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

Bybit Institutional_Weekly Poster.png

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.

block-scholes-x-bybit-report.jpeg

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

flock.png

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

network3 tutorial.png

How to Complete Network3 Tasks for Bybit Web3 Airdrop Arcade

Bybit Learn

GameFi

DEFY is the latest move-to-earn game that utilizes augmented reality to bridge the virtual and physical worlds. Find out more about it in this article.

DEFY_Tokenomics.png

 has been increasing in popularity ever since it was first introduced to the public. It combines two things that people love — gaming and earning. Many companies have jumped on the bandwagon to launch their own 

 games that reward players for playing, and 

 games that reward players for being active. 

? Read on, as we include everything you need to know about 

, the game where you take on the role of an operative to overthrow Future Systems.

 is a move-to-earn mobile game that combines elements of the virtual and physical worlds to provide an immersive metaverse experience. Players get to experience hyper-casual code-breaking gameplay, explore the real world, go on AR adventures, and — in the future — also take part in learn-to-earn missions where they can acquire the basics of coding and other valuable skills.

Set in a futuristic dystopian world, Future Systems, a faceless corporation, has gained total control over global networks that power the internet through their influence. They had claimed to give free access to the internet to the world; however, privacy and individuality are no longer rights. Instead of looking to the government for health, education and finance, people now depend on Future Systems for their basic necessities. 

With such a dictatorship comes individuals who are dissatisfied. Kha0s, a mole who works as a systems administrator at Future Systems, wants to take down the entire corporation, but he can’t do it alone. Players take on the role of operatives, joining Kha0s in his fight against Future Systems by hacking into their network through an exploited mobile app and stealing the new world currency, FCOIN, from wallets. 

In order to facilitate the mission, Kha0s has created NFT Virtual Private Masks for operatives to conceal their identities from Future Systems. However, Future Systems has security and defenses in place, and it’s important for operatives to be careful when moving around. If the drone defense system detects you, it will hunt you down and leave you no choice but to either outrun the drone or shut it down with an Electromagnetic Pulse device (EMP). 

As Future Systems has used cell towers to take control over global networks and made FCOIN the new world currency, all transactions made by the general population go through Future Systems wallets. Each cell tower has a hexagonal boundary that divides the wallets into groups. Once the total value of funds in all wallets exceeds a certain amount, the funds are transferred back to their Future System’s headquarters. 

As an operative, you’ll have to hack into the cell towers to determine the locations of the wallets. You’ll then need to steal the wallets before they’re transferred to HQ. But the cell towers utilize a cloaking device to keep them hidden from the naked eye — so you’ll have to use the scanning device located within your mask to identify them. 

Once you access a cell tower’s hexagon, you can initiate a hack on the tower, which involves a series of challenges to correctly identify the location of a given code in a grid of characters. These challenges have to be completed within a specified period of time, depending on the security level of the tower, before Future Systems detects you and kicks you out of the system. The security level is determined based on the total value of funds in all wallets in the tower’s hexagon. When the total value of funds is higher, the security level is also higher, resulting in less time for you to complete the challenge.

After the hack is successfully completed, the tower will be taken offline for an hour. During this period, you’ll have to locate the wallets around that geographic area and steal their data, which will take a while. Once the transfer is complete, it will appear in your inventory as an unbanked encrypted wallet. Decryption takes place at a later stage, and you can continue to collect more unbanked wallets first before decrypting them altogether. 

Of course, to make the game more challenging, operatives will face Automated Repair and Maintenance drones (ARMs) that will deploy upon successful hack completion. It’s important to note that certain actions on the part of operatives generate heat, which is what the ARMs will use to detect your location. Each unbanked wallet in your possession will also contribute an amount of heat, thereby increasing your chances of detection. In order to avoid being caught by the ARMs and fined, you have the choice of firing an EMP device to disable all drones within a certain radius, or using an anti-drone weapon. 

All wallets are encrypted using a multi-key elliptic curve scheme. In order to decrypt the wallets, you’d normally have to employ complex hacking techniques to extract their contents. Luckily, Kha0s has developed a sophisticated hacking tool kit that will expedite this process. 

There are a total of four wallet security levels — Low, Medium, High and Maximum — which suggest the amount of FCOIN contained within them. Hacking wallets require completing a simple puzzle that Kha0s has devised to simplify the decryption; the puzzles are harder for wallets with higher security levels.

If you find it too challenging to decrypt the wallets, you’ll soon also be able to submit requests to the Community Decryption Queue and request other operatives hack into the wallet for a share of the loot. You’ll be able to specify the percentage split when you submit the request. Of course, offering a higher cut of the loot will result in the wallet’s prioritization — and therefore lead to the wallet being decrypted sooner. 

 you first need to own a Virtual Private Mask NFT. All free-to-play users will be given a complimentary generic NFT mask upon account creation to kick-start their gameplay. 

Users can also choose to purchase premium NFT masks through the in-app purchase of the premium starter pack, or acquire them through the 

Genesis Mask NFT mint. Premium mask holders will be entitled to more benefits than generic mask holders, such as access to certain play-to-earn elements and the ability to convert stolen FCOIN into DEFY tokens. Premium masks are also upgradeable in the game through forging, which allows players to customize their NFT masks with aesthetic and functional upgrades.

Other than upgrading your NFT mask, you can also build your own drone and customize other in-game NFT assets. 

Operatives who destroy Future Systems drones can create their own personal drones using the parts collected from the destroyed ones. These personal drones come with a starting range and basic features that can be upgraded by purchasing items on the in-app Black Market, trading with other operatives, or by leveling up. The drones can be programmed to complete tasks such as withdrawing FCOIN (available from hacked wallets) by flying to their locations before returning to the player.

Those players who own personal drones have the option to purchase AR Hangars, which are customizable virtual spaces for players to put their drones on display. These spaces can also be visited by other operatives. 

also allows players to generate and sell their own NFT assets for FCOIN and DEFY tokens. Some of the items that can be generated for a profit include NFT mask upgrades, drone skins, AR Hangar items and other in-game assets. 

s in-game currency, FCOIN is obtained through gameplay and acts as the game’s play-to-earn reward. Specifically, players reap FCOIN rewards when they successfully decrypt stolen wallets and complete in-game tasks. This creates a reward cycle, as FCOIN can then be used to purchase and upgrade in-game NFT assets.

Premium mask holders can send their FCOIN to Kha0s’ treasury. Every fixed interval, a predetermined number of DEFY tokens will be distributed to players who have sent in their FCOINs during the specific time window. The amount received by each operative will be dependent on their contribution of FCOIN tokens.

DEFY tokens are the main platform tokens of 

. You can earn DEFY tokens both by playing the game and by purchasing them through Bybit. 

As the game’s primary utility token, DEFY can be used in the following areas:

Now that we’ve gone over the foundations of 

. There’s a total supply of 2.5 billion DEFY tokens, with 33% reserved for game rewards. 21% is allocated to the treasury, 15% to the team and advisors, 20% to private partnership placement, 5% to strategic partnership, 1.05% to initial exchange offering/initial DEX offering, and 0.25% to KOL. The remaining 4.70% is kept to maintain liquidity. 

In case you’re concerned about inflationary pressure on the value of DEFY tokens since there won’t be any burning or extra minting of DEFY tokens, rest assured as 

One of the uses of DEFY tokens is for players to purchase in-game NFTs within the game’s marketplace. These include customizable personal drones, which are key to the gameplay, and premium masks that grant players access to additional benefits. This creates a cycle in which players obtain more DEFY tokens in order to upgrade their gameplay experience in 

, thus maintaining the long-term supply of DEFY tokens. 

Ready to join the revolution and take on Future Systems? You can start investing today at 

, where 18 million DEFY tokens can be earned through either committing 

is certainly an intriguing game to get behind, thanks to its adrenaline-pumping storyline and its use of AR to bridge the virtual and physical worlds. Gamers will be amazed at the AR graphics, while investors will be satisfied with the DEFY token’s utilities and value. 

is set to take on greater heights in the near future, as the developer team continues to innovate and launch more ways to enhance the gameplay experience with consumables, collaborative in-app missions, community builder tools, more extended reality gameplay, a PVP mode, and even an entire 

 professionally done alongside a production house to further develop the storyline.

It’s also impressive that the core team members of this project have years of experience in the blockchain and gaming industries, with many of them leading their own strategic teams prior to creating 

. Furthermore, the project is backed by well-known venture capitalists like 

. As such, not only can you be assured that 

 will offer addictive gameplay, stunning graphics and a healthy economic model that will keep you hooked, but it will also be a good investment.

is currently available to play in the Closed Alpha testing phase, but if you’ve missed that, you can watch out for the Public Beta that will launch sometime in Q3 of 2022. 

 game’s DEFY tokens seem to be a great long-term addition to any crypto portfolio. The future of the project looks promising, especially since the team is dedicated to delivering even more innovations that distinguish it from those of other GameFi projects. It’s also worth noting that 

’s NFT Mint phase previously sold out within 13 minutes, so if you’re looking to take part in the next mint just in time for the Public Beta, you’d best be prepared for some ferocious competition. 

has a lot of potentials, and we’re excited to see all of the 

DEFY (DEFY): The First Move-2-Earn AR Game with Mask NFTs

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards