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

Altcoins

Crypto

Whimsical Harry Potter origins aside, learn what makes Mimblewimble special and a worthwhile investment.

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In the cryptocurrency industry, it’s difficult to ensure blockchain privacy and fungibility without compromising on bandwidth. Privacy-enhancing upgrades such as 

s and so-called “confidential” transactions tend to reduce bandwidth and increase costs. Mimblewimble, an alternative blockchain, promises to solve these problems. Since its inception in 2016, developers and researchers from various blockchain projects have participated in the development of Mimblewimble.

Named after a tongue-tying curse in the 

 series, Mimblewimble is a blockchain protocol that allows cryptocurrency transactions to remain anonymous. By keeping addresses and transactions confidential and minimizing block space, opaque (fully private) yet verifiable transactions can be created. Mimblewimble 

 confidential transactions (CTs) and one-way aggregate signatures (OWAS) to create a system with better privacy and greater scalability than protocols like Bitcoin. CTs let users hide transaction amounts so that only the sender and recipient know how much has been sent. 

Originally proposed as a sidechain or “soft fork” for Bitcoin, Mimblewimble currently serves as the base layer of new cryptocurrencies that have created blockchains, such as 

With Mimblewimble, it’s possible to sign and validate transactions without having to validate each historical transaction, or include the inputs of a transaction in the hash of a new one. This drastically reduces the overall size of its blockchain.

Mimblewimble could potentially transform the current blockchain transaction model. The Mimblewimble network enables a compact history to be downloaded, synchronized, and even checked. Cryptocurrencies that implement Mimblewimble use Bitcoin’s 

 (UTXO) model, in which almost no information is encrypted. Since UTXO is always assigned to an address, you can only process a transaction if you sign it with a private key from the originating wallet. 

Mimblewimble keeps all transactions confidential. Values are 

 with “blind factors” — elements created by combining the private and public keys of the transaction partners. If all output values minus all input values equals zero, a transaction is valid. Transactions from two blocks can be made into one block without losing their validity.

, full nodes subtract the encrypted amounts on the sender side of transactions from the encrypted amounts on the recipient side. Miners can thus confirm that transactions are legitimate. Meanwhile, validators ensure that rules are followed and the number of coins in circulation is correct.

MimbleWimbleCoin (MWC) is a cryptocurrency native to the Mimblewimble protocol. It’s a pure 

-based crypto on the Mimblewimble blockchain, which boasts greater network scalability, privacy and fungibility than legacy blockchain protocols. All transactions on the base layer use Gregory Maxwell’s 

MW is unique for its implementation of CTs. There are no addresses on Mimblewimble. Instead, blind factors are used to connect two parties in a transaction. These factors are shared between the two parties only, and no outsider has access to them. If necessary, they can be used as proof of ownership later on. 

Blind factors are used to encrypt the inputs/outputs of transactions and the private/public keys of transaction participants. The blocks only contain information about how many coins are in the remaining inputs or outputs chain. The signatures are also available to ensure validity. Individual transactions — such as “Person A sends 1 BTC to Person B” and “Person B sends 1 BTC to Person C” — can no longer be viewed after completion. 

To truly understand how Mimblewimble works, let’s take a look at Bitcoin’s UTXO model.

In a typical non-cryptological transaction, if Person A gives Person B $1, the process is straightforward: Person A: −$1, Person B: +$1. With Bitcoin and other legacy blockchains, however, the process works differently, as different inputs and outputs go from the sender to the receiver. 

If Person A wants to send 1 BTC to Person B, this BTC will not be deducted directly from the wallet (by Person B). Instead, the BTC network bundles several inputs from previous transactions and sends them to Person B. Therefore, a BTC transaction could look like this: Person A: – (0.25 + 0.40 + 0.15 + 0.20) BTC, Person B: + 1 BTC.

In the example above, the Bitcoin sent is composed of four different inputs. In reality, however, over 100 inputs can be used for a single transaction. The goal of the MW protocol is to eliminate all inputs and outputs and make the process more efficient, especially when large amounts of data are involved. Instead of the UTXO model, it relies on a multi-signature process. If Person A wants to send a BTC to Person B, both will need to create a multisig key to confirm the transaction.

 is meant to obfuscate any cryptocurrency transaction in order to make it private and render it untraceable. Since the Mimblewimble blockchain is highly scalable, it improves usability and privacy for crypto users. MWC is also used to reward miners for validating transactions and keeping the network safe. 

Mimblewimble is highly scalable due to the cut-through technology it employs. A single block consists of hundreds of transactions, along with plenty of information that needs to be stored on the blockchain. However, these blocks can be compressed with Mimblewimble’s cut-through feature, since much of the information can be removed from blocks without risking the security of the blockchain network. Mimblewimble’s advanced scalability is achieved by reducing the weight of the blockchain through the removal of unnecessary and unused elements. 

Here’s an example of how cut-through works. Say three people are involved in a transaction: Alice, Bob and Carol. Alice gives $10 to Bob, and then Bob immediately gives the $10 he’s received to Carol. Bob becomes an intermediary in this situation, and his part of the transaction won’t be visible on the blockchain.

One of the core functions of Mimblewimble is privacy. Mimblewimble also uses the principle of CoinJoin, which combines several transactions and prevents the tracking of transactions from the outside. The MW network can also be used as a sidechain solution that connects to Bitcoin. 

This technology allows MW to combine multiple transactions into a single large transaction. Mimblewimble has managed to attain a level of privacy that’s unprecedented in the blockchain industry. Sent in bulk with other transactions, the value of your transaction is a mystery to network and external observers. Also, since no addresses are used, no one can associate your name with any address and use it to track your transaction activity. 

Mimblewimble offers practically complete privacy without sacrificing scalability. The sender, the recipient and the value of the transaction remain confidential at all times. Typically, privacy-oriented blockchains like 

 have much smaller block sizes and charge higher fees compared to other blockchains. This is also the case with Mimblewimble.

In economics, the term fungibility means interchangeability of the units of any asset. Generally, all cryptocurrencies are considered fungible assets. However, most cryptocurrencies tend to be sold at a discounted price, while MWC is both fungible and untraceable.

One major disadvantage of Mimblewimble is its lack of a scripting language. This limits the functionality of any blockchain to the transfer of funds and monetary transactions. These limitations, in turn, make it extremely difficult to introduce second-layer protocols such as Lightning Network. However, some functions of scripts can be repeated on MW using multi-signatures and time-lock transactions. According to 

, a Bitcoin developer, the introduction of smart contract functionality is possible through a combination of 

Like today’s UTXO blockchains, Mimblewimble is vulnerable to quantum computing. The protocol relies on elliptic curve cryptography (

) to manage privacy and release new MWC. In theory, quantum computing could crack the ECC, thus undermining the entire protocol.

It’s important to note that developers will stop such attempts before they can cause harm. In addition, the consequences would affect most blockchain projects, so security measures will likely be developed in advance. According to experts like Andrew Poelstra, Mimblewimble could be upgraded by quantum computing-resistant primitives. However, further work is needed to develop quantum-stable proofs of the range.

One difference between Bitcoin and Mimblewimble is that the latter supports private transactions. With Bitcoin, all transactions are made public: users can check input and output values, and verify if a particular transaction is valid via BTC explorers. When using Mimblewimble, however, all values are encrypted homomorphically with blind factors.

A second difference between Mimblewimble and Bitcoin is the data size of their blockchains relative to the cut-through function. Unlike Bitcoin and other PoW blockchains, the Mimblewimble blockchain contains only essential information. Thus, it’s smaller than Bitcoin’s and requires fewer computing resources. 

Finally, Mimblewimble’s cores support updatable transaction summaries. Such a mechanism differs from that of Bitcoin, where nodes store and verify each signature of a transaction, starting with the genesis block.

As of this writing, MWC is trading at $4.02 with a 

 of around $43 million. There are about 157 million MWC in circulation against a maximum supply of 20 million.

MimbleWimbleCoin mining is available with two algorithms, 

. The latter previously worked on Grin and was recently switched to Cuckarood C29.

, which has 9,000 miners and supports both solo and pool mining. To begin mining, you’ll need to get an address on the trading platform or the wallet. In the miner settings, enter your login details from the 2Miners pool. Next, install the miner itself. For example, Gminer for 

 is for AMD. Then, specify the .bat file and the name of the farm, e.g., rig-777.

You can buy MWC on exchanges like WhiteBIT and BitForex. All you’ll need to do is create an account and verify it before purchasing Mimblewimble tokens. You can also download a 

 from Mimblewimble’s official website to safely store your tokens.

There’s no doubt that an increasing number of crypto users are prioritizing anonymity in their transactions. Mimblewimble can be used to prevent a blockchain from revealing user information. Transactions are cryptographically encrypted and therefore cannot be uniquely assigned. In addition, the inputs and outputs in the blockchain can be cut out and deleted.

Legacy blockchain developers are still looking for ways to use Mimblewimble’s innovations without sacrificing existing UTXO structures. Should they succeed, Mimblewimble’s potential will truly become limitless. 

Featuring blind factors and Pedersen schemes, Mimblewimble’s blockchain protocol is specifically designed to obfuscate transaction values. The cryptographic combination of these features ensures that only the sender and receiver in a transaction know the amounts involved. These transactions are significantly different from those made on UTXO blockchains like Bitcoin’s. All things considered, Mimblewimble currently presents one of the most innovative privacy solutions in the crypto space.

Mimblewimble Coin (MWC): Everything You Need to Know

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards