be managed via the platform’s dedicated Add Liquidity interface.

Another area that Thetanuts has ventured into with the introduction of its third version is that of 

 protocol, liquid restaking offers an alternative to the popular liquid staking method that emerged after Ethereum's shift to 

 (PoS). While liquid staking allows users to stake ETH to help secure the network, liquid restaking goes a step further: EigenLayer enables ETH stakers to utilize their staked ETH to earn additional yield, essentially upgrading the benefits of liquid staking.

Thetanuts Finance has partnered with another yield protocol, 

 (PENDLE), in order to provide leveraged LRT restaking opportunities. Pendle allows its users to speculate on future yields by tokenizing and splitting LRTs into two separate synthetic assets: PT-eETH and YT-eETH. On Thetanuts' Lending Market, users can lock their PT-eETH for eETH yields, as well as for additional yields from premiums and NUTS token rewards.

What Is the Thetanuts Finance Token (NUTS)?

The platform's native cryptocurrency, NUTS, is an Ethereum-based 

 token. Most of the token's utilities are derived by staking it to receive veNUTS, an asset that provides direct 

. veNUTS holders can participate in governance voting and decision-making regarding platform changes and future direction.

Besides its staking and (indirect) governance functions, NUTS — again, via veNUTS — also serves as a value accrual asset. Liquidity incentives on the protocol are distributed in veNUTS, which can also be used to boost the rate of rewards and incentives earned on the protocol.

Total and maximum supply of the NUTS token are specified at 10 billion. The graphic below illustrates distribution of the total supply.

Following the token's launch in May 2024, Thetanuts Finance announced a month-long airdrop of NUTS to distribute the 3% of the supply allocated for this purpose. To be precise, the airdrop involves the distribution of veNUTS tokens. After a 90-day vesting period, these can be swapped for NUTS tokens at a ratio of 1:1.

Where to Buy the Thetanuts Finance Token (NUTS)

The NUTS token is available on Bybit through the Spot market as a swap pair with USDT (

). Additionally, you can take advantage of Bybit's campaigns dedicated to the token for a chance to grab a share of the 

. The campaign runs from May 20 – Jun 3, 2024, and is split into two events: a Token Splash for new users to deposit and earn from a 2,500,000 NUTS Prize Pool, and a Trade to Earn 500,000 NUTS Prize Pool event where you can simply trade a minimum of 500 USDT worth of NUTS to qualify for participation.

Thetanuts Finance is quite a distinct player in the market. The platform offers options trading opportunities and structured products for additional yield that can satisfy the tastes of the most sophisticated traders and liquidity providers. For a DeFi user who understands the options trading game, Thetanuts Finance provides plenty of options, no pun intended. Additionally, the platform's Lite Mode represents an innovative way for less advanced altcoin options traders to get a taste of this specialized market. As such, whether you’re a seasoned options trader or a relative beginner, Thetanuts Finance's product line deserves at least an initial look from you — and perhaps even more. 

Thetanuts Finance (NUTS): The DeFi Solution for On-Chain Altcoin Options

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards