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

ERC-6551 is an Ethereum standard that creates token bound accounts. This new protocol is a smart contract that makes a unique wallet for each NFT.

Since their creation back in 2014, non-fungible tokens (

) have remained largely the same. The majority of NFTs still run on the ERC-721 standard. While this older method can be useful in certain situations, many innovators are looking for newer and more effective ways of managing NFTs. The ERC-6551 standard proposes a new way of handling NFTs through token bound accounts (TBAs). What is ERC-6551, and how does it work? Keep reading to learn about this exciting new project, and how it can change the way people use NFTs.

ERC-6551 is an Ethereum standard that creates token bound accounts. This new protocol is a smart contract that makes a unique wallet for each NFT. The wallet is linked to the NFT, and can store digital assets related to that NFT.

A token bound account is essentially a type of NFT wallet. With the

, a new or existing NFT can get a smart contract account that’s linked to it. The account can hold all sorts of digital assets, such as cryptocurrency and proof of attendance protocols (

). Token bound account contracts also include records of all transactions associated with the individual NFTs.

Whenever the NFT is sold or transferred, the token bound account moves with the NFT. The new owner of the NFT receives access to all blockchain-based digital assets inside the NFT wallet, and can review the transaction history for the NFT.

The ERC-6551 standard was created as a response to modern NFT culture. Its creators noticed that NFTs were increasingly placed in scenarios where they needed to hold assets. For example, an NFT character in a game might need to hold tokens they earned in the game, or an NFT membership card might need to hold a record of which events the member has attended. However, the original ERC-721 standard only creates single tokens that can’t associate with other blockchain assets or act as standalone agents.

ERC-6551 was designed to allow NFTs to function as individual agents, with their own transaction records and assets. The creation of token bound accounts gives users a convenient way to transfer all items related to the NFT at one time. ERC-6551's creators hope that their protocol makes it more convenient to handle modern NFTs.

Token bound accounts might sound fairly straightforward, but behind the scenes, there’s a lot going on. In order to create a wallet account that’s bound to a non-fungible token, the ERC-6551 protocol needs to follow 

The main reason people are so excited about these smart contract accounts is that they make it a lot easier to use NFTs. With a token bound account, NFTs become more than just a simple digital image you can transfer back and forth. ERC-6551 has a lot of useful applications for decentralized finance (

NFT composability essentially means bundling multiple on-chain assets into a single NFT. Users can purchase an NFT that includes unique tokens associated with the NFT project. Due to the way ERC-6551 is designed, composable NFTs are also very adjustable. Users can choose to keep all assets associated with the NFT or sell some of the assets and keep others. They can even add additional assets to it. Composable NFTs are highly popular for things like experimental art projects and NFTs designed as investments.

One of the main reasons NFTs are so popular lately is that they can function as a sort of digital identity. However, a standard NFT can’t function as an independent agent on a blockchain. For instance, if a user wishes to send money to another entity, they need to enact a separate smart contract with the owner of the NFT. ERC-6551 simplifies things quite a bit. The NFT itself can make smart contracts with accounts, or hold ownership of digital assets. This allows the NFT to function like an actual person, so people can use or transfer NFT identities without getting their actual identity involved in the transaction.

When it comes to gaming, the uses for an ERC-6551 smart contract wallet are almost endless. Many games focus on minting NFTs with special attributes, such as 

 other animals. Trading these sorts of NFTs gets a lot easier with an ERC-6551 token bound account. 

Having a wallet attached to the NFT lets gamers bundle multiple game-related assets for sale, so you can purchase both the fantasy animal and the crypto tokens that let you "feed" the animal. Since a token bound account can hold POAPs, it can also let you show that an NFT has taken part in special game activities or participated in other events that may provide the NFT with extra features or game-related assets.

In addition to letting you hold on-chain assets, smart contract wallets are also valuable because they hold a record of past transactions. New owners can see when an object originated, who owned it before and how many times it's been sold. This is useful for NFTs sold as collectibles. Owners can use the smart contract account to verify the provenance of a piece. They can make sure the item is exactly what it claims to be, so they can prove its history and its worth.

. This means that the NFT can independently interact with other items on the chain. It can directly own things like tokens, which can then be used to adjust the NFT itself. For example, a creator could make an NFT that changes color as more tokens are added to its wallet. Since NFT dependency increases the NFT’s interactivity, a buyer could feel like they're more involved in the artwork.

ERC-6551 and ERC-721 are both Ethereum standards. This means that they’re a set of rules built on a 

 governing how users can interact with the Ethereum blockchain. Both protocols create a standard for how NFTs based on Ethereum work.

The main difference between these protocols is simply in the way they run and what they accomplish. ERC-721 is a protocol for creating an NFT. It defines an NFT as a unique token with attached media, such as a visual or set of text. Meanwhile, ERC-6551 builds on the base of ERC-721. It takes the classic ERC-721 token and adds an account that can hold other assets.

. However, users can choose to upgrade the base token to an ERC-6551 account that provides the NFT with its own wallet, which can interact with other blockchain assets.

ERC-6551 certainly provides new opportunities for people working with NFTs. However, it's not without its downsides. There are a few potential concerns to be aware of.

 and can be used with any existing ERC-721 token. However, this doesn't necessarily mean that any previous NFT project can immediately adopt the new standard. Many NFT projects use a combination of blockchain technology and other types of technology. This additional tech might not be designed to work with ERC-6551. For example, some of the popular NFT markets aren’t coded in a way that will let people easily sell ERC-6551.

ERC-6551 can make NFTs both more valuable and complex, which makes them a target for scammers. Malicious actors can use people's lack of awareness about ERC-6551 to take advantage of others. Since NFTs can now hold a lot of crypto and other valuable on-chain assets, those who get taken in by scams can lose a lot more than just a single NFT.

Potential for Assets to Be Locked in Ownership Cycles

ERC-6551 comes with some potential problems related to recursivity. What happens if an owner transfers an ERC-721 NFT into its own token bound account? Currently, both the NFT and all assets in the account end up locked in an ownership cycle. This makes them completely inaccessible because only the owner of the account can transfer the account— but now the owner of the account is an NFT. Currently, the only way to avoid this is to be very careful with how one sets up or uses a token bound account.

ERC-6551 is likely to make big waves in the NFT community. It creates a simple, on-chain way to perform many of the tasks into which DApp developers previously had to put a lot of effort. This protocol has the potential to make gaming, 

 and collectible markets a lot easier to design and run. In the future, this might lead to a lot more NFT projects taking off.

However, keep in mind that changes aren't likely to occur overnight. Adopting any new ETH standard takes a while, and there are a lot of little details that go into implementing ERC-6551. Plenty of people and projects will start using ERC-6551 eventually, but the full effects of the new protocol might not be evident at first.

ERC-6551 solves many problems people had with the original ERC-721 NFTs. Adding a wallet to an NFT allows it to hold the assets needed to make the NFT a digital identity, game component or collectible. Though it might take some time for this new Ethereum protocol to be adopted, it's likely to become an essential part of the NFT landscape.

ERC-6551 NFT Standard: Exploring Token Bound Accounts

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