Crypto’s dramatic price swings create unique opportunities. The investors who bought Bitcoin under $1,000 or early Ethereum didn’t just get lucky—they spotted real value before the crowd. With new projects launching weekly, these opportunities continue to emerge.

This guide will help you:

• Identify optimal market conditions for finding opportunities
• Spot strong projects before they become widely known
• Use on-chain data to verify project activity
• Read market sentiment to avoid buying at peak hype
• Determine strategic entry and exit points
• Avoid common traps and scams

Realistic Expectations

Remember these key points:

• Not every project will succeed—aim to be right more often than wrong
• The best opportunities typically develop over months or years
• Finding early opportunities requires research others aren’t doing

With these tools and expectations, you’re ready to begin the hunt for crypto’s next big opportunities!

Crypto Market Cycles

Understanding crypto market cycles helps you time your investments better. Let’s explore the four phases and how to identify them.

The Four Phases of Market Cycles

The Accumulation Phase follows market drops when prices are low and sentiment is negative. Smart money quietly buys while most people have lost interest. Prices move sideways, volume is low, and this presents the best opportunity to find quality projects at bargain prices.

During the Markup Phase, prices begin rising steadily. Volume increases and positive news emerges. Early in this phase, many still doubt the recovery. Projects with strong fundamentals often lead the way, signaling promising market areas. This remains a good time to find opportunities.

The Distribution Phase occurs near market tops when prices reach new highs and everyone is excited. Early investors sell to eager newcomers. Volume is very high, media coverage is extremely positive, and low-quality projects rise on hype alone. This is the most dangerous time for new investments.

The Markdown Phase brings a painful downtrend. Prices fall, sentiment turns negative, and recovery attempts fail. Many weak projects collapse. Avoid buying during early markdown, but toward the end, quality projects become oversold, setting up the next accumulation.

Identifying the Current Phase

To determine which phase we’re in, watch these key indicators:

The relationship between price and the 200-day moving average offers vital clues. Prices below this average suggest accumulation or markdown; prices well above it indicate distribution.

Market sentiment shifts predictably through cycles. Track fear and greed indexes and social media activity to gauge the market’s mood.

New wallet address growth rates and the quality of newly launched projects also help identify the current phase.

Bitcoin Halving Cycles

Bitcoin’s “halving” events occur approximately every four years, reducing new supply and historically leading to price increases. About 6-12 months after halving, Bitcoin typically enters a major markup phase. The market often peaks 12-18 months after halving before entering markdown.

The best opportunities typically emerge during accumulation (6-12 months before halving) and early markup (1-6 months after halving) when quality projects are more likely to be undervalued.

Macro Influences

Crypto doesn’t exist in a bubble. External forces shape the market in predictable ways, creating both risks and opportunities.

Global Economic Factors Affecting Crypto

Higher interest rates typically hurt crypto by making safer investments more attractive and reducing capital for speculative assets. Low or falling rates generally boost crypto markets.

Inflation has mixed effects—it can drive Bitcoin adoption as a store of value but also leads to higher interest rates. Watch “real rates” (interest rates minus inflation); negative real rates historically benefit crypto.

A strong US Dollar pressures crypto prices, while a weakening dollar typically supports them.

Economic crises impact crypto differently: banking crises may boost adoption, market crashes usually hurt crypto initially, and currency problems in specific countries can drive local crypto use.

Regulatory Developments and Their Implications

Regulation significantly impacts crypto through securities classifications, tax rules, banking access, Central Bank Digital Currencies, and compliance requirements.

Not all regulatory effects are negative—clear rules often attract institutional investment, compliant projects frequently outperform during crackdowns, and some regulations create demand for blockchain solutions.

Regional regulatory differences matter; projects relocate to friendly jurisdictions, and user growth varies by region. When regulations change, ask which projects might benefit, not just how the market might suffer.

Institutional vs. Retail Money Flows

Investor types follow distinct patterns. Retail investors buy based on social media, news, and price momentum, typically arriving during late markup and distribution phases.

Their massive interest often signals market tops. Institutions typically accumulate during lower prices, requiring more due diligence but providing stronger price support.

The predictable cycle: early adopters buy during late markdown/accumulation; venture capital enters during early markup; institutions join during late markup; retail floods in during distribution; smart money exits while retail buys; retail panics and sells during markdown.

Look for projects with growing institutional interest but limited retail awareness, watch for venture capital “silent periods,” and track exchange flows to understand smart money movements.

Fundamental Analysis

Finding good crypto projects starts with checking their fundamentals. Just like researching a company before buying stock, you need to evaluate what makes a crypto project strong or weak.

Team, Tokenomics, and Community Assessment

The people behind a project often matter more than the idea itself. Check if team members have relevant experience, successful past projects, and appropriate skills.

Teams that share their real identities tend to be more trustworthy than anonymous ones.

Look for teams that deliver on promises and meet roadmap goals. A complete team needs technical developers, business expertise, and marketing skills.

Tokenomics—how a project’s tokens are created, distributed, and used—significantly impacts growth potential.

Examine current and future token supply; beware of projects with huge upcoming token releases.

Check token distribution; if the team and early investors hold more than 50% of tokens, they might have too much control. Longer token lock-up periods signal confidence in long-term success.

The best tokens have clear utilities within their ecosystems. Always ask: “Why does this project need a token?”

A strong community helps projects grow and survive tough times. Look beyond raw follower counts to engagement quality—are discussions technical and project-focused or just about price?

Steady community growth is more meaningful than sudden spikes that might be artificial. Active code contributors on GitHub usually indicate a healthier project.

Problem-Solution Fit Evaluation

Great crypto projects solve real problems better than existing solutions. First, verify the problem is genuine and significant—how many people face it, how desperately they need a solution, and how they currently solve it.

Be skeptical of projects claiming to solve problems that don’t exist or aren’t suited for blockchain.

Next, assess if the solution makes sense. Does it actually need blockchain? Blockchain makes sense for cases needing decentralization, censorship resistance, or trustless operations.

Identify what makes this solution superior to alternatives—lower costs, better security, or new capabilities. Consider adoption barriers; projects requiring major behavior changes face tougher challenges.

The strongest projects offer substantial improvements over existing solutions.

Red Flags That Signal Potential Failures

Learning to spot warning signs can save you from bad investments. Team red flags include anonymous founders with no reputation, missing crucial skills, overdependence on a single leader, and repeating past mistakes.

Tokenomics red flags involve founders receiving excessive token allocations (>30%), unnecessary tokens, unreasonable valuations compared to similar projects, and undisclosed future token unlocks.

Technical red flags include copied code without meaningful improvements, lack of security audits, centralized control that defeats blockchain’s purpose, and closed-source code that prevents community verification.

Marketing red flags feature guaranteed returns promises, revolutionary technology claims without proof, excessive focus on marketing over development, undisclosed influencer promotions, and unrealistic development timelines.

Most projects have some minor red flags. The key is watching for multiple serious red flags appearing together.

Technical Innovation

Understanding the technical aspects of crypto projects doesn’t require being a developer. You just need to recognize genuine innovation, assess scalability and security, and judge real-world potential.

Evaluating Technological Advantages

True innovation creates new ways to solve problems or offers capabilities that weren’t possible before, like Ethereum’s smart contracts or zero-knowledge proofs. Iteration makes smaller improvements to existing ideas.

Both can be valuable, but true innovation has more potential for significant growth. Look for clear technical differences that give a project an edge—unique capabilities, superior speed, lower costs, or faster confirmation times.

Every blockchain makes trade-offs between security, decentralization, and speed. Good projects explain their technical advantages clearly without excessive buzzwords. If you can’t understand what makes a project special after reading their materials, that’s a warning sign.

Verify claims by checking their GitHub for active development with multiple contributors, reviewing technical documentation, and seeing if respected developers outside the project speak positively about the technology.

The best proof is a working product that demonstrates the claimed advantages.

Scalability and Security Considerations

Scalability means a network can grow without becoming slow or expensive. Check how many transactions per second the network can handle and if this suffices for the intended use case.

Examine the project’s growth plan—solutions like layer-2, sharding, or improved consensus mechanisms. Has the network been tested under heavy load?

Many projects claim high capacity but fail when actually tested. Also consider if fees remain reasonable as usage increases. For security evaluation, review the project’s track record—previous hacks and response quality.

Look for code reviews by reputable security firms and bug bounty programs.

More decentralized networks typically offer better security against attacks and censorship. Check how many validators or miners secure the network and how widely distributed they are.

Real-world Application Potential

Consider adoption barriers that might prevent widespread use. Is the technology too complicated for target users? Does it face legal hurdles? Are there already good solutions for this problem? How difficult is it for businesses or users to start using it?

Timing matters in technology—does it need other systems to be in place first?

Are potential users familiar with similar concepts? Is there active demand for solutions to this problem?

Even brilliant technology can fail if it arrives too early or too late. Can the project team describe specific, realistic scenarios where their technology solves a problem better than alternatives?

Are real users (not just investors) already using the technology? Does the benefit clearly outweigh the costs of switching?

Long-term viability depends on whether the technology becomes more valuable as more people use it, can evolve as needs change, and has an economic model supporting ongoing development.

Technology that solves an immediate problem while also building for the future has the best chance of success.

Key On-Chain Metrics

One of crypto’s unique features is that you can see blockchain activity in real-time. On-chain metrics provide insights unavailable in traditional markets, helping you spot genuine adoption and track smart money movements.

Active Addresses and Transaction Volumes

Daily active addresses show how many unique addresses interact with a network each day. Growing active addresses generally indicates more network usage.

Look for steady growth rather than spikes that quickly fade. Compare active address growth to price movement—when price rises but active addresses don’t follow, it might signal speculation rather than adoption.

When active addresses grow during flat or declining prices, it often suggests building interest that may lead to future price growth. Transaction volume shows how much value moves through a network.

Rising transaction volume can indicate growing usage and utility, but beware of artificial inflation through wash transactions.

The Network Value to Transactions ratio (NVT) compares market cap to transaction volume—lower values suggest the network processes significant value relative to its market cap, generally a positive sign.

Whale Movements and Accumulation Patterns

Whales (large holders) can influence markets significantly. Tracking their behavior provides clues about smart money actions. When whales accumulate during price drops, it’s often bullish.

When they sell during price increases, it may signal distribution. Monitor changes in the number of addresses holding large token amounts—increasing whale addresses suggests accumulation, while decreasing numbers might indicate distribution.

Exchange inflows and outflows also matter. Tokens moving from exchanges to private wallets usually indicates long-term holding intentions, reducing selling pressure. Large token flows into exchanges can signal upcoming selling pressure.

Track the net flow (inflows minus outflows) to see the overall trend. Sustained outflows from exchanges often precede price increases as exchange supply becomes limited.

The percentage of tokens being staked or held long-term shows holder conviction.

Higher staking rates typically mean less selling pressure. Projects where a large and growing percentage of the supply is staked or held long-term generally have more stable price support.

Developer Activity Indicators

A project’s GitHub activity reveals development intensity. Look for regular commits, multiple contributors, and ongoing improvements. Declining development activity often precedes project abandonment.

Quality matters more than quantity—substantive protocol improvements outweigh cosmetic changes. Check if core protocol work continues or if development has shifted only to peripheral features.

Successful upgrades demonstrate a functioning development process and governance system. Watch how smoothly upgrades are implemented and how quickly bugs are fixed. The frequency and significance of upgrades can reveal if a project is actively evolving or becoming stagnant. Developer count indicates project health and momentum.

Growing developer numbers suggests increasing technical community interest. When developers leave in significant numbers, it’s often an early warning sign. Look beyond the core team to see if external developers are building on the platform.

A healthy ecosystem has third-party developers creating applications and tools.

Using On-Chain Data Effectively

Popular tools for on-chain analysis include Glassnode, IntoTheBlock, CryptoQuant, and Santiment.

Block explorers like Etherscan also provide useful metrics. Many basic on-chain metrics are available for free, while advanced data may require paid subscriptions.

No single metric gives a complete picture—combine multiple metrics for better insights.

For example, rising active addresses, increasing developer activity, and exchange outflows together create a stronger signal than any one metric alone. Focus on long-term trends rather than short-term spikes.

Temporary activity increases often follow marketing events but don’t indicate sustainable growth. Look for metrics showing consistent improvement over months rather than days.

On-chain data gives you an edge by revealing what’s actually happening beneath the surface hype.

Market Sentiment

Market sentiment—how investors feel about crypto—often drives prices in the short term. Learning to read and interpret sentiment helps you spot both opportunities and dangers.

Social Signals and Sentiment Analysis

Social media volume shows how much people are talking about a crypto project. Rising mentions across Twitter/X, Reddit, and Discord often precede price movements.

More important than raw numbers is the sentiment behind these mentions. Are people excited, fearful, or frustrated? Sentiment analysis tools can categorize social media posts as positive, negative, or neutral, providing a broader view of market mood.

The Crypto Fear & Greed Index measures overall market sentiment from extreme fear to extreme greed, combining metrics like volatility, momentum, social media, and surveys. Extreme fear often presents buying opportunities, while extreme greed suggests caution.

The index works best as a contrarian indicator—when most people are extremely fearful, prices are often near bottoms, and when greed is extreme, tops may be forming.

Look beyond raw numbers to assess engagement quality. Are discussions technical and use-case focused, or just about price predictions?

Projects with communities discussing real development typically have stronger foundations. Rising social engagement without corresponding development often signals unsustainable hype.

News Impact Evaluation

Crypto markets react strongly to news, but not all news matters long-term. Learn to distinguish between significant developments and headline noise. Important news includes regulatory changes, major partnerships from reputable sources, technological breakthroughs, and adoption by established companies.

Less meaningful news includes celebrity endorsements, minor updates, and speculative rumors. Watch how markets react to both good and bad news.

During bull markets, prices may barely drop on negative news and surge on positive developments. In bear markets, even good news might not move prices much, while bad news causes sharp drops. These reactions provide clues about the underlying market phase. When good news fails to lift prices, sentiment may be worsening. When bad news doesn’t drive prices down, sentiment is likely improving.

Crypto often follows the “buy the rumor, sell the news” pattern. Prices frequently rise in anticipation of positive events (like upgrades, token burns, or exchange listings) and then fall when the event actually happens.

Track upcoming events and observe price movements before and after to identify trading opportunities.

Contrarian Indicators During Market Extremes

Several signals often appear near market tops: taxi drivers and relatives giving crypto tips, substanceless projects rising dramatically, mainstream media running highly positive crypto stories, social media flooded with “getting rich quick” posts, and extreme price predictions becoming common.

When multiple euphoria indicators appear together, consider taking profits or being more selective with new investments. At market bottoms, different signals emerge: “crypto is dead” headlines in mainstream media, long-term believers expressing doubt, projects shutting down or laying off staff, social media engagement dropping significantly, and little reaction to positive news.

These capitulation signals often present the best buying opportunities, though timing exact bottoms is impossible.

Sentiment works better as a guide than as a precise timing tool. Extreme sentiment in either direction suggests potential reversals but doesn’t predict exactly when they’ll happen.

Use sentiment analysis alongside fundamental and technical factors rather than in isolation. The most powerful signals occur when sentiment, on-chain data, and technical analysis all point in the same direction.

Technical Analysis Essentials

Technical analysis helps you identify potential entry points, confirm trends, and manage risk. Even basic technical tools can improve your timing and results.

Entry Point Identification

Support levels are price points where buying pressure has previously stopped declines. Resistance levels are where selling pressure has capped advances. These levels often form at round numbers, previous highs or lows, and key percentage drops.

Buying near established support levels can lower your risk, as these areas often attract buyers. When a resistance level breaks, it frequently becomes a new support level, and vice versa. Look for zones rather than exact prices—support and resistance typically work as ranges.

Volume adds credibility to price movements. When price breaks through a key level with high volume, the move is more likely to continue. Low-volume moves are less reliable and often reverse. Look for rising volume during breakouts and declining volume during consolidations.

Volume spikes often mark short-term extremes and potential reversal points, especially after extended trends. Common patterns like triangles, flags, and head-and-shoulders formations can help identify potential entry points.

These patterns represent periods of accumulation, consolidation, or distribution before price continues or reverses. Don’t force patterns where they don’t exist. Clear patterns with volume confirmation are more reliable than ambiguous ones.

Trend Confirmation Techniques

Moving averages smooth price action to reveal underlying trends. The 50-day and 200-day moving averages are widely watched in crypto. When shorter-term averages cross above longer-term ones (a “golden cross”), it signals potential uptrends. The opposite (a “death cross”) may indicate downtrends.

Moving averages also act as dynamic support and resistance. During uptrends, price often bounces off the 50-day MA. In stronger uptrends, even pullbacks to the 20-day MA can offer entry points.

Momentum indicators like RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) help confirm trend strength. In strong uptrends, RSI typically stays between 40 and 80, rarely dropping below 40.

In downtrends, it usually ranges between 20 and 60. Divergences between price and momentum indicators can signal potential reversals.

When price makes a new high but RSI makes a lower high, it might indicate weakening momentum. Market structure refers to the pattern of higher highs and higher lows in uptrends, or lower highs and lower lows in downtrends.

A break in this structure often signals a trend change. In an uptrend, watch for a failure to make a new higher high followed by a break below the previous low.

Risk/Reward Calculation Methods

Proper position sizing is crucial for managing risk. Never risk more than 1-2% of your portfolio on a single trade.

In more volatile assets or uncertain market conditions, consider reducing position sizes further. Calculate position size based on your stop loss placement.

If your stop loss is 10% away from your entry, and you’re willing to risk 1% of your portfolio, your position should be 10% of your portfolio. Set stop losses based on technical levels rather than arbitrary percentages.

Good places for stops include just below recent support levels, below key moving averages, or below the low of a bullish candle pattern. Avoid placing stops at obvious levels where many others might place theirs.

These “stop hunts” can trigger your stop before the market continues in your expected direction.

Before entering a position, identify potential profit targets using previous resistance levels, Fibonacci extensions, or measured moves from chart patterns.

Only take trades with a reward-to-risk ratio of at least 2:1, meaning your potential profit is at least twice your risked amount. Better trades often offer 3:1 or higher ratios.

Consider taking profits in stages rather than all at once. A simple approach is the “thirds rule”: Sell 1/3 of your position at your first target, another 1/3 at your second target, and hold the final 1/3 with a trailing stop for potential further gains.

Technical analysis works best when combined with fundamental and on-chain analysis. Look for situations where multiple approaches support the same conclusion.

For example, a project showing strong fundamentals, increasing on-chain activity, positive but not extreme sentiment, and a technical breakout presents a much stronger case than technical signals alone.

Remember that no technical method is perfect—these tools improve your probabilities rather than providing certainty.

Your Opportunity Scorecard

After learning how to analyze projects from multiple angles, you need a system to bring everything together.

This chapter helps you develop a practical scorecard, integrate new investments into your portfolio, and size positions based on conviction.

Creating Your Evaluation System

A good evaluation system makes your decision process consistent and less emotional. Create a simple scorecard with categories based on previous chapters: team quality, tokenomics design, community strength, problem-solution fit, technical innovation, on-chain activity, market sentiment, and technical chart setup.

• Score each category from 1-5, with 5 being strongest. This approach forces you to consider all aspects rather than focusing only on what excites you about a project. Not all factors matter equally for every project.
• Assign weights based on project type and your investment strategy. For early-stage projects, you might weight team quality and problem-solution fit more heavily. For established projects, on-chain activity and tokenomics might deserve higher weights.
• Your final score would be the weighted average across all categories. Beyond scoring positive attributes, create ared flag system for deal-breakers. Some issues are serious enough to avoid a project regardless of other strengths.

If a project triggers any major red flags or multiple minor ones, consider removing it from consideration regardless of its score.

Portfolio Integration Strategies

A balanced crypto portfolio typically includes assets with varying risk profiles: lower-risk core holdings like Bitcoin and Ethereum (50-70%), medium-risk established projects with proven use cases (20-30%), and higher-risk smaller projects with greater upside potential (10-20% maximum).

Rebalance periodically to maintain your target allocations. Rather than buying all at once, consider staged entries to reduce the impact of short-term volatility.

For example, split your intended position into thirds: buy the first third when your analysis indicates a good opportunity, the second third after a key milestone or price confirmation, and the final third if the project continues executing well.

Building a portfolio with less correlated assets improves overall stability. Look for projects in different sectors with different value drivers.

Some projects might perform better during risk-on periods, while others might hold value better during downturns.

Position Sizing Based on Conviction

After scoring projects, group them into conviction levels: high conviction (top 10% with no significant red flags), medium conviction (solid projects with good but not exceptional scores), and low conviction (interesting projects with potential but significant uncertainties).

Your position size should reflect these conviction levels.

For a more mathematical approach, a simplified version of the Kelly Criterion can help determine position sizes: Position size = (Win rate × Reward:Risk ratio − Loss rate) ÷ Reward:Risk ratio. For example, with a 60% chance of success and a 3:1 reward:risk ratio, the calculation would be: (0.6 × 3 − 0.4) ÷ 3 = 0.4, suggesting a 40% position size relative to your maximum allowed position.

In practice, using half of this calculated value provides a safety margin. Set absolute limits on position sizes based on risk level: established projects (BTC, ETH) up to 25% each, mid-tier proven projects maximum 5-10% each, and early-stage speculative projects maximum 1-3% each.

These limits ensure that even high-conviction bets on risky projects won’t endanger your overall portfolio.

Creating a scorecard isn’t a one-time event. Establish a regular review process to reassess holdings quarterly or after significant events.

Score them again using the same criteria as your initial evaluation. If a project’s score drops significantly or new red flags emerge, consider reducing your position or exiting entirely.

For existing investments, add “execution against roadmap” to your scorecard. Projects that consistently deliver on promises should earn higher scores in this category.

This systematic approach takes emotion out of the decision process and gives you clear guidelines for each investment.

Conclusion: Maintaining Your Edge

Throughout this guide, we’ve covered multiple approaches to finding crypto opportunities. Here’s how to maintain this edge over time.

Create a sustainable research routine that fits your life—check market cycle indicators weekly, review your portfolio monthly, and set alerts for key events.

Focus deeply on a limited number of projects rather than following everything superficially. Dedicate more research time during accumulation phases when quality projects are overlooked.

Continuously improve by keeping an investment journal that records not just what you bought and sold, but why. After each significant investment, analyze what you missed or misunderstood. Test new approaches with small positions before incorporating them into your main strategy.

Beware of emotional biases. Combat confirmation bias by seeking opposing viewpoints. Use your scorecard system to counter FOMO. Regular re-scoring helps overcome sunk cost fallacy. Maintain position sizing discipline even after successful investments to avoid overconfidence.

Successful crypto investing isn’t about finding a single 100x opportunity—it’s about consistently identifying solid projects before the crowd and managing risk effectively.

No system predicts the future perfectly; the goal is having a positive edge over time.

The opportunity to spot the next big thing comes from doing the work others won’t do, having patience others lack, and following a system when others follow the crowd.

The post Finding The Best Crypto to Invest In: Expert Strategies for Identifying Tomorrow’s Winners appeared first on CoinCentral.

Developed by Mysten Labs, it differentiates itself with parallel execution, an object-centric model, and the Move programming language. The goal isn’t just theoretical scalability; it’s proving that blockchain performance can track with real-world demand.  

Mysten Labs was founded in 2021 by ex-engineers from Meta’s now-defunct Diem blockchain initiative. CTO Sam Blackshear created Move, CEO Evan Cheng led engineering teams at Meta and Apple, and CPO Adeniyi Abiodun worked on Novi, Meta’s crypto wallet.

This background gives Sui an institutional pedigree, but it also has to prove it isn’t just another overhyped corporate-backed experiment.  

Sui has attracted serious investment, raising $336 million from firms like Andreessen Horowitz (a16z), FTX Ventures, Jump Crypto, Binance Labs, and Coinbase Ventures. This puts it in the same funding league as Ethereum and Solana in their early days, with backers betting that Sui’s infrastructure can support high-frequency financial and gaming applications.  

Launched in May 2023, Sui quickly built momentum, surpassing $1 billion in total value locked (TVL) by 2024. With zero reported network outages and an architecture designed for high-speed execution, Sui is positioning itself as a competitor to Solana. 

The real question is whether it can sustain adoption beyond the initial surge of speculation.  Competition is fierce. Solana dominates the high-performance Layer 1 category, and Aptos—another blockchain built by ex-Meta engineers using Move—offers a similar pitch. 

Whether Sui can differentiate itself over the long term will depend on developer traction, security resilience, and actual user adoption rather than just hype cycles.  

Let’s explore how Sui works and what the $SUI token is used for. 

Sui’s Technical Architecture & Innovation  

Sui’s defining feature is its parallel execution model, which aims to eliminate the congestion that plagues blockchains operating sequentially. 

Instead of processing transactions in a linear block structure, Sui’s object-centric approach allows independent transactions to finalize simultaneously. This is great in theory, but in practice, efficiency boils down to real-world developer implementation and network conditions.  

The blockchain runs on a Delegated Proof-of-Stake (DPoS) system, incorporating a Directed Acyclic Graph (DAG) to streamline data flow. Validators—who confirm transactions—are selected based on staked SUI tokens. This boosts throughput while maintaining decentralization, though like all DPoS models, there’s an ever-present risk of validator centralization if staking power concentrates in a few hands. 

Sui’s use of the Move programming language is another advantage. Originally built for Meta’s Diem, Move is designed to reduce security risks in smart contracts. Its resource-oriented approach prevents asset duplication or unintended loss—critical for financial transactions and NFTs—making it a potential upgrade over Solidity. 

Of course, Move’s adoption still trails far behind Ethereum’s Solidity, meaning developer migration isn’t guaranteed.  

Another key component of Sui’s architecture is the Narwhal and Bullshark consensus mechanism. Narwhal acts as a mempool, ensuring smooth transaction batching, while Bullshark handles sequencing within the DAG. 

This setup theoretically enables 125,000 transactions per second (TPS) under ideal conditions—but “ideal” and “real-world” are two very different things. Until Sui undergoes stress tests at scale, these numbers remain optimistic.  

Beyond speed, Sui addresses data storage costs, a growing problem for blockchain validators. The Storage Fund introduces an upfront payment model where users cover the cost of storing their transactions. This reduces the long-term validator burden, but it’s still unclear if the economics will hold up as transaction volume scales.  

$SUI’s Tokenomics  

Sui’s native token, $SUI, underpins the network. With a fixed supply of 10 billion tokens, distribution is structured to prevent inflation spikes while sustaining long-term liquidity. As of early 2025, around 3.1 billion tokens were in circulation, with more unlocking gradually through 2030. 

This staged release model prevents sudden price crashes, but investor behavior around major unlocks is notoriously unpredictable.  

The token’s primary functions include:  

1. Transaction Fees: Every on-chain action requires fees in $SUI, compensating validators.
2. Staking & Security: Holders can stake tokens to support network security and earn rewards. Staking returns aim to favor long-term participation over short-term speculation. 
3. Governance: $SUI holders get voting rights on protocol upgrades, economic policies, and validator parameters. 
4. Ecosystem Growth: Half of the total supply is allocated to community initiatives, developer grants, and infrastructure expansion.  

Unlike Ethereum, Sui doesn’t automatically burn transaction fees, which limits its deflationary mechanics. Instead, it uses a dynamic gas fee model where costs adjust every 24 hours, based on network demand and validator input. This is meant to stabilize transaction prices, but whether it prevents fee volatility over time remains to be seen.  

Sui’s token economy borrows elements from Solana’s while introducing tweaks like storage sustainability incentives and a structured unlock schedule. The real challenge is whether demand will scale to match increasing token availability. 

If developer adoption accelerates, demand for $SUI could absorb upcoming releases. If not, supply-side pressure could lead to volatility, particularly around investor and team token unlocks.  

Sui has many technical selling points, but the market ultimately cares about adoption. If dApps, games, and DeFi projects actually migrate to Sui and gain traction, its token economy has legs. If not, no amount of theoretical scalability will save it from fading into the crowd of “promising” Layer 1s. 

Sui is attempting to reimagine the blockchain architecture with an object-based model that shifts away from the conventional account-based transaction design. By structuring data as programmable objects, Sui enables parallel transaction execution, aiming to address the scalability issues that bog down traditional Layer 1 blockchains. 

This approach sidesteps the serial processing bottlenecks that have long plagued performance and throughput, though its real-world efficiency will depend on developer adoption and validator performance.

At the core of Sui’s architecture is the Move programming language, originally developed by Meta for the Diem project. Move’s resource-oriented design prioritizes security and predictability, offering guardrails that significantly reduce common vulnerabilities like double-spending and unintended state changes. 

For sectors like finance, gaming, and NFTs—where preserving asset integrity is non-negotiable—Move’s strict ownership rules and modularity provide a safer alternative to Ethereum’s Solidity. The challenge, however, lies in wooing developers away from Ethereum’s vast ecosystem to embrace an arguably less battle-tested framework. 

On paper, Sui delivers an enticing theoretical throughput of 125,000 transactions per second (TPS), underpinned by its directed acyclic graph (DAG)-based mempool system. It employs Narwhal to manage transaction data efficiently and Bullshark to handle Byzantine Fault Tolerant (BFT) consensus. 

This dual-engine system avoids sequential block-by-block processing, allowing high-speed execution with reduced congestion risk. While the architecture looks robust in controlled conditions, whether Sui can sustain such performance metrics under the unpredictable peaks of real-world demand remains to be seen.

Scalability further sets Sui apart, at least in theory. Its ability to dynamically allocate resources based on demand could be advantageous over rigid, monolithic systems that buckle under high usage. This flexibility promises predictable transaction fees and operational stability for validators. However, maintaining this balance as the network grows will require careful tuning to avoid overloading validators or pricing out smaller participants. 

Security is another area where Sui takes a calculated step forward. Move’s intrinsic protections, such as eliminating reentrancy attacks, bolster the baseline safety of applications built on the network. Regular audits—like recent ones from Trail of Bits—lend credibility to its robustness claims. 

While no blockchain is immune to exploits, Sui’s proactive stance on security does provide a higher degree of confidence for developers entering its ecosystem.  

For developers and users, Sui’s combination of high throughput, near-instant finality, and programmable object functionality offers a fresh alternative to legacy smart contract designs. 

However, its ability to challenge industry giants like Ethereum depends as much on developer migration and user adoption as it does on technical superiority. The narrative of displacing entrenched competitors will hinge on whether Sui can consistently deliver on its promised performance in production environments.  

Sui’s Delegated Proof-of-Stake (DPoS)

Sui’s Delegated Proof-of-Stake (DPoS) model employs a Byzantine Fault Tolerant (BFT) consensus mechanism that emphasizes throughput without compromising security. Unlike blockchains that enforce sequential validator roles, Sui eschews rigid block-building for a parallel processing approach when transactions lack dependency conflicts. 

The result is faster transaction finality with decentralized execution—at least in theory.

Validators hold a central role in this ecosystem. Sui’s infrastructure allows them to process transactions flexibly, reducing the time required for finality. Delegators, meanwhile, can stake their $SUI tokens with validators to participate in governance and earn proportional rewards without running full nodes. 

This system encourages broader participation, although the balance of power among validators will require ongoing vigilance to prevent centralization—a stubborn challenge for most DPoS systems.

What truly distinguishes Sui’s consensus is the tandem operation of Narwhal and Bullshark. Narwhal serves as the transaction mempool, ensuring efficient data organization and availability. Bullshark then finalizes transactions using a Byzantine Fault Tolerant architecture. 

This setup reduces communication lags among validators and bolsters throughput under heavy network loads. However, like any innovative system, the effectiveness of this design will ultimately depend on sustained real-world testing, not just theoretical superiority.

While DPoS streamlines certain aspects of blockchain operation, it does raise legitimate concerns about validator power consolidation. Sui partially mitigates this by encouraging widespread delegator participation, but it’s no silver bullet. 

Long-term decentralization will require active community governance and measures to prevent larger validators from dominating the ecosystem. How Sui addresses these structural risks will significantly influence its success as it scales. 

Final Thoughts:Will Sui Be a Layer 1 Powerhouse or a Hype Cycle Casualty?

Sui has delivered an ambitious vision: a blockchain that challenges Solana and Aptos with cutting-edge architecture, a developer-friendly ecosystem, and record-breaking transaction speeds. 

The object-based model, scalable Move programming language, and parallel execution make it one of the more interesting Layer 1 contenders in recent years. In theory, Sui avoids the congestion and downtime issues that have plagued competing high-performance chains. 

But theory and real-world adoption are two entirely different challenges. Since its May 2023 launch, Sui’s ecosystem has grown rapidly, with over $2.1 billion TVL by early 2024—a milestone that confirms user interest. However, short-term speculation and hype often drive early adoption in new blockchains. 

The real test comes when the initial excitement fades, and projects must deliver sustainable value beyond trader activity.  

One crucial concern is Sui’s tokenomics. With only 28% of the 10 billion $SUI supply in circulation, upcoming unlocks will inject billions of tokens into the market between now and 2030. If Sui’s developer ecosystem and transaction volume don’t expand simultaneously, this supply pressure could weigh heavily on long-term price stability. 

Even with technical advantages, competing with Solana’s deep liquidity and Ethereum’s network effects is no small task.  

Moreover, Aptos also uses Move, meaning the battle for developer talent is fierce. While Sui’s infrastructure offers true parallel execution, it must prove that this translates into a superior developer experience and that projects built here can scale efficiently in real-world applications. 

The chain has so far avoided Solana-style network crashes, which is promising, but sustained stability under mainstream demand remains an open question.  

Ultimately, Sui isn’t just a tech experiment—it’s a bet on whether architecture can overcome crypto’s network effect problem. The best infrastructure doesn’t always win; it’s about adoption, developer tooling, liquidity depth, and platform stickiness. 

If Sui can onboard major projects, maintain security, and balance supply mechanics smartly, it could cement a spot next to Solana, Ethereum, and other top Layer 1s. If not, it may follow the fate of countless ambitious blockchains—technically brilliant but commercially overshadowed.  

Sui’s Outlook in 2025

In closing, here are a few questions to noodle on: 

???? Can Sui sustain long-term developer interest, or will Move adoption plateau against Solidity’s dominance over developers?  

???? The Sui Network unlocked over $250 million worth of its native token on February 1, 2025. Will the market absorb token unlocks, or is there a significant risk of sell pressure impacting price?  

???? Sui’s theoretical maximum transaction speed is 297,000 TPS, surpassing Solana’s 65,000 TPS. Does the network truly offer practical advantages over Solana in real-world usage, or is its competitive edge mostly theoretical?  

???? As more Layer 1 chains integrate scalable execution models, institutional adoption is growing, with major asset managers like BlackRock and Fidelity exploring tokenization. How will institutional and retail traction evolve as more Layer 1 chains integrate scalable execution models?  

Our verdict: Sui is a layer 1 to watch, but the hard part is just beginning.

The post Sui Blockchain Explained: How It Works and What You Need to Know appeared first on CoinCentral.

Three days before his second inauguration, Trump’s official X (formerly Twitter) and Truth Social accounts shared an announcement about a new Solana-based memecoin, $TRUMP.

“My NEW Official Trump Meme is HERE! It’s time to celebrate everything we stand for: WINNING! Join my very special Trump Community. GET YOUR $TRUMP NOW,” the post read, linking to a website.

Within minutes, the cryptocurrency was trading in the hundreds of millions of dollars as excited traders rushed in, skeptics raised alarms, and blockchain sleuths got to work investigating. 

Within hours, $TRUMP had a market cap of nearly $7.5 billion. 

But is the Trumps memecoin actually legit? 

The evidence so far suggests two possibilities: Either this is an official launch sanctioned by Trump, or his accounts were hacked in what could be one of the most elaborate crypto scams in recent memory. 

Let’s unpack the situation.

Update: January 24th, 2025. It appears the coin was actually launched by Trump organization and was endorsed by Trump prior to becoming President. H

What Happened: Trump’s Solana Memecoin Moons

The announcement came late Friday night, first on Truth Social and shortly after on Trump’s X account. 

Some rumors say he confirmed it during his crypto gala. 

Both posts featured identical language promoting $TRUMP, alongside a link to a website that resembles those used for Trump’s past NFT collections.

The coin’s website credits CIC Digital, the same official licensee behind Trump’s NFT collections from 2022 and 2023. The infrastructure and deployment of the site also align with Trump’s earlier ventures, leading some to conclude it’s legitimate.

The memecoin immediately gained traction. As of now, $TRUMP is trading at $8.32 with a self-reported market cap of $6.7 billion. However, 80% of the tokens are locked and will gradually unlock over the next three years, making the circulating supply—and its true market cap—much smaller.

Blockchain tracking sites show that the coin has generated roughly $680 million in trading volume in its first hours of existence, placing it among the most actively traded new cryptocurrencies.

The Case for $TRUMP Being Legitimate

If this is a sanctioned Trump project, it would align with his recent pro-crypto stance. Trump has previously dipped his toes into Web3 with multiple NFT collections, and he’s publicly endorsed World Liberty Financial, a decentralized finance platform.

Observers have pointed out that the $TRUMP website is remarkably similar to Trump’s NFT sites, down to the hosting provider, Heroku. 

This consistency has led blockchain experts like the pseudonymous engineer cygaar to suggest that the same team likely deployed both projects.

Additionally, the posts on X and Truth Social have remained live for over 12 hours, with no follow-up indicating a hack or disavowal from Trump’s team.

Trump’s presidency has also leaned heavily into memes and online engagement, so launching an official memecoin as a cultural and financial rallying point wouldn’t be entirely out of character.

Further, he’s close with Elon Musk, who owns X. If it were a hack, he’s got direct access to the owner of the platform– which is more than the 99.99% of people who have had their X profile hacked. 

The Case for Skepticism: Is Trump’s Memecoin a Scam?

Despite the evidence pointing to legitimacy, there are reasons to remain cautious.

First, the coin’s funding origins have raised eyebrows. 

On-chain sleuths discovered that the project was seeded with millions of dollars from wallets linked to Binance and Gate.io, exchanges that do not cater to U.S. customers. For a project tied to a U.S. president, this is an unusual choice—and potentially problematic from a regulatory perspective.

Second, Trump’s high-profile status makes his accounts a prime target for hackers. 

One red flag is that the top ten holders have 86% of the coin, and the contract ownership is not renounced.

The crypto industry has seen countless examples of high-profile figures’ accounts being compromised to promote pump-and-dump scams. In most cases, the hacked posts are quickly deleted, but the extended time these posts have remained live complicates the picture.

Lastly, while the coin is trading actively, many memecoins experience sharp rises followed by equally sharp declines as liquidity dries up or early adopters sell off their holdings. Whether $TRUMP holds its value or proves to be a speculative bubble remains to be seen.

Ultimately, $TRUMP is real, but the argument here still holds.

So, What if $TRUMP is Real? 

If $TRUMP is legitimate, it could signal a major shift in Trump’s approach to cryptocurrency, and a conversation would need to be had about the role of memecoins here on out. 

 As a sitting president, his endorsement of a memecoin would elevate the conversation around crypto to the highest levels of global politics– and likely not in a good way. 

A Trump-backed memecoin would also present opportunities and risks for the U.S. crypto market. 

On one hand, it could rally his supporters around blockchain technology, potentially boosting adoption. 

On the other, it raises questions about the regulatory implications of a president directly promoting a cryptocurrency.

What It Means If $TRUMP is a Scam

If Trump’s accounts were hacked, this could go down as one of the most sophisticated scams in crypto history.  A scam of this magnitude would likely lead to calls for stricter regulations around crypto and heightened scrutiny of high-profile accounts. 

However, it’s now clear that the accounts were not hacked and the coin is actually legitimate.

The resemblance to Trump’s past NFT projects, combined with the coin’s rapid adoption, suggests that the attackers put significant effort into making the project appear authentic.

It would also serve as yet another cautionary tale for traders chasing the latest trend without proper due diligence.

How to Buy $TRUMP

Buyer beware– this is not financial advice.

One interested in purchasing $TRUMP would have to do so through a Solana-based exchange, such as the Jupiter exchange and by having a non-custodial wallet, such as Phantom wallet.

It’s verified, but the contract address is listed on sites like CoinMarketCap as 6p6xgHyF7AeE6TZkSmFsko444wqoP15icUSqi2jfGiPN

This is found on SolScan as well.

The next step would be to paste the address into the coin search bar, as there are already dozens of fake Trump memecoins (if this one is considered real) floating around.  This will allow you to make your purchase in SOL or other SOL-compatible tokens.

It has also been listed on Coinbase and Robinhood.

Final Thoughts: Where Things Stand on $TRUMP

At this point, it appears $TRUMP is real coin, meaning it has the endorsements of Trump and his organization. It also also been verified, and listed on Coinbase and Robinhood. The team even launched a $MELANIA after the First Lady shortly after. 

For now, the coin’s trading volume and market activity are impossible to ignore. Whether $TRUMP becomes a cultural phenomenon or a fleeting meme, it’s already a defining moment for crypto in 2025.

As always, if you’re considering getting involved, proceed with caution. The crypto market is as volatile as ever, and even legitimate projects can carry significant risks. Keep an eye on Trump’s official channels and the broader crypto community for updates—and, as always, don’t invest more than you’re willing to lose.

The post Is Trump’s Memecoin Legit? Here’s What We Know About $TRUMP appeared first on CoinCentral.

Just as the Bitcoin movement was born out of a desire to create a permissionless financial system, decentralized AI aims to democratize access to AI technologies by removing gatekeeper chokepoints. 

Decentralization, in step with the open-source programming philosophy, offloads the heavy burden of auditing and data security to a global community, which decentralization proponents believe to be an effective means to watchdog against the potential of a centralized AI Frankenstein growing too strong for centralized systems to control.  

If it sounds dystopian, that’s because it is—such was the plot of Terminator; Arnold’s character was just one of a series of machines designed by Skynet, a fictional artificial intelligence created by a centralized organization. 

While decentralized AI isn’t a guaranteed insurance policy against dystopia, it hints at a necessary alternative construction to the nascent centralized systems, the true risks we may not realize until it’s too late. 

Why Do We Need Decentralized AI in the First Place?

Machine learning improves with the quantity of data available, and consumer-friendly products like ChatGPT, Claude, and Perplexity.AI will continue to improve as they grow in popularity. 

Providing models with training data, Users are often oblivious to the value they generate for private companies just by using them. 

AI’s potential to pull the economic rug from virtually any career path and the out-of-whack monetary incentives for users are parts of an entirely different rabbit hole we’ll explore in a future article.

Perhaps the greatest risk is what happens if these highly trained models end up in the wrong hands. 

OpenAI, for example, has been under intense scrutiny over recent moves. 

Apple and OpenAI announced a partnership on June 10th, 2024, that would bring ChatGPT into Apple’s suite of products, including iOS, MacOS, and iPadOS, a collaboration that’ll likely lead to a mindblowing customer experience far exceeding any recent iOS update. 

The other hand, however, is troublesome. 

Although the press release states, “requests are not stored by OpenAI, and users’ IP addresses are obscured. Users can also choose to connect their ChatGPT account, which means their data preferences will apply under ChatGPT’s policies.”

Still, OpenAI’s models would be trained on incredibly intimate personal behavior and information, which could be used for whatever purpose. 

pic.twitter.com/7OgZAAdPf6

— Elon Musk (@elonmusk) June 10, 2024

Ok, CoinCentral, let’s take off the tinfoil hats for a moment. This doesn’t seem much more invasive than Siri or Alexa; besides, what could a company like OpenAI do with this data? 

We’re not in the business of fear-mongering or speculation, but the juxtaposition with this next data point is concerning. 

Just three days after the Apple news, OpenAI announced its appointment of former NSA Director (2018 to 2023) and Retired U.S. Army General Paul M. Nakasone to its Board of Directors. 

While we shouldn’t be dismissive of the NSA’s counter-terrorism and cyber defense efforts, it’s still a government apparatus notorious for spying on its citizens, popularized by NSA whistleblower Edward Snowden, who also criticized the appointment.

They’ve gone full mask-off: ???????? ???????????? ???????????????? trust @OpenAI or its products (ChatGPT etc). There is only one reason for appointing an @NSAGov Director to your board. This is a willful, calculated betrayal of the rights of every person on Earth. You have been warned. https://t.co/bzHcOYvtko

— Edward Snowden (@Snowden) June 14, 2024

We don’t mean to paint OpenAI, Nakasone, or the NSA with ominous and villainous overtones, but the reality is that, through relatively straightforward and flashy integrations, people may walk backward into a surveillance state they wouldn’t be inclined to enter through the front door. 

Knowledge is power, but not in the way your stereotypical classroom motivational poster claims. As useful and constructive a tool like generative AI is, it can also seem to have an enormous downside risk in the wrong hands that must be actively protected against.

Even a glass-half-full approach should acknowledge that while companies like OpenAI aren’t operating with a malevolence bent on world domination, safeguards should still be in place to prevent unintended consequences. 

Let’s take a breather from the dramatic flair of this section for a moment by looking at the decentralized AI’s structural advantages.

Centralized AI vs. Decentralized AI: On Technology

It’s important to frame decentralized AI not solely as a strategic safeguard against centralized AI but as potentially a better system overall. 

Let’s explore. 

Cost Advantages of DeAI

Scaling a centralized AI system is often compared to building a skyscraper on a single foundation; the higher you go, the more strain you place on that foundation. 

Centralized AI demands substantial computational resources, including powerful servers and large-scale data centers. As the appetite for AI grows, these systems face challenges in scaling efficiently and cost-effectively. 

ChatGPT, for example, was estimated to cost roughly $700,000 per day in 2023, a figure that has likely increased due to OpenAI’s advanced models—and that’s not counting any of the audio or generative video, as seen with Sora. 

Anthropic, creator of the Claude model, has raised over $7.6 billion to compete with OpenAI.

Decentralized AI systems utilize some variation of a network of globally distributed providers of computing power and data storage. Instead of going through AWS or private data centers, a DeAI entrepreneur could tap into a marketplace of 24/7/365 competitively priced compute and data storage resources.

A decentralized AI network could tap into various devices, from high-end servers to personal laptops and even smartphones. For example, by connecting your MacBook to a decentralized AI network, you can contribute its computational power to the collective pool, for which you’d be compensated, likely in the project’s native token. 

Editor’s note: We use the term “decentralized AI” or “DeAI” here, but this model has existed since decentralized computing projects such as Golem. Today, the category of “Decentralized Physical Infrastructure Network, or DePIN, largely overlaps with the creation and operation of compute marketplaces. 

This distributed approach creates a marketplace for idle (or active) compute resources, aligning proper business incentives for aspiring DeAI entrepreneurs and cash flow seekers alike. 

Centralized AI vs Decentralized AI: Efficacy, Data Security, and Privacy

By definition, centralized systems tend to have single central points of failure, making them susceptible to attacks and technical failures. A compromised central server can disrupt the entire AI system, leading to downtime and data loss. 

Famously, a distributed network made possible by blockchain should, theoretically, never experience downtime. 

Downtime is just the cost of doing business– most popular centralized businesses, such as OpenAI and Meta, have their own downtime trackers.

Blockchain, which underpins most DeAI systems, provides a secure and immutable ledger of transactions and interactions within the network. This makes it nearly impossible for malicious actors to alter or corrupt the system without detection. 

A large enough network should be fine even if some nodes go offline or are compromised.

It’s this distributed nature that inherently provides continuous uptime, ensuring that AI services remain available and providing a level of reliability that centralized systems struggle to match.

And then there’s the 21st-century digital bogeyman– data privacy. 

Imagine a vault containing the most valuable jewels in the world, all stored in one place– enough to make a goblin salivate. 

Centralized AI systems store vast amounts of data in central servers, making them a honeypot for cyberattacks. A single breach could expose sensitive information, causing irreparable harm to individuals and organizations alike. 

However, these data breaches aren’t necessarily the same thing as your Reddit password being exposed. The specter of surveillance looms large, as entities with access to centralized data can misuse it, eroding public trust and raising ethical concerns about privacy and consent.

It’s not a matter of a centralized company willingly using your data for evil but of the potential for them to neglect to secure it, as has been seen time and time again. 

Artificial intelligence innovation is moving at light speed, evidenced by OpenAI’s breakout ChatGPT app, which notched an estimated 100 million monthly users in just two months upon launch, making it the fastest-growing consumer app of all time– a milestone that took runner-up Facebook four and a half years.

For the average user, what’s not to love: ChatGPT is regarded as very accessible with a free version, premium costs of $20 per month, and reasonable API requests for developers. 

However, centralized AI is like a gated community, where only a select few have access to the resources needed for development. 

It goes beyond API accessibility– the average startup doesn’t have Google or Microsoft money to spend $700,000 daily on operational expenses. 

Many decentralized AI startups focus on providing developers with a marketplace where people from all over the world provide compute resources and access to servers at reasonable prices.

AI & Data Transparency

Nearly all centralized models operate behind a veil. 

The data in this “black box” of sorts used to train these systems is collected from limited, largely unknown sources, introducing biases that can lead to inaccurate, unfair, and discriminatory outcomes. 

Granted, this threat level seems negligible if something like ChatGPT’s chicken casserole recipe calls for using egg whites instead of egg yolks. Still, as society grows more dependent on AI’s efficiencies, biases and inaccuracies can compound into enormous issues.

Without transparency in their decision-making processes, it becomes challenging to identify and correct these biases, undermining the ethical integrity of AI applications.

Centralized data sets can’t be reliably audited by third parties, whereas it seems to be common practice by decentralized AI companies to have the entire model, including its training data, open source. 

Some DeAI startups are even working on marketplaces where users can buy and sell their data or lease individual models specifically trained on a narrow task with exceptionally high-fidelity data. 

These “personal AI experts” will likely have enormous commercial demand, especially if they can reduce the likelihood of error for an incredibly useful and scalable system prototyped by ChatGPT. 

But what about licensing? What if we know that a model is being trained from data from the New York Times, Reddit, or our favorite site, CoinCentral?

Here’s the thing with licensing: it’s expensive but also creates another regulatory chokepoint where a rulemaker can determine which data should or shouldn’t be permissible to be licensed. 

For starters, licensing costs may dissuade budding AI startups from building if they can even obtain permission to license the data. 

However, the notion of using licenses to restrict and control AI startups isn’t just Libertarian propaganda; it’s a courtroom drama evolving as we write this article. 

An August 2023 proposal by anti-crypto Senators Lindsay Graham and Elizabeth Warren advocated for creating a new federal agency, structured as a commission (full text here) to “regulate digital platforms, including with respect to competition, transparency, privacy, and national security.”

The proposal would require “dominant platforms” (as defined by the commission) to get a license that meets the designation. Specifically, the commission can also revoke licenses if the platform has “engaged in repeated, egregious, and illegal misconduct” and hasn’t undertaken measures to address the misconduct. 

The White House-issued AI Bill of Rights has a similar tone of regulatory control in order to protect.

Our discussion here isn’t whether AI innovation should be regulated or left completely laissez faire as there are extensive arguments for either side, but this model does little to address data transparency. 

It actually further muddles it, enabling a regulatory body to exert control to omit or add new information with the threat or reward of a permit. 

Many decentralized AI companies offer marketplaces for models, where third parties can actively audit, confirm, and even contribute to the training data for each model. 

Challenges for Decentralized AI 

Throwing the blockchain on something isn’t necessarily a panacea, and DeAI is fraught with challenges and shortcomings.

If centralized AI is in its nascent baby deer-legged stages, DeAI has yet to leave the womb. 

Few models work, let alone functional, robust marketplaces capable of rivaling the models made by OpenAI, Anthropic, Perplexity, Google, or most of the stuff shared on AI model directory, Hugging Face.

One of DeAI’s premier challenges is its reliance on diverse and distributed data sources. This can lead to discrepancies in data quality, making it difficult to maintain the accuracy and reliability of AI models. 

As such, data integrity and standardization across a network is a critical challenge.

While DeAI aims to enhance security and trust, it introduces new vulnerabilities; its distributed nature makes it susceptible to various attacks, such as data poisoning or Sybil attacks, where malicious actors can disrupt the system by flooding it with fake nodes. 

And then, there’s product-market fit for each marketplace. 

However, don’t let the novelty of DeAI dissuade you from learning about it. If the velocity of innovation of its centralized counterpart is any indication, it will move very quickly. 

Final Thoughts: So, Why Decentralized AI

Leaving the practical advantages described above aside, the spirit of decentralization is an extension of the rebellious demand for self-sovereignty and freedom from central control, as seen with Bitcoin. 

Understandably so, the crypto OGs may get flashbacks to the ICO craze of 2017 upon hearing of the combination of two trending technologies “(cryptocurrency and AI), but we implore our readers to consider the severity of what’s at stake. 

At brass tacks, the DeAI niche is about marketplaces– people who buy and sell compute and data storage resources, people who buy and sell access to AI models, people who participate in the economics of the native tokens via staking or liquidity provision, etc.

The more people who enter the DeAI space, driven by a passion for self-sovereignty or just general curiosity, will indirectly contribute to upholding privacy, security, and community-driven innovation as the standard for technology and not just fringe features. 

The post What is Decentralized AI and Why We Need It ASAP? appeared first on CoinCentral.

Or maybe you’re just getting started and have no idea what that last sentence means. 

Wherever you are on the DeFi knowledge spectrum, you’re at the right place. We’re going to do something few have accomplished before: try not to make DeFi sound extremely confusing and complicated. 

In this guide, we’ll review a crucial DeFi puzzle piece: liquidity pools and liquidity mining. 

Why are liquidity pools so important? Well, that answer depends on you.

From a technical POV, liquidity pools help make decentralized trading possible. Anyone can trade swap tokens at any time without any single centralized entity. Rather than peer-to-peer (P2P) trading, where Bob trades with Sally, you have peer-to-contract trading (P2C), where Bob trades with a smart contract. Liquidity pools are at the center of this. 

From an investing POV, liquidity providers are earning yields of 100% (and exponentially higher) APR from providing liquidity, which is a relatively passive but pretty risky practice. 

Let’s get started with a key concept, decentralized exchanges.

Liquidity Pools 101: How a Decentralized Exchange Works

Picture our ancestors trading chickens for seashells thousands of years ago. Now, imagine Ooga Booga, captain of the prehistoric seashell industry, throwing his seashells into a big magic vortex, which automatically spits out a predetermined fair-market value of chickens. 

This is obviously a gross oversimplification, but the vibe is similar to peer-to-contract trading in decentralized exchange. 

A decentralized exchange (or, if you want to sound really in the know, a DEX) is essentially software that allows people to trade (or swap) tokens without a centralized intermediary. 

A DEX can be open-source software created by independent developers, which should be audited by third parties to assess its efficacy and legitimacy. Many decentralized protocols are owned by a centralized parent company. Uniswap, for example, is a Brooklyn-based startup with a Series A led by famed venture capital firm a16z. In other cases, many DEX upstarts don’t have a centralized company established or an office you can call if things go awry. 

Rather than requiring a human third party to custody assets, DEXes use smart contracts to provide nearly instant settlement times. 

A DEX like Uniswap makes money by:

1. Charging a “protocol fee” of between 0.05% to 1%. This feature can be voluntarily turned on by UNI token holders per their governance features. 
2. Token price appreciation. 20% of the 4 billion UNI tokens were assigned to Uniswap employees. As the protocol and UNI token grow in popularity, so will the wealth of the company and of the token holders. 

DeFi protocols can differ in their liquidity protocols structure; one might charge higher fees, and one might distribute tokens that don’t have governance rights, etc. 

Since these exchanges are completely decentralized, they need access to a large number of funds to ensure traders always have access to the token pairs they need. 

To go deeper into DEXes, check out our decentralized exchange guide. 

This brings us to liquidity. 

Why Liquidity in DeFi Is Important

Ok, let’s take a momentary breather before we get into some nitty-gritty, but really freaking cool DeFi stuff. 

Liquidity is the extent an asset can be quickly purchased or sold at a price that reflects its true value; it’s at the heart of any functional market. 

A lack of liquidity correlates to higher-risk categories and is priced accordingly. Without liquidity, or anyone to purchase an asset, the demand, and subsequently the value, of the asset drops. For example, if I buy $1,000 of some obscure token, and every cryptocurrency exchange removes it from trading, I’d have nowhere to sell it, making it a much less valuable asset. 

Low liquidity also means low volume, which leads to a pesky thing called slippage, where your order executes at different tiers of decreasingly preferential prices. For example, when Elon Musk buys a massive $100M order of Bitcoin, his order might even move the market as the order is being executed. Let’s say the first 10M BTC is filled at $50k per BTC, then the next $30M at $52k per BTC, and the last $60M is at $53k per BTC.

Legacy systems offer relatively functional marketplaces for most needs; if Bob wants to sell his $TSLA stock, a stock trading platform can execute the trade almost immediately, often without slippage since most reputable stock exchanges only carry assets with significant volume. 

Since DEXes don’t have a centralized order book of people who want to buy or sell crypto, they have a liquidity problem. 

In other words, in the face of highly efficient exchanges, an exchange without liquidity sucks– and DEX developers planned for this. 

There are certainly infrastructural tradeoffs between the order book model that dominates centralized exchanges and the Automated Market Maker models in DeFi. However, the blockchain can offer significant improvements over traditional methods of exchange.

For one, most central marketplaces are confined to limitations such as market hours, reliance on third parties to custody the assets, and occasionally slow settlement times. 

A DeFi liquidity protocol enables: 

1. 1. Fast settlement: peer-to-peer trading settles immediately on-chain 
   2. Simple to use: The liquidity protocol smart contract determines the trading price algorithmically. 
   3. Non-custodial: A decentralized exchange doesn’t take custody of your private keys, meaning traders always have full control of their funds. 
   4. Interoperability: Many of DeFi programs are interoperable and can be stacked on other compatible apps, like Lego blocks. Think of a company like Uniswap as a “Liquidity-as-a-Service” platform, where other third-party dApps, wallets, and payment processors can grant their users access to liquid markets as an ingrained feature.
   5. 24/7/365 Global Liquidity: Traders get liquidity anytime and anywhere in the world.

Order books make sense in a world where reasonably few assets are traded, not so much the madhouse world of crypto where anyone can launch their own token. 

A centralized exchange like Coinbase or Gemini takes possession of your assets to streamline the trading process, and they charge a fee for the convenience, usually around 1% to 3.5%. 

DeFi aims to accomplish the same goal of enabling a fast “always-on” marketplace, but without holding anyone’s private keys or assets. And here’s the conundrum: how do DeFi protocols get access to funds to fill trades without turbulence?

That’s where liquidity pools come into play. 

DeFi Liquidity Pools in a Decentralized World 101:

A centralized exchange like Coinbase or Gemini uses the “order book” model, as do traditional marketplaces like the New York Stock Exchange. In the “order book” model, buyers and sellers bid in an open market: buyers want the asset for the lowest price possible, sellers want to sell for the highest price possible. For the trade to happen, buyers and sellers must agree on the price. 

That’s where the Big Hoss of the whole ordeal comes in– the Market Maker. A centralized exchange acts as the market maker by establishing a fair price where buyers and sellers are willing to meet. 

The Market Maker is always willing to buy or sell assets at a specific price, usually using its own pool of assets to make sure there is always something available. This means users can always trade on the exchange– cryptocurrency is unique in that exchanges operate 24/7/365, whereas something like the NYSE opens at 9:30 AM and closes at 4 PM EST.

Centralized exchanges invest resources to create a convenient and fair marketplace for users to exchange cryptocurrency, and make a hefty chunk of revenue from what they charge for facilitating the transaction. 

Deeper dive: To see how a centralized exchange functions as a business, Coinbase is a public company– check out its S1 Statement or regular earnings reports. 

The “order book” model is impossible without a market maker. 

Instead of buyers and sellers being matched by a central market maker like Coinbase, traders using liquidity protocols trade directly against a smart contract. Peer-to-contract! 

Where do the smart contracts get access to deep pools of funds to make trading possible? You guessed it– liquidity pools!

A liquidity protocol (think Uniswap, Bancor, or Balancer) acts as an Automated Market Maker (AMM) allowing users to access a liquid market at any given moment. 

A liquidity pool is a combination (“pool”) of at least two tokens, locked in a smart contract. 

Now, why would anyone do such a thing? 

Well, it’s pretty lucrative (and risky) and many yield seekers jump into liquidity pools in search of monetary gain. Others with a more technological bent view their participation in liquidity pools as a means to uphold a decentralized project. 

These sorts of things are better experienced than understood, so let’s run through some real-world examples. 

What is a DeFi Liquidity Pool in Action?

We just mentioned people trading on DEXes trade against smart contracts designed to provide liquidity at a fair price. Those smart contracts access liquidity pools for those actively traded tokens. 

We also talked about a liquidity pool being a combination of at least two tokens locked in a smart contract. 

Let’s dive into a liquidity pool– put on your snorkels. 

Liquidity pools were popularized by Uniswap, a decentralized exchange used by many in the DeFi world. The Uniswap protocol charges about 0.3% in network trading fees when people swap tokens on it. 

Suppose I am an aspiring liquidity provider. As such, I’m incentivized by liquidity pools to provide an equal value of two tokens in the liquidity pool. 

Liquidity providers are rewarded. The whole 0.3% trading fee (more or less, depending on the pool) paid by traders is distributed proportionately to all the liquidity pool providers. 

There are plenty of community-led calculators that provide a clearer estimate of rates and returns. 

DeFi Liquidity Pool Example #1: Liquidity Pools on Uniswap

For example, putting $10,000 in a WETH-ENS Pool at a 0.3% fee on Uniswap v3 is estimated to generate $132.04 per day in fees, at an estimated annual percentage of 481%. 

Going to the actual Uniswap site, we see that the ETH-ENS pool generated $72,320 in the past 24 hours, which were all distributed proportionately to the liquidity providers.

The estimated LP returns on any DEX will always be in the state of flux, and a myriad of DeFi yield farming applications such as aggregators exist to get liquidity providers the best rates. 

Keep in mind that these liquidity pool fees earned are just for the pool itself, paid by Uniswap and generated by traders of the platform. 

As liquidity becomes a sought-after commodity, some protocols have taken it a step further to compete for liquidity providers by offering liquidity pool token staking, which we’ll get into below.

DeFi Liquidity Pool Example #2: Liquidity Pools on ShapeShift Review

ShapeShift is a centralized cryptocurrency company that was founded in 2014, but elected to decentralize entirely in July 2021. It airdropped FOX tokens to its employees, stakeholders, and users, becoming a Decentralized Autonomous Organization (DAO.)

ShapeShift offers just one liquidity pool, WETH-FOX. 

I can provide an equal amount of WETH (it’s basically just normal ETH, but “wrapped,” the difference is insignificant for this discussion) and FOX (the token that powers the ShapeShift ecosystem.) 

I put in $3,750 of WETH and $3,750 of FOX for a total of $7,500. In return, I receive WETH-FOX Liquidity Pool tokens. 

I can then “Stake” these LP tokens for an estimated yearly reward of 116.91% APR.

Yes, you read that correctly—an APR of 116.91%. So, for the $7,500 WETH and FOX, I put in, I should get around $8,758 in profit in one full year, but this isn’t always the case.

Protocols often denominate the APR in the number of tokens (often the native token of the platform, like FOX) rather than a U.S. Dollar amount. Your actual dollar APR can be more or less depending on the value of the token. 

An APR like 110% APR, or even some as high as 90,000% or higher, isn’t an anomaly among other liquidity pools. 

So, for example, if the price of FOX token were to plummet, as it later would,  so would the value of all my rewards accumulated (paid in FOX)– not to mention that half the pool consists of FOX tokens.

So, who’s paying these bonkers DeFi yields? There’s no way they’re sustainable, right? 

What’s the Difference Between Liquidity Pools and Liquidity Mining?

The difference between liquidity pools and liquidity mining has to do with who pays the yield and how. 

Remember that the smart contracts written by protocol developers (such as Uniswap) determine how LP staking yields are paid, as a percentage of fees accrued from the token swapping on the platform. 

Some projects also give liquidity providers liquidity tokens, which can be staked separately for yields paid in that native token. This is a bit confusing, but the difference is more than just semantics. 

• The liquidity pool rewards are based on the protocol fees, like 0.3% on Uniswap.
• The liquidity pool tokens, which are staked on a different protocol, can earn 100%+ APR, paid in whatever token that protocol is incentivizing you with (i.e., FOX.)

Again, 

Liquidity providers received a percentage of trading fees in a particular pool. Liquidity pool rewards tend to decrease as more liquidity providers join, as per simple supply and demand. 

AND,

Liquidity providers who stake their liquidity pool tokens may get paid in other tokens as a further incentive to provide liquidity there as opposed to another platform. Are yields of 90,000% APR sustainable? Well, the protocol determines how much of its token it wants to print to sustain the yield. 

This is the primary difference between liquidity pools and liquidity providing, a contrast with blurred lines. 

The practice of seeking out the highest yield in various DeFi protocols is called yield farming; it can get pretty complicated, but it’s within reach for anyone wanting to learn.

Final Thoughts: Are DeFi Liquidity Pools Legit and Worth Your Time?

If you’ve made it this far, congratulations– you’ve just learned about one of the most important components of decentralized finance. 

It’s easy to get tripped up in all the funky protocols and token names. It’s important to keep in mind that DeFi is only a few years old, and things break. 

And no, this isn’t going to end as some wild-eyed sales pitch about how you, too, can automatically earn 90,000% yields with just a small investment. Our content isn’t investment advice—it’s all meant to be educational and, hopefully, entertaining. DeFi and crypto in general are incredibly risky. 

It’s no surprise liquidity pools attract both speculation and skepticism of equal intensity. As a nascent technology, liquidity pools have plenty of growth opportunities and risk factors that should be considered. Providing liquidity is very risky for reasons like a thing called impermanent loss, or even a total loss of funds through smart contract failures or malicious rug pulls. 

Liquidity is a critical issue in a decentralized digital asset landscape, and developers have come up with some fairly ingenious and creative solutions. Educating yourself on DeFi liquidity pools and liquidity mining is like having a flashlight in your toolkit of exploring the next era of finance. 

The post What is a DeFi Liquidity Pool: A Non-Technical Breakdown (w/ Examples!) appeared first on CoinCentral.

Stellar advertises itself as an open-sourced, distributed payments infrastructure, built on the premise that the international community needs “a worldwide financial network open to anyone.” The project is filling this need, connecting individuals, institutions, and payment systems through its platform.

In doing so, the Stellar team wants to make monetary transactions cheaper, quicker, and more reliable than they are under current systems. Additionally, their protocol connects people from all over the world by allowing for more efficient cross-border payments.

In this guide, we get into all the details including:

• How Does Stellar Work?
• Stellar Team
• XLM Trading History
• Where to Buy XLM
• Where to Store XLM
• Stellar Roadmap
• Final Thoughts
• Additional Stellar Resources

How Does Stellar Work?

Like (almost) all other cryptocurrencies, Stellar bears that beautiful buzzword that has become the hallmark of blockchain technology: decentralization. The network runs on a web of decentralized servers supported by an international consortium of individuals and entities. These servers support the distributed ledger that keeps track of the network’s data and transactions.

In practice, the Stellar protocol functions like a more inclusive, more flexible PayPal. To start using it, you need to upload funds to an anchor on the network. Much like a bank or PayPal, this anchor then holds your money and issues credit to your virtual wallet in its stead.

You might be wondering why you need to exchange debit for credit with an anchor in the first place. Well, anchors serve as a bridge for any given currency and the Stellar network. The swap allows you to formally convert your funds into Stellar’s public ledger.

This integration means you can send funds instantly on the network without having to wait for a bank transfer, as with PayPal. It also streamlines cross-border payments. Let’s say you wanted to send funds to your impoverished expat brother living in France. You would use your credited USD balance to shoot him funds through the Stellar network. Stellar would then automatically convert the USD to EUR using the lowest exchange rate, and your brother’s account would be credited with the exchanged amount in EUR. After receiving the transfer, he can withdraw the funds from an anchor that supports EUR and go about living his Bohemian lifestyle.

Distributed Exchange

Stellar also offers you the option of placing exchange orders onto the public ledger to sell or buy other currencies. All rates are pre-determined by the individual placing the order, so they are not subject to the automatic exchange rate that Stellar applies to personal transfers.

If you wanted to exchange, say GBP for EUR, you’d place an order in Stellar’s order book. That order then enters the global marketplace, which you can also consult to see how your order stacks up against others like it. Note that this exchange is not limited to fiat currency only. It also includes cryptocurrency and fiat trading pairs as well.

Multi-Currency Transactions

As we previously noted, Stellar allows you to freely send money across borders without the hassle of formal banking procedures or currency exchange.

In order to accomplish this, the network does one of three things when you request a currency transfer:

• Stellar converts the funds with a previous offer on its order book and automatically facilitates the exchange.
• Stellar uses Lumens (XLM), its coin, as an intermediary for the exchange. It converts the funds from currency A into Lumens on the global marketplace, and then it takes those Lumens and converts them to currency B for the user receiving these funds.
• If there are no trading pairs in the exchange for the two currencies, Stellar searches for offers on the network that will lead to a chain conversion into the desired currency (e.g., USD to EUR, EUR to GBP, BGP to AUD, AUD to JPY).

This multi-currency exchange process is pretty ingenious, and it offers users a flexible approach to easily swap currencies on an international scale.

Stellar Team

Jed McCaleb is the face of Stellar. Previously, he created the infamous Mt. Gox, although he was no longer involved during the over $450 million hack. After that, he went on to found Ripple, Stellar’s most notable competitor. In 2013, he left Ripple due to differences in ideology against the rest of the leadership team. Shortly after, he started Stellar.

Stellar has one of the most impressive advisory boards of any other project in the cryptocurrency space. The list includes Patrick Collison (Stripe CEO), Matt Mullenweg (WordPress Founder), Naval Ravikant (AngelList Founder), and Sam Altman (Y Combinator President).

XLM Trading History

XLM has had an interesting trading history, to say the least. The coin experienced around a 5x increase in value at the end of 2014. However, that runup was shortlived, and the price slowly fell throughout all of 2015, 2016, and even the beginning of 2017.

It wasn’t until May 2017, that things really started to turn around for the coin. That month, the price skyrocketed from $0.00547 (~0.00000363 BTC) to just over $0.047 (~0.0000283 BTC) in four days. It’s not exactly clear what caused this monumental jump. It may have been a recent airdrop the team hosted, more people learning about to project, or just typical market shenanigans.

Following the early May rise, the XLM price more or less followed the rest of the market. It grew to an all-time high of over $0.91 (~0.000061 BTC) in January 2018 and fell for the remainder of that year. That said, XLM has weathered the bear market significantly better than most other altcoins. In fact, it’s only lost around 50 percent of its BTC value when many other coins have lost over 90.

The addition of more anchors, partners, and (obviously) users, should all impact the price in a positive way.

Where to Buy XLM

Stellar Lumens trades under both the XLM and STR ticker. The Stellar team changed the ticker from STR to XLM a while back, but some exchanges, such as Poloniex, haven’t bothered to change it.

Bittrex, Poloniex, and Binance account for a vast amount of XLM’s trading volume. Binance and Bittrex support both ETH and BTC trading pairs, while Poloniex supports BTC, USDT, and USDC only.

If you’d like to purchase XLM with USD or EUR, it’s worth taking a look at Kraken.

Where to Store XLM

Most of the wallets used to store XLM are either XLM specific or exist within Stellar’s network for use with its global marketplace. Stronghold, for instance, is the distributed exchange built into Stellar’s system, and StellarTerm is a client that allows you to access the distributed exchange to trade or send funds. The Stellar team has also created a Desktop Client that is specific to the XLM currency.

If you’re looking for a non-Stellar-exclusive wallet, the Ledger Nano S is probably the safest bet, but if you don’t have this hardware wallet, you could check out stargazer, Papaya, and Saza.

In a recent promotional stunt, Blockchain added support for XLM and gave away $25 worth of XLM when you verified your identity.

Stellar Roadmap

Stellar does not have a concrete roadmap on their website, but they do keep a regular blog.

In this blog, they post monthly roundups of that month’s biggest developments. For the October 2017 roundup, for instance, they recapped their partnerships with IBM and KlickEx for cross-border payments. They’ve also secured partnerships with Remitr, MSewa Software Solutions, PesaChoice, and Chaneum ICO Advisory Services.

In the vein of ICOs, the Stellar team believes that their network would be ideal for overseeing ICOs and blockchain startup fundraising. There’s a strong case to be made for the flexibility Stellar’s network offers to startup ventures, as it could facilitate a multitude of cryptocurrency and fiat payment options.

As mentioned above, Stellar partnered with the Blockchain wallet provider in November 2018. The partnership includes integrating XLM support into Blockchain and airdropping up to 500 million XLM to Blockchain users.

Final Thoughts

If Ripple (XRP) was built for financial institutions and banking giants, then Stellar Lumens goes to work for the common man. It has the potential to revamp how we process peer-to-peer transactions on a global scale.

Its versatility and use cases make it function like a financial Swiss Army Knife. With Stellar, you can handle micro-payments with nominal fees, send remittances without fretting over currency exchange or bank transfers, and settle payments in real time (2-5 seconds).

If the IBM and KlickEx partnerships weren’t enough to impress you, Deloitte, Parkway Projects, and Tempo have started building services on Stellar’s network.

Between these companies using Stellar for real-world adoption, its official partnerships, and the vision Stellar has for the future of currency exchange, we’re excited to see what the next few years have in store for the layman’s Ripple. We won’t tell you to put your money into it, but it’s worth getting to know.

Additional Stellar Resources

Website

Twitter

Github

Reddit

Blog

The post What Is Stellar (XLM)? | A Guide to the Common Man’s Financial Network appeared first on CoinCentral.

These contracts allow traders to speculate on the future price of cryptocurrencies without owning the actual asset.

For example, traders can use futures contracts to bet against the market– if they believe the price of a cryptocurrency will fall, they can sell futures contracts and buy them back at a lower price.

Investors may also use futures contracts to hedge against potential price declines in their crypto holdings– by locking in a selling price; they can mitigate losses if the market turns unfavorable.

It’s common for crypto future exchanges to provide leverage, allowing traders to control a larger position with less capital. This can amplify gains but also increase the risk of significant losses.

To trade with leverage, traders must maintain a margin, a percentage of the total trade value, as collateral. If the market moves against their position, they may need to add more funds to avoid liquidation.

Words of Caution & Disclaimer

Cryptocurrencies are notoriously volatile, which can already lead to significant losses. The combination of leverage and the added layer of risk presented by futures contracts is like jet fuel– an excellent propellant if you know what you’re doing with it or disastrous if you don’t. 

As such, futures trading requires a high understanding of margin requirements, leverage, and risk management.

The following article explores the offerings of a few top crypto futures exchanges, which vary in size, jurisdiction, and unique features. The following list is in no particular order and is not a comprehensive or definitive list of every offering on the market. 

Binance: Up to 125x Leverage

Binance is the largest futures exchange on this list in terms of daily trading volume, with over $40 billion in daily trading volume. 

Binance was launched in June 2017 and quickly became one of the largest cryptocurrency exchanges in the world. 

Binance’s services are restricted in certain locations, including the United States, Singapore, and Ontario (Canada). Other countries with restricted usage or limited features due to regulatory reasons include China, Malaysia, Japan, the UK, and Thailand.

Futures and derivatives products are also unavailable in Germany, Italy, and the Netherlands. Binance.US, a dedicated platform for US clients, was launched in September 2019.

Binance has relatively higher fees than other futures exchanges, with a 0.02% maker and 0.04% taker.

Binance offers margin trading with up to 10X leverage through Binance Margin. Users can also leverage their trades with derivatives such as Binance Futures, settled in USDT, BUSD, or other cryptocurrencies, and Binance Options.

For more information, check out our Binance review.

PrimeXBT: Up to 1000x Leverage for CFDs & 200x for Crypto Futures

PrimeXBT is a centralized cryptocurrency exchange (CEX) launched in 2018. It offers a user-friendly environment and 24/7 multilingual customer support. It uses cold storage for security. 

It has roughly $520,000,000 daily trading volume. 

Registered in Seychelles, PrimeXBT serves clients in over 150 countries. However, it restricts services in regions like the U.S., Canada, Japan, Algeria, Ecuador, Iran, Syria, North Korea, and Sudan.

It provides access to over 100 assets across various markets, including Crypto, Forex, Commodities, and Indices. It supports major cryptocurrencies like BTC, ETH, and LTC, meme coins like DOGE and SHIB, and popular coins including TON and SOL. 

The platform supports derivative trading instruments such as Crypto Futures and CFDs and offers Copy Trading to mimic the trades of successful Strategy Providers automatically. 

It offers up to 1000X leverage for CFDs and up to 200X leverage for Crypto Futures and Crypto CFDs. 

Fees: PrimeXBT charges a maker fee of 0.01% and a taker fee of 0.02% for Crypto Futures, and a 0.05% trading fee for Crypto CFDs. There are 0% commissions on CFD trading pairs for global Forex, Commodities, and Indices.

For more information, check out PrimeXBT; new users get a 20% deposit bonus in various tiers.

Bybit: Up to 125x Leverage

Bybit is a centralized cryptocurrency exchange (CEX) launched in March 2018.

Serving over 10 million users, Bybit provides access to over 100 assets and various contracts, including Spot, Futures, Options, launchpad projects, earn products, and an NFT Marketplace.

Notable partnerships include Oracle Red Bull Racing, esports teams, and football clubs like Borussia Dortmund.

The platform supports over 100 cryptocurrencies and 300 spot trading pairs, such as BTC, ETH, SOL, and DOGE. Bybit employs a tiered fee structure with spot trading fees at 0.10% for non-VIP users and lower rates for Pro 3 users. 

Perpetual and futures trading fees are 0.06% for takers and 0.01% for makers.

Bybit offers up to 125X leverage on crypto derivatives, including BTC/USD and ETH/USD perpetual contracts.

For more information, check out our Bybit review.

OKX: Up to 125x Leverage

OKX operates globally with offices in Hong Kong, Singapore, the UAE, Silicon Valley, and the Bahamas. Launched in 2017, OKX offers a range of services through its entities in Seychelles and the Bahamas. In the U.S., it focuses on Web3 services but doesn’t provide exchange services.

In 2022, OKEx rebranded as OKX, updating its branding and strategic direction. The platform supports users in over 200 countries, though it excludes U.S. residents.

OKX lists over 350 cryptocurrencies and more than 500 trading pairs, including BTC, ETH, OKB, AAVE, SOL, MATIC, XRP, DOGE, SHIB, and DOT. Its fee structure starts at 0.10% and decreases with higher trading volumes. Regular users’ fees depend on the amount of OKB they hold, while advanced users’ fees depend on their 30-day trading volumes.

The platform offers margin trading with up to 10X leverage. OKX provides futures trading and perpetual swaps with up to 125X leverage for derivatives. Users can also trade options, including BTC and ETH.

For a detailed look, check out our OKX review.

MEXC: Up to 200x Leverage

MEXC, founded in 2018, serves over 10 million users in more than 170 countries.

The platform offers localized language support, aiding investors globally. MEXC’s trading engine, developed by banking industry experts, completes 1.4 million transactions per second, ensuring efficiency. User security is prioritized with servers hosted independently across multiple countries.

MEXC handles about $4 billion daily trading volume, with 0% maker fees and 0.01% taker fees.

Final Thoughts: Picking the Right Crypto Futures Exchange

Crypto futures trading is perhaps the highest-stakes version of trading, and the risks, especially if you are unfamiliar with or have no experience with it, cannot be understated. 

While it offers opportunities to profit from market volatility, the use of leverage means you can lose more than your initial investment. 

Top crypto futures exchanges like Binance, Bybit, PrimeXBT, OKX, and MEXC provide a range of tools and options to help traders navigate this fast-paced trading environment. They each offer high leverage, low fees, and advanced trading features.

Ultimately, it comes down to user preference and convenience– which UI do you feel most comfortable with? What features stand out the most to you? Which exchange do you trust the most? 

Stay informed, trade wisely, and always be prepared for the risks that come the pursuit of the rewards.

The post Crypto Futures 101: The Top Crypto Futures Exchanges for High Leverage Trading appeared first on CoinCentral.

But a crypto-burglar might not even be your worst enemy. There are countless tragic and borderline comical stories of people losing their own bitcoins: This poor guy lost a hard disk with a Bitcoin data file containing 150 bitcoins (worth about $405,000 today) and another guy accidentally threw out a hard drive with 7,500 bitcoins (worth about $20.5 million today).

So, how do we protect our cryptos from hackers and ourselves?

Cue the Bitcoin wallets.

The Best Bitcoin Wallets

If you’ve been looking for a way to securely store your cryptos, look no further; we’ve got you covered!

The Different Types of Bitcoin Wallets

Before we get started, let’s go over the different types of Bitcoin wallets. There are some new terms coming up, but don’t freak out! We’ve made this guide simple and easy so that even the cryptocurrency newbies will walk away experts.

There are three types of Bitcoin wallets: hardware, software, and paper. Hardware wallets are physical wallets with your private keys encrypted in them, software wallets are programs that live either on your computer or on the Internet, and paper wallets are physical documents with private keys.

For hard wallets, you’ll need a digital signature. Your digital signature is your ID. It’s how you prove that you own a specific private key without flashing your key around in public. Digital signatures verify ownership, keeping your private key safe and away from prying hands.

The advantage of hardware wallets is that your private keys are isolated from your computer, keeping your risk of theft near zero. Software wallets, on the other hand, are still connected to the Internet and expose you to some risk.

The only potential downside of a hardware wallet is that it costs money. Most software wallets are free. While both wallets protect your bitcoins more securely, some users would rather pass on the extra cost.

By all means, you do you.  But I’d personally rather spend $100 or so to guarantee security than take risks with the free software wallet route.

Bitcoin Hardware Wallets

Without a doubt, Bitcoin hardware wallets are the most secure type of Bitcoin wallet. What differentiates hardware wallets from software wallets is that when they are plugged out—in “cold storage.”

This means your hardware wallet is disconnected from the Internet and impossible to touch. Hackers, Trojans, and other malware can’t get to anything in cold storage. Personally, I like hardware wallets because I’m a worrier. I enjoy the peace of mind knowing that someone much better at the Internet than me isn’t running off with my hard-earned bitcoins.

Ledger Review

Ledger and TREZOR are names that always come up when reviewing Bitcoin wallets.

The Ledger Nano S functions like any other hard wallet, with a few minor differences. For any Bitcoin fashionistas out there, the Ledger definitely wins in the style category.

Setting up the Ledger wallet is pretty simple. All you need is Chrome and a secure computer. The ledger comes with a PIN for added security. If the PIN is entered incorrectly three times, Ledger wipes itself clean.

Terrifying but not the end of the world. Ledger allows you to set up a recovery seed to retrieve your private keys if your device is lost or broken. This recovery seed is a set of words that must be put together in a certain order. Ledger allows you to recover all your lost bitcoins with your recovery seed so no need to break a sweat.

This Reddit user summed it up nicely: “I just got a Ledger Nano S and I love it. The biggest advantage is that your private key is stored completely offline and never exposed to your computer, so your chances of getting your wallet hacked are as close to zero as they come. If you lose it, you can restore your wallet to another device or another wallet entirely with the seed. It truly is an investment that could save you thousands down the line.”

Ledger rating: Overall, the Ledger wallet functions exactly as you’d want it to. It keeps your bitcoins safe, it’s easy to access—but only for you, and is forgiving if your house burns down.

Check out our full Ledger Nano S Review for more information about this wallet.

Trezor Review

TREZOR is a hardware wallet that holds your private keys offline and allows you to sign transactions with your digital signature without having to connect to the Internet.

TREZOR is often hailed for simultaneously serving as an offline cold storage device and allowing you to spend your coins. It’s a pretty small, nifty device that you can carry around on a keychain. If you thought your Tamagotchi was cool, imagine a device that can potentially hold millions of dollars of Bitcoin in the palm of your hand.

Whenever you want to spend your bitcoins, you can do so through TREZOR’s limited USB connection. A limited USB connection acts like a computer mouse: the mouse communicates its location to the computer, but the computer can’t move the mouse. It’s a one-way connection. TREZOR can safely interact with computers that may be compromised or infected with malware. This is amazing for safely managing your bitcoins.

There are also no usernames or passwords for TREZOR accounts, so it’s very difficult to hack. Your TREZOR device is all you need. Unless someone has physical access to your device, there’s no way your account can be accessed.

In case you want to further nullify the risk of someone physically hacking into your device, TREZOR offers passphrase protection for Bitcoin access. This passphrase should be purely memorized and not written down anywhere.

Now, if you’ve got a group of telepathic ninjas after your bitcoins, you can use a blockchain-powered artificially intelligent android to protect you. (Just kidding, we’re not there yet.)

TREZOR Rating: Overall, I like the TREZOR a lot. It’s extremely secure and intuitive. The price is a bit higher than most wallets but the features, TREZOR team, and accessibility of the product justify it.

Read our full Trezor Review for more details.

KeepKey Review

KeepKey is another hardware wallet. While some might prefer its sleek design and screen size, it’s nearly twice as big as the TREZOR or Ledger Nano S.

KeepKey also isn’t as reputable as Ledger and TREZOR. And in the wild Wild West of the crypto world, reputation matters a lot. That being said, it has phenomenal credentials. KeepKey comes with a pin code and number randomization to guard your coins. You can also use it on compromised or malware-infected computers, although I wouldn’t recommend doing so.

KeepKey supports Bitcoin, Litecoin, Dogecoin, Namecoin, Testnet, Ethereum, and Dash. This is a big deal for users that want to keep their altcoins off the grid.

KeepKey rating: KeepKey’s ability to store such a wide variety of altcoins is super appealing. It’s a bit larger than other hardware wallets, but isn’t much of an issue. The security is top-notch, and that’s what matters.

Learn more in our full KeepKey Review.

Easiest to Use Online Bitcoin Wallets

Now that we’ve gone over the hard(wallet) stuff, let’s jump into online wallets. Online wallets run on the cloud, so users can access them from virtually any computing device anywhere. These wallets are very convenient to access and easy to set up in comparison to hard wallets, but are ultimately controlled by a third party. While these third parties are constantly improving security and taking proactive measures, there’s still an inherent risk.

With hardware wallets, you trade flexibility for security. The tradeoff with online wallets is security for flexibility. You can’t have it all.

Coinbase Wallet Review

If you’re reading this guide before you’ve bought your first bitcoin (or fraction of a bitcoin), you’ll probably want to start off with Coinbase.

Coinbase is one of the easiest ways to buy and store your bitcoins, and is the most popular option for people just getting started out in the crypto world.

Coinbase is a brokerage, exchange, and wallet. This means you can buy, sell, trade, and store your coins all on the same platform. This flexibility is something that hardware wallets don’t offer.

As the world’s largest Bitcoin exchange, Coinbase is a pretty big target for hackers. A benefit Coinbase has over many other online and hard wallets is that all its digital currency is insured. This means that if the platform were breached (physical security, cyber security, or employee theft), Coinbase’s insurance policy would cover any of your money lost. Coinbase also only holds less than 2% of its customer funds online, with the rest in cold storage, adding more credit to their security.

Another appeal of Coinbase is its substantial credentials. It’s a Bitcoin company based in San Francisco and backed by reputable investors. Lloyd’s of London covers its insurance policy, and therefore any Coinbase users. Additionally, if you are a U.S. resident and have any fiat currency, your Coinbase wallet is covered by FDIC insurance for up to $250,000 of your fiat. This insurance policy doesn’t cover individual account hacks, so if you have a weak password and aren’t taking adequate precautions with your login credentials, it’s on you.

You can access your Coinbase wallet via web or through the Coinbase iOS and Android apps. Coinbase still controls all your private keys so I’d recommend you use it to buy and sell bitcoin, rather than storing funds. Unless you use their Multisignature Vault.

The Multisignature Vault is a decent solution for securing larger amounts of bitcoin. This Multisignature Vault is a 2-of-3 wallet. This means Coinbase has one key, you (the account holder) have a second key, and one key is shared. Any two of the trio of keys allows funds to be spent.

An additional safety net is the 48-hour processing time for all withdrawals from Vaults. You can cancel any faulty withdrawal request within this generous period.

It’s also a good thing Coinbase is a reputable company since it can shut down your Vault account at any time.

Coinbase Rating: Coinbase is a great place for newbies to buy and store Bitcoin. That being said, I’d recommend quickly upgrading to a hardware wallet if your bitcoins are stacking up.  This will ensure full control over your coins.

Check out our Coinbase Review for more info.

Blockchain.info Review

While Blockchain is far from the best option, I wanted to include it anyway.

My main beef with Blockchain is that all transactions need to be routed through the company’s servers, and they’ve gone through a disconcerting number of outages over the past years. If you’re equally uncomfortable with the thought of your account being inaccessible at any random time, you’ll probably want to pass on this one. Bitcoin, to many people, is about full control anywhere anytime. Blockchain seems like a step back.

Blockchain.info can be accessed either in a browser or via mobile, which would be very convenient if there weren’t so many server issues. You can access Blockchain wallet from any browser with your wallet address and you can back up on mobile. There are two additional layers of security: The web version has 2FA (two-factor authentication), meaning Blockchain notifies users with a text when someone tries to log in. Mobile users can also set a four-digit password requirement for the app.

Blockchain.info Rating: For now, Blockchain.info is a good plan B but shouldn’t be your first choice. The security is top notch, but its lack of reliability and convenience raises red flags.

Bitcoin Paper Wallets

When it comes to securing your bitcoin, paper wallets aren’t exactly Fort Knox. Paper wallets, handwritten or physical copies, are easy prey for Malware if you’re not extremely careful generating them on an online PC.

Paper wallets are one of the riskier ways to store your bitcoins, but they are still an option. If they’re unencrypted, you‘re basically a tourist carrying load of cash and expensive jewelry on vacation.

Bitcoin Clients

You’ve probably heard the term “Bitcoin client” tossed around a few times. A Bitcoin client is a software that facilitates private key generation and security, as well as payment, on behalf of a private key.

You might be asking yourself, What’s the difference between a Bitcoin client and a Bitcoin wallet?

A wallet is technically the data necessary to spend and receive bitcoins. This includes a private key, public key, and the address from the public key.

A client, however, is the interface to the network. A client is the hardware and software on a device that makes it possible to connect to networks. It handles all the communication and updates your wallet with incoming funds. It also uses information from the wallet to sign outgoing transactions. A client is just a device, not a corporate entity.

If you’re still confused, don’t worry. The terms overlap. It certainly doesn’t help that most companies are clients and wallets and market themselves as “wallets.” For example, popular Bitcoin wallet is Airbitz synergizes its “wallet” and “client” functions so you can store the right data and interact with the network intuitively and safely. For potential users, “wallet” seems to be easier to understand about their money than “client” is.

Exodus Wallet Review

The Exodus wallet is best described as a “Blockchain assets wallet” because you can store a variety of cryptocurrencies like Bitcoin, Litecoin, Dogecoin, Ethereum, and Dash. The Exodus wallet is very appealing if you’re actively investing in altcoins. I love its circular design and intuitive interface, but Exodus launched in July 2016 and is still a relatively new wallet.

Exodus’s built-in exchange feature allows you to trade your altcoins and bitcoins for altcoins. Thanks to Shapeshift, it’s easy to trade cryptos from within the wallet, a feature very few wallets have.

Keep in mind that Exodus is connected to the Internet and, therefore, inherently riskier than a hard wallet.

Learn more in our Exodus Wallet Review.

Jaxx Wallet Review

Jaxx is another software wallet that poses a great option for altcoin enthusiasts.

Jaxx is available on Windows, Mac, and Linux desktops. It’s also accessible on Android and iOS mobile and tablets, as well as through Chrome and Firefox extensions. The wallet functions as well as any other bitcoin wallet, and its simple interface makes looking through your portfolio a breeze. I enjoyed the ability to use different exchange rates, set a PIN, and set up different transaction fee sizes (how quickly your transaction gets processed).

Jaxx is also integrated with Shapeshift—like Exodus—so you can exchange altcoins within the app. This is pretty sweet, given that Jaxx currently supports Bitcoin, Litecoin, Zcash, RSK, Augur (REP), Dash, and Ethereum (ETC and ETH).

Keep in mind that Jaxx also functions online and is inherently riskier than a hardware wallet or cold storage.

MyCelium Bitcoin Wallet Review

MyCelium is popular among more intermediate Bitcoin users due to its robust advanced privacy and security features. It tends to be a bit tricky for beginners, but users appreciate its open-source software program and transparency.

Perhaps the greatest highlight of the MyCelium wallet is that the advanced privacy features allow you to stay anonymous while the advanced security features keep your bitcoin safe. Unfortunately, MyCelium is only accessible via smartphone as there is no web or desktop interface.

Learn more in our MyCelium Wallet Review.

Final Thoughts

Nothing is 100% secure. There are certain hardware and software wallets that are extremely close, but not perfect. The one thing that hardware and software devices can’t protect you from is human error. Human error includes forgetting your information, or falling prey to phishing attacks that scam you into sending bitcoins to a wrong address.

Wallets house your cash. They keep your hard-earned money safe. But they can only do so much. Keep this in mind!

They say that bad things happen to good people. But dare I say that they only happen to careless good people?

(Looking for an Ethereum Wallet? Check out our list of Best Ethereum Wallet options.)

The post Best Bitcoin Wallet Reviews in 2024 appeared first on CoinCentral.

Our Uphold review explores everything you need to know about the company’s history, the exchange’s utility, how to best use the exchange, a signup bonus, and more.

Uphold Exchange Key Information

About the Uphold Company: Diving into the Cryptocurrency Exchange’s History

Launched in 2014 under the name Bitreserve as a Bitcoin trading platform, Uphold has established its reputation as a scandal-free functional exchange through multiple bull and bear cycles. It shares this standing with exchanges like Kraken (founded 2011), Coinbase (founded 2012), and Gemini (founded 2015). 

However, Uphold is a relatively lesser-known exchange compared to its graduating class, which strikes us as strange given the resume of its founder, Halsey Minor. 

Halsey Minor is best known for also founding CNET, an early blog covering computers and software largely considered a pioneer in profitable blogging. Between 1995 and 2000, CNET was one of the top fifteen largest websites in the world based on traffic and generated billions of dollars in revenue. Minor is also credited with foundering or co-founder companies such as Salesforce, Google Voice, OpenDNS, E! Online, NBCi, and Vignette.

In addition to Uphold, Minor launched cryptocurrency companies like Live Planet and Vivid Labs, both of which involve tokenizing computing power, video, and NFTs. We interviewed Minor in 2018 about Live Planet and his thoughts on cryptocurrency.

Minor is no longer with Uphold in an employment capacity today; the current CEO is Simon McLoughlin. 

Uphold currently boasts over 10 million users. 

The company is based in 80 East Sir Francis Drake Blvd., Ste. 3D, Larkspur, CA, north of San Francisco.

About the Uphold Exchange

The Uphold website exchange interface offers a clean, minimalistic UI– closer to the simplicity one would expect from Coinbase and less so from the more complex trading screens on Kraken.

Uphold excels from the cryptocurrency exchange pack in that it also offers four commodities: precious metals: Gold (XAU), Platinum (XPT), Palladium (XPD), and Silver (XAG).

Users can trade over 250+ cryptocurrencies. 

Uphold sign-up bonus: Uphold currently offers a $50 BTC sign-up bonus when you trade at least $600. 

Uphold’s mobile app is available on both Android and iOS. Out of over 4,300 reviews on the Apple App Store, Uphold has a rating of 3.6 stars. The Uphold app is rated 4.2 stars with 15,260 reviews on Google Play. 

Uphold Fees: Deposits, Trades, Withdrawals

Since Uphold supports all sorts of fiat and cryptocurrency options, its fee structure can be complex for newer traders. 

Opening an account and holding funds on Uphold is free. It’s also free to fund an Uphold by depositing cryptocurrency or from another Uphold account. This means that all member-to-member transactions are free. 

Uphold also doesn’t charge any fees for bank deposits or withdrawals for U.S. users using ACH. 

Debit cards come with a 2.49% fee, and credit cards have a 3.99% fee.

Uphold makes money on the spread (difference between the bid and ask) on transactions– it claims its spread is typically between 0.8% to 1.2% on BTC and ETH. The spread can be higher for lower-liquidity cryptocurrencies– Uphold urges users to check rates at the Preview confirmation screen before trading. 

Spreads for other trading assets and commodities range from 0.65% to 3.95%. 

Precious metals are a 3% spread, in addition to the bid-ask spread charged by Uphold’s supplier. 

Fiat currency trading comes with a 0.2% spread.

There is a $1 transaction fee when the amount transacted is under $1. 

Uphold’s debit card comes with a $9.95 one-time fee, and each withdrawal costs $2.50. 

A complete updated list of Uphold’s fees can be found on its fee page. 

Uphold Competition and Alternatives

Uphold is considered one of the top ways to buy cryptocurrency, but there are always other options for various desires:

Maybe you prefer a different fee structure? Coinbase, Kraken, and Gemini all offer comparable fee structures and are typically a hair under those of Uphold. 

You may want a different mobile trading experience. Robinhood offers a clean mobile trading experience, albeit with higher costs per trade.

Maybe you just fear hot air balloons, and Uphold’s logo terrifies you. Whatever you do, do not look up the hot air balloon festival in Cappadocia, Turkey.

How Do I Open an Account on Uphold?

Begin by visiting the Uphold website.  Snag that $50 in BTC bonus when you trade at least $600– if you want. 

Creating an account is a seamless experience and takes less than fifteen clicks from registration to purchase for individuals. You must go through the standard KYC and AML identity verification processes, such as submitting your ID. 

You can also open a business account on Uphold, a unique offering, as most popular cryptocurrency exchanges only focus on individuals. However, creating a business account may take longer, requiring a more substantial verification process. 

Security: Is Uphold Safe?

Overall, Uphold has a strong security track record, and its users are content with the security of the service. The exchange checks all the boxes you’d expect for a modern and compliant cryptocurrency exchange:

• Two-factor authentication (2FA) is the default for all accounts
• It has a bug bounty program
• It claims 90% of cryptocurrency is kept offline in cold storage

One minor security incident in November 2018 saw Uphold temporarily suspend BTC withdrawals– a third-party mail account was compromised, not Uphold’s existing inbound mail system;  hackers tricked users by sending a phishing email that said anyone could send between 0.1 and 50 BTC to a specified address and get back 15 percent more. The hackers made away with just $2,200 from two transactions.

Security is a paramount concern for cryptocurrency exchanges. 

Regarding a 2018 QuadrigaCX exchange scandal, where the founder Gerald Cotton allegedly died with private keys to $190 million, prior UpHold CEO JP Thieriot commented:

“While it’s certainly suspicious that an exchange would allow one man to hold $190 million, we can’t be sure that this was not the case. With all due sensitivity to the situation, an exchange’s cold storage being vulnerable in this way is bound to invite speculation of malfeasance. A fact pattern including $22m in frozen funds by the CIBC is also not encouraging.

Unfortunately, schemes like this are not new to the space, and continue to tarnish the reputation of exchanges, and discourage new investors. If we want to make the leap to the mass market, we have to take steps to prevent issues like these from becoming commonplace.

Universal Protocol has alluded to the systemic problem by offering recoverability of private keys, though we never contemplated an event of this scale. While this may be potentially bullish for BTC, the bigger focus is on how these events impact the industry in the long run as we collectively aim for mass adoption.”

Can You Trust Uphold?

Uphold has a very catchy tagline in the wake of cryptocurrency industry chaos… Sometimes boring is better…

Uphold claims that its funds have always been and always will be 100% reserved, and it never lends out your cryptocurrency, so it’s always available to withdraw. 

However, instead of publicly lying about the safety of its assets *cough* Alex Mashinsky. Celsius Network *cough* Uphold publishes its reserve status live. 

Anyone can see all of Uphold’s assets, obligations, transaction volume, and number of transactions on Uphold’s site– updated live.

The transparency section of the site highlights different views in several asset tiers and various fiat holdings.

Uphold Fiat Currency Options and Trading Limitations

The exchange supports 28 fiat currencies. This is an area where Uphold excels over the vast majority of exchanges. Most major fiat-to-crypto exchanges don’t support currencies outside of USD, EUR, GBP, and CNY.

It also supports over 250+ cryptocurrencies, including BTC, ETH, DASH, LBA, LTC, BAT, BCH, BTG and XRP. 

An early Uphold innovation was the innovative things about Uphold: the ability to use email to send Bitcoin (BTC) to people in over 150 countries– a feature launched in 2018.

Access is available in every nation except for the Central African Republic, Cuba, Iran, Libya, North Korea, Somalia, Sudan, and Syria. 

Uphold requires the standard AML and KYC verification processes to use the exchange. During registration, the exchange collects info like date of birth and phone number. To become a verified member, you need to provide the following three items: current residential address, government-issued ID (passport, national ID card or driver’s license), and a clear photo of your face. 

Customer Service Experiences

Uphold boasts an overall rating that is generally better than many exchanges, according to third-party review sites like TrustPilot.

While Uphold excels in many areas, the negative reviews mostly focus on issues related to customer service requests. Account locks after filling out verification information or depositing funds appear to be common. Some users have reported that they have talked with multiple customer service representatives over periods of days or weeks and have not been able to resolve their issues.

Still, many complaints listed in reviews are unfair. For example, some users gave bad reviews for long and/or inconsistent ACH transfer wait times. For the most part, this issue is outside of the control of Uphold or any other exchange.

In most scenarios, this has more to do with the processing capabilities of an individual’s bank.

Uphold Staking Updates

Uphold offers its staking program everywhere it operates except the United States.

The exchange suspended its staking services in the United States following SEC guidance– similarly, exchanges like Coinbase, Kraken, and Gemini were beckoned to do the same. 

The SEC considered Staking-as-a-Service providers as offering securities, which is a notion currently being challenged in courts. As per proof-of-stake blockchain programming, staking essentially helps validate transactions and secure a blockchain network– which is different from the context implied by offering securities.

However, rules are rules, and Uphold is playing ball. 

If the argument is successfully challenged, uphold plans to reintroduce staking in the United States. 

Uphold does offer its crypto-staking service everywhere else in the world. It offers ten popular staking-enabled cryptocurrencies, such as:

• Ethereum (ETH)
• Cardano (ADA)
• Polkadot (DOT)
• Solana (SOL)

Final Thoughts: Is Uphold Legit

Overall, Uphold boasts some features that should qualify it as a top exchange choice for any beginner to intermediate. 

The exchange’s history since 2014 has so far been anticlimactic, which is an excellent quality in an industry still dazed by the likes of FTX, Celsius Network, Voyager, and BlockFi.

However, it’s worth noting that Uphold, like all other centralized exchanges, takes custody of your private keys and assets, which is one significant layer of control away from being fully decentralized and in control of your funds.

By most cryptocurrency exchange grading systems, Uphold is a perfectly good (thankfully, boring) exchange that is running in accordance with all regulatory guidelines. What really sells us on the exchange is its public publishing of assets and obligations that showcase the exchange isn’t lending out your assets ever. 

The fees are reasonable, and the exchange has offered periodic no-trading fee periods to encourage new user sign-ups. 

Uphold is right for you if:

1. You want a simple, straightforward exchange with a clean user interface that you can trust to keep your cryptocurrency safe, given you take the proper user precautions. 
2. You want to access and spend your cryptocurrency online and in stores using the Uphold debit card.
3. You want to dabble in fiat currency exchanges and commodities in a single platform. 

Ultimately, the decision to make an account on Uphold is up to you– it offers a $50 BTC sign-up bonus when you trade at least $600. 

 If your experience with the exchange or company is different from what we’ve described above, please reach out to us and let us know.

“Uphold Disclaimer: Assets available on Uphold are different per region. All investments and trading are risky and may result in the loss of capital. Cryptoassets are largely unregulated and are therefore not subject to protection“

The post Uphold Exchange Review: Can You Trust Uphold with Your Crypto? (Updated 2024) appeared first on CoinCentral.

LSTs, like stETH from Lido, allow you to stake your Ethereum and earn staking rewards while retaining liquidity. 

This means you can use your staked assets in various DeFi activities, such as lending, trading, or providing liquidity, all while still earning staking rewards. This dual functionality has kept many folks’ hands full, boosting the capital efficiency and appeal of staking. 

Liquid Re-Staking Tokens, LRTs, take this a step further by enabling restaking, which means you can re-stake your already staked tokens to earn additional rewards. 

Platforms like EigenLayer allow stakers to participate in securing new blockchain projects or DeFi services, earning yields from the base Ethereum staking, liquid staking activities, as well as staking activities. 

Liquid Staking into Liquid Re-Staking: A Brief History

As of writing, there are 1,023,467 validators actively securing the Ethereum blockchain, with a staggering 32,709,951 $ETH staked– about $115 billion in normal people terms. 

Of that lump sum, $47 billion is done through liquid staking, a testament to the explosion of interest and investment in Liquid Staking Derivatives (LSDs).

The spark was The Ethereum Shanghai Upgrade in April 2023, which revolutionized staking by enabling stakers, who had locked up their ether since December 2020, to withdraw both their principal and their rewards. 

This newfound flexibility turned heads and opened wallets, driving a surge in LSDs. But let’s rewind. 

The real game-changer was the Merge in September 2022; Ethereum shifted from its energy-hungry Proof-of-Work (PoW) model to the sleek and efficient Proof-of-Stake (PoS) system. 

Validators became the gatekeepers of the Ethereum network, and are rewarded handsomely with an annual return of around 4-5% on their staked ETH. This has transformed Ethereum from a few mining whales to a bustling hub of over a million validators.

Unlike miners who need vast resources to solve complex puzzles, validators simply need to stake 32 ETH to gain the privilege of adding blocks to the blockchain; folks with less than 32 ETH could delegate their holdings to a validator and earn yield as well. 

This democratization of block creation meant lower costs and higher participation.

So, each validator earns roughly 1.25 to 1.6 $ETH per year– about $4,300 to $5,600, in addition to any token appreciation, forming a relatively conservative economy around relatively passive income. 

The journey from the Merge to the Shanghai Upgrade set the stage for the DeFi momentum from which Liquid Staking Derivatives emerged.

With traditional staking, you lock up your cryptocurrency to help validate transactions and maintain the network’s integrity.

With liquid staking, you’d still lock up your cryptocurrency ($ETH) and earn yield, but in return, you’d get a liquid staking token, stETH (Staked ETH), which you can use for various other DeFi purposes. 

For example, you stake 10 ETH on a platform like Lido and receive 5 stETH in return. These tokens can be utilized in various DeFi activities, such as crypto swaps, providing liquidity, lending, and using them as collateral. 

Typically, Ethereum staking yields about 3-5%. Depending on your specific activities, you can enhance your returns further by engaging in DeFi with your stETH (3-5% + x%). Note that, prior to the re-staking infrastructure we’ll describe below, staking your LSTs wasn’t possible.

Lido is the most successful liquid staking protocol, capturing the bulk of the Ethereum DeFi Liquid Staking Derivatives (LSD) market.

Note on TVL: TVL calculations are often contentious, involving double-counting of tokens. For example, if a user deposits ETH into Lido, it is counted in Lido’s TVL. If the resulting stETH is then deposited into EigenLayer, it is counted again in EigenLayer’s TVL, leading to inflated and potentially misleading representations of value. This double-counting results in TVL figures that are considered unreliable, distorting the DeFi landscape.

From Liquid Staking to Re-Staking

Liquid restaking, pioneered and launched by EigenLayer in June 2023, introduced the ability for liquid staking tokens (LSTs) to be further tokenized into liquid restaking tokens (LRTs).

Very meta, indeed. 

LRTs offer stakers new ways to maximize their assets through a broader range of activities beyond simply increasing yield. Specifically, it supports Actively Validated Services, or AVS, including layer-2 networks, data layers, dApps, cross-chain bridges, and more. 

The pitch for AVSs is that by integrating with Ethereum’s consensus mechanism, AVSs no longer need to develop their own costly consensus systems. 

Security + cost savings = win/win for AVSs

In this system, LSTs can be restaked (supporting the AVSs) and converted into LRTs, which can then be used to participate in various DeFi activities. 

So, stakers earn rewards from the primary staking network and the additional AVS applications they support. 

Re-Staking Behind the Scenes

Node operators register with EigenLayer, allowing stakers to delegate their tokens to them. Operators then validate AVS tasks and secure transactions by restaking their ETH, acting similarly to Ethereum validators. 

AVSs gain network security, and restakers earn supplemental rewards. 

The ability to earn staking rewards from both the native network and the new protocol, alongside additional AVS rewards, has made liquid restaking a pretty attractive option for experienced yield seekers.

EigenLayer’s first Actively Validated Service, EigenDA, launched in Q2 2024, with more services expected to follow. 

Re-Staking (and Liquid Staking) Risks

For starters, liquid staking introduces a few distinct risks.

Staking through a liquid staking protocol outsources the responsibility of maintaining a validator node. In proof-of-stake networks, staked assets can be slashed due to malicious or negligent behavior from validators. 

Being slashed means you lose a portion of the assets you’ve staked.

While liquid staking derivatives aim to reduce these risks, they cannot completely eliminate them, leaving stakers vulnerable to potential losses if validators are penalized.

LST value is influenced by market dynamics, including supply and demand, liquidity constraints, and price volatility. Theoretically, these tokens could “depeg” significantly from the underlying staked cryptocurrencies, leading to a substantial deviation from the native token’s value. 

Such a de-pegging event can trigger a cascade of liquidations, compounding the financial impact on users.

For example, if stETH is worth significantly less than ETH for some reason, people would likely sell stETH to move into the safer base layer asset (or completely exit the ETH ecosystem.) 

The custodial risk associated with the potential for malicious actions by liquid staking protocols can result in the loss of staked assets. 

Further, liquid staking derivatives rely heavily on smart contracts to manage staked assets and issue derivative tokens. Smart contracts can have bugs and vulnerabilities or be exploited, leading to significant financial losses for users.

Similarly, restakers place this trust in the platforms they use for staking.

While Liquid Restaking Tokens (LRTs) offer higher profit potential compared to native tokens or Liquid Staking Tokens (LSTs), they also come with a higher risk of substantial loss.

A recent incident with Renzo Protocol illustrates these risks: users holding Renzo Protocol’s liquid restaking token, ezETH, experienced significant losses when the token depegged during a controversial airdrop of the REZ native token, leading to a $60 million liquidation cascade.

As of June 2024, Renzo Protocol is still operational and has continued to grow and evolve. The protocol has been actively expanding its ecosystem and is now integrated with multiple platforms, including Morpho Blue, Balancer, Curve, and Pendle. Renzo has also been added to Binance’s Launchpool as its 53rd project, highlighting its prominence in the DeFi space.

Despite these inherent risks, the appeal of liquid staking derivatives still draws many validators, and ETH (and stETH) holders. 

Further Re-staking Considerations

On one hand, “restaking” has the vibes of hypothecation, the culprit behind the demise of Luna and Celsius. This line of thought would point to this as the next black swan event in the crypto space if something goes wrong. 

Users should rightfully be skeptical about any DeFi innovation if only for the sake of poking holes through weak designs that could collapse and cost people their shirts. 

On the other hand, a closer examination suggests that the fear may be exaggerated, likely influenced by past traumatic events like the Luna collapse.

Eigen’s docs essentially claim that “rehypothecation” isn’t possible because the layer doesn’t have financial activities– remember, rehypothecation has to do with the domino effects of lending borrowed funds. 

EigenLayer’s primary function is to pass economic security to new projects implementing proof-of-stake mechanisms rather than engaging in financial activities that could create a domino effect.

However, the biggest, often overlooked, risk is its inherent centralization.

Involving multiple off-chain networks complicates the verification of honest behavior. A significant slashing event on EigenLayer relies on manual triggers, raising concerns about the system’s transparency and reliability. While advanced cryptography might address these issues in the future, it hasn’t yet provided a solution.

For U.S. investors, there’s an added layer of risk. EigenLayer could potentially meet the criteria of the Howey Test, classifying it as a security under SEC regulations. This is particularly relevant since EigenLayer accepts deposits from non-validators for yield, similar to staking on a centralized exchange. This arrangement essentially places investors in a securities contract, relying on the entities to manage their investments correctly.

Making the process permissionless could introduce further complications. Malicious entities could potentially manipulate the system by overwhelming it with votes to cause slashing events. If collateral is required to vote, then this collateral might be classified as a

security, creating a complex legal and operational situation. This predicament may prevent EigenLayer from achieving full decentralization, limiting its potential growth and stability.

Overall, while restaking presents opportunities for enhanced yields and security, these potential risks and regulatory challenges should be carefully considered by investors and developers alike.

Final Thoughts: Liquid Restaking and the DeFi Evolution

Liquid staking and restaking are new, albeit experimental, fixtures of DeFi that combine enhanced yield opportunities with liquidity.

The Shanghai Upgrade and the Merge facilitated this growth and made Ethereum staking more accessible and profitable. This has drawn significant attention from crypto OGs, technologically advanced DeFi crowds, and more institutional investors’ interest. 

By proxy, an ETH ETF would stimulate and accelerate innovation (and breaking points) for both liquid staking protocols like Lido and staking protocols like Eigen Layer. 

Looking ahead, the success of liquid staking and restaking will hinge on addressing the risks and considerations noted above. 

The post What are Liquid Restaking Tokens (LRTs) & Liquid Staking Tokens (LSTs) appeared first on CoinCentral.