Binance Academy

Key Takeaways

Yield farming and staking allow users to get rewards on their crypto holdings without having to trade them constantly.

Staking involves participating in a blockchain's Proof of Stake (PoS) mechanism to validate transactions and get rewards.

Yield farming generally involves lending or staking assets in liquidity pools to get rewards, but this often requires more active management than staking.

While staking offers consistency and time efficiency, yield farming can offer higher rewards but comes with higher complexity and risks.

One key benefit of passive investing is that it takes very little effort compared to active trading. However, remember that these rewards are only “worth it” when the market prices remain stable or increase.

Introduction

When people start with cryptocurrency trading, they usually focus on buying and selling coins (spot trading). But after a while, many investors look for ways to make better use of their idle assets.

This is where passive investing comes in. It’s a good choice if you feel unsure about trading actively; it allows you to grow your holdings without having to monitor the markets constantly.

Two of the most popular methods for generating passive income in the crypto space are staking and yield farming. While both strategies can bring rewards, they function differently and carry unique risk profiles. This guide compares the two to help you decide which fits your investment style.

What Is Passive Investing?

Think of passive investing as a way to grow your money without working too hard. Instead of checking prices every hour or making lots of trades, you put your money into assets and let them grow over time.

In the crypto world, there are many ways to do this. Common examples include staking, yield farming, and lending.

The advantages

Get rewards: You can increase your assets just by holding them.

Consistency: Unlike trading, where you have to make decisions constantly, passive investing follows a set plan that is usually focused on the long-term.

Save time: This is great for people who want a more hands-off approach. It requires much less time and effort than active trading.

The risks

Before you start, it’s important to understand the potential downsides of passive investing:

Market risk: Since you aren't managing your money actively, you might not react fast enough if the market gets volatile or crashes. This can lead to losses or periods where your investment doesn't perform well.

Funds may be locked: Depending on the product you choose, you might not be able to touch your money for some time.

Concentration risk: Some passive strategies rely heavily on a few specific assets. If those assets have problems, your investment may suffer.

Staking

Staking is one of the most popular ways to get passive income with crypto. When you participate in crypto staking, your rewards are based on the work done by blockchain validators (as part of the Proof of Stake consensus mechanism).

How it works on Binance

Binance offers simple options like ETH Staking, SOL Staking, and Soft Staking. It’s quite simple: you put your crypto in and get rewards back automatically.

Flexible vs. Locked: Some options are flexible, meaning you can take your money out anytime. Others are locked, meaning you agree to leave your funds there for a specific time.

Liquid Staking: For assets like ETH and SOL, Binance gives you a token back (like BETH or BNSOL) that represents your staked assets. This is a big benefit because you can still use, sell, or move these tokens while receiving rewards (unlike traditional staking, where your money is locked).

Soft Staking: A simple and flexible way to get passive income on supported assets by holding them in your Binance Spot Wallet. You are still allowed to trade, withdraw, or use them anytime without lock-up periods. Rewards are based on your average daily balance and distributed automatically.

Yield Farming

Yield farming is a strategy used in the decentralized finance (DeFi) space where users generate passive income by depositing their assets into smart contracts known as liquidity pools. 

Unlike staking, which helps secure a blockchain network, yield farming focuses on providing liquidity to decentralized exchanges, lending platforms, and other DeFi protocols. Common examples include Aave and Uniswap.

Liquidity providers (LPs): When you participate in yield farming, you act as a liquidity provider. You deposit funds to facilitate trading, lending, or borrowing for other users.

Rewards: In exchange for "renting out" your assets, you earn rewards. These can come in the form of interest, a share of transaction fees, and governance tokens.

Impermanent loss: Also known as divergence loss, this is a risk specific to yield farming. Impermanent loss happens when the price of your deposited assets changes compared to when you deposited them. In some cases, you might end up with less value than if you had simply held the tokens in your wallet.

Staking vs. Yield Farming

When compared to staking, yield farming tends to be more complicated. While both allow you to get rewards from idle assets, the mechanics and risks are different.

The goal: Staking helps secure a blockchain (Proof of Stake) and validate transactions. Yield farming provides liquidity to DeFi applications so others can trade or borrow.

Complexity: Staking is generally a "set it and forget it" strategy. Yield farming often requires active management, such as moving funds between different pools to find better returns (yield aggregators can help with this).

Risk profile: Staking risks are mostly related to the asset's price or validator performance. Yield farming carries additional risks, such as smart contract vulnerabilities, rug pulls, and impermanent loss.

Profitability: Because of the higher risk and complexity, yield farming usually offers better returns compared to staking.

Which is better for you?

​​Choosing between the two depends on your experience level, risk tolerance, and how active you want to be.

Choose Staking if:

You are a beginner in the crypto space.

You prefer a simple method to earn rewards.

You are a long-term holder of specific Layer-1 tokens (like ETH or SOL) and want to contribute to the network's security.

You want more predictable returns without worrying about more complicated DeFi strategies.

Choose Yield Farming if:

You are an experienced DeFi user comfortable with smart contracts and crypto wallets.

You have a higher risk tolerance and are willing to take more risks for the chance of better rewards.

You have the time to actively manage your positions and research different liquidity pools.

You want to earn specific governance tokens or maximize the yield on your idle assets.

Closing Thoughts

Both staking and yield farming are viable methods of passive income in the cryptocurrency market. Staking offers a more stable and predictable path, making it suitable for beginners or those who want to support their favorite blockchain networks. Yield farming can offer higher potential rewards but requires a deeper understanding of DeFi markets and stricter risk management.

Regardless of which path you choose, always remember to do your own research and only risk what you can afford to lose. Also, consider using hardware wallets and diversifying your investments to improve security.

Further Reading

What Are Liquidity Pools in DeFi?

What Is Liquid Staking?

What Is a Rug Pull in Crypto and How Does It Work? 

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

Rehypothecation occurs when a lender uses the collateral pledged by its users to secure its own loans or generate yield with third parties.

While it increases liquidity and allows platforms to offer high interest rates, it also creates a complex chain of financial dependency.

The main risk of rehypothecation happens when a third-party borrower defaults, causing the primary lender to become insolvent and leaving depositors unable to withdraw their funds.

Investors can mitigate risks through self-custody. It’s also important to understand the terms of service and recognize the trade-off between high yield and security.

Introduction

Earning passive income through crypto lending platforms has become a popular strategy. Users deposit their digital assets to earn an annual percentage yield (APY), much like a savings account. However, unlike traditional banking, the mechanisms generating these yields often involve a practice known as rehypothecation.

While rehypothecation is a standard practice in traditional finance (TradFi), its application in the crypto sector operates with fewer regulations. Understanding this concept is important for any investor entrusting their assets to a centralized exchange (CEX) or lending platform.

Understanding Hypothecation vs. Rehypothecation

Hypothecation is the act of pledging an asset as collateral to secure a loan. For example, when you take out a mortgage, your house is hypothecated to the bank. You retain ownership, but the bank has a claim on it if you default. In crypto, this happens when you lock bitcoin to mint a stablecoin or take a cash loan.

Rehypothecation occurs when the entity holding your collateral (the bank or crypto platform) takes those pledged assets and uses them for their own purposes, usually pledging them as collateral for their own trading or lending them to a third party. In other words, you lend your money to a platform, and the platform lends your money to someone else.

How Rehypothecation Works in Crypto

Rehypothecation is the engine behind many high-yield crypto accounts. Here is the typical flow of funds:

Deposit: Let’s suppose you deposit 1 BTC into a centralized lending platform offering 5% APY.

Re-lending: The platform takes your 1 BTC and lends it to an institutional borrower (such as a hedge fund or market maker) at 8% interest.

The spread: The platform pays you 5% and keeps the 3% difference as profit.

From the platform's perspective, this maximizes capital efficiency. However, it means your bitcoin is no longer sitting in the platform's cold storage; it’s in the hands of a third party.

The Core Risks of Rehypothecation

When assets are rehypothecated, the depositor is exposed to "counterparty risk." This creates a house-of-cards scenario where the failure of one entity can trigger a collapse of others.

1. Counterparty insolvency

If the hedge fund (Borrower B) makes bad trades and loses the BTC they borrowed from your platform (Lender A), they cannot repay the loan. Consequently, Lender A now has a hole in its balance sheet and cannot repay you. You are relying on the financial health of entities you don’t really know.

2. Bank run

In times of market volatility, users often rush to withdraw their funds simultaneously. If a platform has rehypothecated a large percentage of user funds into illiquid investments or long-term loans, it likely won’t have the liquid cash to honor withdrawal requests. This usually leads to a freeze on withdrawals and potential bankruptcy.

3. Unsecured creditor status

In traditional brokerage accounts (like in the US), rehypothecation is capped (usually at 140% of the loan balance) and insured (SIPC). In crypto, regulations are still evolving. Terms of Service for many lending platforms state that upon deposit, you transfer ownership of the assets to them. In the event of bankruptcy, depositors are often treated as unsecured creditors, meaning they are last in line to be repaid.

Examples: The 2022 Liquidity Crisis

The risks of rehypothecation became a reality during the crypto market crash of 2022. Several major platforms collapsed due to aggressive rehypothecation strategies:

Celsius Network: The platform rehypothecated user funds into high-risk DeFi protocols and loans. When the market turned, they could not recall liquidity fast enough to meet user withdrawals.

Voyager Digital: Voyager lent hundreds of millions of dollars of user assets to a single hedge fund, Three Arrows Capital (3AC). When 3AC defaulted due to its own trading losses, Voyager became insolvent.

CeFi vs. DeFi Rehypothecation

It’s important to distinguish between centralized and decentralized finance. CeFi operations are more opaque. Users often deposit funds into a "black box" without knowing who the counterparty is or how much leverage is being used.

DeFi rehypothecation exists (often via liquid staking or wrapping), but it is generally transparent. Users can verify on the blockchain where their assets are deployed. However, DeFi introduces smart contract risk, where bugs in the code can lead to loss of funds.

How to Mitigate Rehypothecation Risk

Self-custody: The most effective way to avoid rehypothecation risk is to hold your assets in a non-custodial crypto wallet. If you hold the private keys, the assets can’t be lent out.

Read the fine print: Before using a centralized lender, read the Terms of Service. Look for clauses regarding "transfer of title" or the platform's right to "pledge, re-pledge, or hypothecate" your assets.

Assess the yield: Be skeptical of high yields. If a platform offers significantly higher interest than the market average, it often signals they are engaging in riskier rehypothecation strategies to generate that return.

Segregated accounts: While rare in retail, some institutional custodians offer segregated wallets where client assets aren’t mixed with the firm’s assets.

Closing Thoughts

Rehypothecation is a double-edged sword. On one hand, it provides the liquidity necessary for markets to function and allows holders to earn yield on idle assets. On the other hand, it introduces systemic risks that can lead to total loss of funds during bear markets.

For the individual investor, the choice comes down to risk tolerance. Remember that old saying: "not your keys, not your coins". Keeping control over your funds provides total protection against rehypothecation risk.

Further Reading

What Are Wrapped Tokens?

What Is Crypto Staking and How Does It Work? 

Hot vs. Cold Wallet: Which Crypto Wallet Should You Use? 

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

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📖 Binance Academy Knowledge
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Key Takeaways

Intent-based transactions allow users to define a desired outcome rather than the specific steps to achieve it.

This model shifts the complexity of execution from the user to specialized third-party agents known as solvers or fillers.

Intent-based transactions can make your trading experience smoother, save some money on fees, and protect you from certain trading bots.

But there are some limitations, such as potential centralization risks and opacity regarding how intermediaries (solvers) execute the trades.

Introduction

In the early days of decentralized finance (DeFi), making a trade felt a bit like solving a puzzle. You had to figure out the gas fees, choose the right path for your trade, and hope the transaction didn't fail. If you made a mistake, you lost money.

Intent-based transactions were designed to fix this, making DeFi more accessible. Instead of giving you a box of tools and telling you to build the car, the system acts like a taxi driver: you just tell it where you want to go, and it handles the driving.

What Are Intents?

In DeFi, an intent is your goal. So, unlike a standard transaction that lists specific instructions (e.g., "Do A, then B, to get C"), an intent simply states the desired outcome (e.g., "I want X, and I am willing to pay Y”). Let's compare the newer intent model with the traditional method.

The traditional method: Imperative

This is the "Do It Yourself" approach. You have to give specific instructions to the blockchain.

Example: "Take my token, go to this specific pool, swap it, pay this much gas, and send the new token to my wallet."

Problem: If the gas fee changes or the pool is empty, your trade fails. You have to know exactly how the system works.

The newer method: Declarative Intent

This is the "Make It Happen" approach we described earlier. You focus on the result.

Example: "I have 1 ETH and I want at least 2,000 USDC. Make it happen."

Solution: You don't care which pool is used or how the gas is paid. You just want the final result to match your request.

How Do Intent-Based Systems Work?

In an intent-centric architecture, the transaction lifecycle changes significantly from the standard public mempool model.

User expression: The user signs a message (the intent) defining their specific goal, such as swapping Token A for Token B at a minimum price.

Outsourcing: This intent is broadcast to a network of third-party agents, often called solvers, searchers, or fillers.

Execution: Solvers compete to find the optimal execution path. They may aggregate liquidity from various sources, batch multiple orders, or use their own inventory to fulfill the request.

Settlement: The winning solver executes the transaction on-chain. In many designs, the solver pays the gas fees upfront and is reimbursed through the trade.

Benefits of Intent-Based Transactions

Improved user experience (UX)

Intents abstract away the technical complexities of DeFi. Users do not need to worry about gas spikes, failed transactions, or bridging assets across chains manually. For example, "gasless" trading is made possible because solvers can pay the network fees in the native coin (like ETH) while the user pays in the token they are swapping (like USDC).

MEV protection

In traditional trading, users are vulnerable to Maximal Extractable Value (MEV) attacks, such as front-running or sandwich attacks. Intent-based systems often protect users by delegating the execution risk to solvers. Since the trade is not finalized until the user's conditions are met, the solver is incentivized to protect the value of the trade.

Capital efficiency and better pricing

By outsourcing execution, users gain access to a competitive market of solvers who search for the best prices across both on-chain and off-chain liquidity sources. Solvers can also batch multiple transactions together (coincidence of wants), which improves efficiency and reduces the overall impact on the network.

Examples of DeFi Platforms With Intent-Based Transactions

Many DeFi protocols have adopted intent-based models to enhance their services:

CoW Protocol: Uses batch auctions to match trades and protect users from MEV.

UniswapX: Aggregates liquidity from various sources and offers gas-free swaps using a Dutch auction mechanism.

1inch Fusion: Allows users to place orders that are executed by professional resolvers who pay the gas fees.

Across Protocol: Uses intents for fast and cost-effective cross-chain bridging.

Risks and Challenges

While intents make life easier, there are a few things to watch out for:

Centralization risk: Right now, becoming a solver is hard work. If only a few big companies can do it, the system tends to become less decentralized.

Trust: You have to trust that the system of solvers is working fairly. Since some of the work happens off the main blockchain, it can be harder to see exactly what is happening compared to the old way.

Closing Thoughts

Intent-based transactions are trying to make DeFi as easy as using a regular banking app. By focusing on what you want rather than how to get it, the technology fades into the background. As this tech grows, we can expect smoother, cheaper, and safer trading for all levels of DeFi users.

Further Reading

What Is Decentralized Finance (DeFi)?

What Are Liquidity Pools in DeFi?

Impermanent Loss Explained 

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

CLMMs allow liquidity providers to set specific price ranges for their assets instead of spreading them across all possible prices.

This model can offer better efficiency by concentrating funds where trading actually happens, meaning providers can earn more fees with the same amount of capital.

Unlike traditional models, CLMMs require users to watch the market more frequently. If the price leaves the custom set range, they stop earning fees.

While potential returns are higher, the risk of impermanent loss can also be greater if the market moves quickly against your position.

Introduction

In the early days of decentralized finance (DeFi), providing liquidity was mostly passive. You deposited your tokens into a liquidity pool, and the underlying smart contract spread your liquidity across every possible price. This model, known as the standard Automated Market Maker (AMM), was easy to use but not very efficient.

Imagine trying to sell water. In the standard AMM model, you would set up a shop on every single mile of a highway crossing the entire country, even in deserted areas where no one drives. Concentrated Liquidity Market Makers (CLMMs) changed this. They allow you to set up your "shops" only on the busy sections of the highway.

What Is Concentrated Liquidity?

In short, concentrated liquidity is liquidity that is allocated within a custom price range. In earlier versions of AMMs (like Uniswap V2), liquidity was distributed uniformly. This meant that a large portion of the assets in a pool was never actually used for trading, especially for stablecoin pairs where prices rarely move much.

With CLMMs (like Uniswap V3), you can choose to allocate your capital solely to a specific price interval. For example, providing liquidity for a stablecoin pair only between $0.99 and $1.01. This makes the liquidity "concentrated" around the current market price, where it’s most needed.

How Do CLMMs Work?

1. Ticks

To make custom ranges possible, CLMMs break down the price spectrum into small, distinct steps called ticks. You can think of ticks as the boundaries between different price areas. When you create a position, you choose a lower tick and an upper tick to serve as the borders for your liquidity.

2. Active liquidity

Your liquidity is only "active" when the current market price stays within the range you selected. As long as the price is inside your range, you earn trading fees.

However, if the price moves up or down and crosses your tick boundaries, your position becomes inactive. At this point, your liquidity is no longer earning fees.

3. Capital efficiency

The biggest benefit of CLMMs is capital efficiency. Because you aren't spreading your money across distant prices, you can provide less total capital to earn the same amount of fees as someone in a standard AMM.

For example, a user providing liquidity in a concentrated range might earn the same daily fees with $1,000 as a user in a traditional pool earns with $5,000, simply because the concentrated money is being utilized more effectively.

The Risks: It’s Not "Set and Forget"

While CLMMs offer better returns, they are more difficult to manage than standard AMMs.

Going out of range: If the price exits your chosen interval, your liquidity effectively converts into one of the two assets and sits idle. You stop earning fees until the price comes back or you manually move your position.

Impermanent loss: Because your liquidity is concentrated, the impact of price changes is amplified. If the market moves against you, you may experience impermanent loss much faster than in a standard pool.

Complexity: Standard AMM pools are easier to manage; you deposit and walk away. CLMMs require you to analyze the market and decide on a strategy. Some users even use game-theoretic strategies to optimize their positions, updating them frequently based on market movements.

Closing Thoughts

Concentrated Liquidity Market Makers have made DeFi markets deeper and more efficient. They allow traders to enjoy better prices and liquidity providers to earn higher yields on their assets. However, they transform liquidity provision from a passive income stream into an active investment strategy. If you are new to DeFi, consider starting with small amounts or simply stick to standard AMMs until you are comfortable with the concepts of CLMM ranges and ticks.

Further Reading

What Is an Automated Market Maker (AMM)?

Impermanent Loss Explained

What Are Liquidity Pools in DeFi?

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

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📖 Binance Academy Knowledge
Ethereum Fusaka Upgrade: All You Need to KnowWhat Is APRO (AT)?​​What Is Wrapped Ether (WETH)?What Is Zcash (ZEC)?What Is an Ethereum Improvement Proposal (EIP)?

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Key Takeaways

An Ethereum Improvement Proposal (EIP) is a formal document used to suggest new features or changes to the Ethereum network.

EIPs are the primary mechanism for community governance and protocol upgrades in Ethereum’s decentralized ecosystem.

Vitalik Buterin and other core developers review these proposals to guide the protocol's development.

Experienced developers, including founder Vitalik Buterin, review these documents to make sure the network continues to develop safely and effectively.

Introduction

Ethereum is a decentralized network that relies on a global community of developers and stakeholders to make decisions. Unlike centralized software companies, where a board of directors controls decisions and updates, Ethereum uses a collaborative process to implement changes.

The Ethereum Improvement Proposal (EIP) is the standard method for proposing, debating, and implementing these changes.

How EIPs Function in Governance

The EIP process is central to how decisions are made on the decentralized network. While code governs the execution of smart contracts, the evolution of that code requires human judgment and coordination.

In the early days of Ethereum, governance challenges were highlighted by the DAO incident, where a vulnerability led to big losses. The community had to debate what to do. Eventually, they decided to perform a hard fork to fix (revert) the damage. This proved that rules written in code aren't always perfect and that human judgment is necessary in certain situations.

Today, leaders like Vitalik Buterin still help guide these changes by reviewing EIPs and sharing research, but the process is open for the whole community to join in.

Real-World Example: EIP-1559

To understand the impact of an EIP, it is helpful to look at a major standard that changed the network's economics: EIP-1559.

Implemented during the London Hard Fork in 2021, EIP-1559 revamped the gas pricing mechanism. Before this upgrade, users had to guess how much to pay validators, often leading to overpayment or delayed transactions.

EIP-1559 introduced a more predictable formula involving two components:

Base Fee: A minimum amount of gas required for a transaction. Crucially, this fee is "burned" (removed from circulation), which reduces the total supply of Ether over time.

Priority Fee (Tip): An optional extra payment you give directly to validators to get your transaction processed faster.

Since the EIP-1559 proposal, the base fee is calculated automatically based on network congestion, which helps make costs more stable and predictable to users.

The Role of Consensus and Upgrades

EIPs are not just about code; they are about consensus. Proposals often undergo rigorous debate before being accepted.

For example, the transition from Proof of Work (PoW) to Proof of Stake (PoS), known as "The Merge", was the result of years of development and discussion involving technical specifications and validator design. Vitalik Buterin played an active role in these discussions, helping to explain the transition's purpose to the wider audience.

While some proposals result in "soft forks" (backward-compatible changes), others, like the response to the DAO hack or major upgrades, may require "hard forks".

Closing Thoughts

Ethereum Improvement Proposals are the roadmap for Ethereum’s future. They offer a clear, organized way for anyone to suggest how to make the blockchain better. Whether it is adjusting how fees work (like EIP-1559) or completely changing the engine of the network (like The Merge), EIPs are the bridge between human ideas and technical progress.

Further Reading

How Do Gas Fees Work on Ethereum? 

What Is the Ethereum Pectra Upgrade? 

The Merge Ethereum Upgrade: All You Need To Know 

Who Is Vitalik Buterin?

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

Zcash (ZEC) is a cryptocurrency forked from Bitcoin in 2016, designed to offer enhanced user privacy.

The network uses a technology called zk-SNARKs, which is a security protocol that allows transactions to be verified without revealing the sender, recipient, or amount.

Zcash uses the Equihash algorithm for mining, which differs from Bitcoin’s SHA-256, and is best mined using Application-Specific Integrated Circuits (ASICs).

Zcash uses a mining algorithm called Equihash. This is different from Bitcoin’s SHA-256, so miners need specific hardware to mine ZEC.

Introduction

Launched in 2016 by Zooko Wilcox O'Hearn and a group of scientists, Zcash began as a project called Zerocoin (later Zerocash). It was built as a hard fork of the Bitcoin codebase with a specific focus on security and anonymity, allowing users to shield their financial data from public view.

How Zcash Works: Privacy and zk-SNARKs

The core technology used by Zcash is a cryptographic tool known as zk-SNARKs (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge).

In a typical crypto transaction, the network confirms a payment by looking at the sender's address and the amount. It’s like writing a check where everyone can see the details.

In contrast, Zcash offers "shielded transactions,” so you are able to prove you have the money and that you sent it, without actually showing the details. The zk-SNARK technology is used to encrypt the information so the network can say "Yes, this is valid," but nobody else can see the sender, the receiver, or the amount. Still, if users want, they can also make their transactions public, just like Bitcoin.

Hashing algorithms

While Bitcoin uses the SHA-256 hashing algorithm for its Proof of Work (PoW) consensus mechanism, Zcash uses an algorithm called Equihash. This difference means that hardware and software designed for mining Bitcoin are incompatible with Zcash. Also, Zcash uses larger block sizes and different hashing times, aiming for a higher network hash rate.

How to Mine Zcash (ZEC)

Like Bitcoin, Zcash uses a PoW consensus mechanism. ZEC miners have to compete to solve cryptographic problems to produce new blocks and earn block rewards.

While it’s technically possible to mine Zcash coins using standard computers (with operating systems like Linux, Mac, or Docker), the network difficulty has increased significantly since its launch. So, mining ZEC with a personal computer is virtually impossible and rarely profitable.

To mine Zcash effectively, it is recommended to use:

ASIC miners: Application-Specific Integrated Circuits are hardware systems designed specifically for cryptocurrency mining.

Mining pools: By joining a mining pool, miners can combine their computing power to increase efficiency and the likelihood of earning rewards, which are shared proportionally among the pool members.

Who Runs Zcash?

Zcash was originally developed by the Electric Coin Company (ECC). In a move toward decentralization, the ECC transferred the trademark and licenses to the Zcash Foundation. By 2024, the ECC announced its intent to step back further, handing over governance decisions entirely to the Foundation.

However, Zcash’s privacy features also make it more concerning to governments and regulators. This has led to debates about the future adoption of ZEC and other privacy coins in a regulated global economy.

Grayscale Zcash ETF Application

In late 2025, Grayscale, a digital asset manager, submitted an application for a Zcash exchange-traded fund (ETF). If approved, the ETF would allow traditional investors to buy shares representing ZEC through their standard brokerage accounts, without needing to manage crypto wallets or private keys.

Closing Thoughts

Zcash is a crypto project focused on blockchain privacy that uses zk-SNARK technology. Its privacy technology allows people to keep their money transfers confidential without losing the ability to verify transactions.

Further Reading

What Is Bitcoin and How Does It Work?

zk-SNARKs and zk-STARKs Explained 

Hard Forks and Soft Forks Explained 

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

APRO is a decentralized oracle designed to provide reliable and secure data for various blockchain applications.

It uses a mix of off-chain and on-chain processes to deliver real-time data through two methods: Data Push and Data Pull.

The platform includes advanced features like AI-driven verification, verifiable randomness, and a two-layer network system to ensure data quality and safety.

APRO supports many types of assets, from cryptocurrencies and stocks to real estate and gaming data, across more than 40 different blockchain networks.

It can also help reduce costs and improve performance by working closely with blockchain infrastructures and supporting easy integration.

Introduction

Smart contracts on blockchains often need to access real-world data to work correctly. This is where oracles come in; they connect blockchain networks to external information. APRO (AT) is a decentralized oracle service that offers accurate, secure, and affordable data for a range of uses like finance, gaming, AI, and prediction markets.

How Does APRO Work?

APRO has a unique two-layer network. The first layer, called OCMP, is a group of nodes that collect and send data to the blockchain. These nodes check each other for accuracy. The second layer, known as the EigenLayer network, acts as a sort of referee to double-check data and solve any disputes. This setup helps reduce risks and keeps the system secure.

Participants in the network must stake tokens as a kind of guarantee. If they send incorrect data or abuse the system, part of their stake can be lost. Users outside of these nodes can also report suspicious actions by staking deposits, helping keep the network honest.

Data delivery: Data Push and Data Pull

APRO provides data to blockchains in two main ways:

Data Push: Nodes send updates regularly or when certain price changes happen. This ensures that data is fresh and helps scale the system without overloading the blockchain.

Data Pull: Instead of constant updates, data is fetched only when needed. This method helps reduce costs and improve speed and flexibility, especially for DeFi apps and exchanges that need up-to-date information.

Both methods use cryptography and consensus among nodes to make sure the data is correct and trustworthy.

Supported assets and networks

APRO covers a broad spectrum of data types, including:

Cryptocurrencies and tokens.

Real-world assets like stocks, bonds, commodities, and property.

Social media trends and macroeconomic indicators.

Event outcomes for prediction markets.

Gaming data and more.

APRO works with more than 40 blockchains, including Bitcoin, Ethereum, BNB Chain (and other EVM-compatible chains), Aptos, Solana, and TON.

Keeping data accurate and secure

APRO prioritizes data integrity and system security through:

Collecting data from multiple, independent sources to avoid relying on just one.

Using AI tools to spot unusual data or errors quickly.

Applying a method called Time-Volume Weighted Average Price (TVWAP) to calculate fair and precise asset prices.

Incentivizing honest behavior through staking rewards and penalties.

Partnering with security firms to audit its system regularly.

Using a special Verdict Layer to settle disagreements over data while keeping privacy intact.

APRO’s Verifiable Random Function (VRF)

APRO also offers a Verifiable Random Function, which provides fair and unmanipulable random numbers. This is important for games, decentralized autonomous organizations (DAOs), and other blockchain uses that depend on randomness.

Built with advanced signature algorithms and smart verification steps, APRO’s VRF is faster than traditional solutions. It incorporates measures to resist front-running attacks and supports fast integration via a unified access layer compatible with Solidity and Vyper smart contracts.

Common uses include fair rewards in play-to-earn games, selecting members of decentralized governance committees, protecting on-chain financial contracts, and creating unique NFT traits.

Easy Integration and Community Support

APRO provides user-friendly APIs and clear documentation to help developers connect their blockchain apps to the oracle service quickly. It also works closely with blockchain projects through programs like APRO Bamboo, which helps lower costs and improve data processing. The APRO Alliance invites developers and community members to join a shared ecosystem, encouraging collaboration and growth.

Closing Thoughts

APRO (AT) is a versatile decentralized oracle platform designed to facilitate secure, accurate, and cost-efficient data delivery across a wide range of blockchain ecosystems and asset types. Its combination of innovative technologies (including a two-tier network, AI-enhanced verification, and verifiable randomness) makes it well-suited for the demands of DeFi, real-world asset tokenization, gaming, and beyond.

Further Reading

What Is EigenLayer?

What Are Actively Validated Services (AVS)?

What Is a Decentralized Autonomous Organization (DAO)?

Blockchain Use Cases: Prediction Markets

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

🗞️ In The News
Bitcoin price climbs back above $90,000 after testing the $80k support level.President Trump says the US may cut income tax due to tariff revenue.Odds of the Fed cutting interest rates by 25 bps in December rose to 87% on Polymarket.USDT issuer Tether becomes the largest independent holder of gold in the world.Upbit suffers a $37 million hack on Solana assets and halts withdrawals.Ethereum raises block gas limit to 60M as ecosystem throughput hits new records ahead of the Fusaka upgrade.Australia moves to fold crypto platforms into a financial licensing regime.

📖 Binance Academy Knowledge
Ethereum Fusaka Upgrade All You Need to KnowWhat Is Open Interest?How to Use the Crypto Trade AnalyzerWhat Is Pendle (PENDLE)?What Is Quant (QNT)?

🔥 Binance Blog Highlights
Full Binance Blockchain Week Agenda Goes Live!  Binance Academy and Marlin Foundation Launch Free Course on Off-chain ComputingBinance Signs MoU with Ho Chi Minh City Department of Finance to Foster Blockchain and Digital Assets Development Mumbai Lights Up the Blockchain Map with Binance Blockchain YatraBinance Prestige: The Trusted Crypto Gateway for Institutional and Affluent ClientsBinance Contributes to Cyber Patrol – A Joint Global Operation Targeting the Financial Lifelines of Digital PiracyThe Risks of Unauthorized AI Trading Bots — Here’s What You Need to KnowCompare Trading Costs Across Top Exchanges in Real-TimeBinance Charity Donates 200,000 USD to Support Vietnam’s Flood Relief and Recovery

Key Takeaways

Pendle is a decentralized finance (DeFi) platform that lets people separate and trade the earnings (yield) they get from investing in certain crypto assets.

The platform breaks down these assets into two parts: Principal Tokens (PT), which represent the original investment, and Yield Tokens (YT), which represent the extra earnings from that investment.

The PENDLE token is used to reward users, help govern the platform, and share fees with people who lock their tokens (vePENDLE).

Introduction

In the world of crypto and DeFi, people are always looking for better ways to earn income from their investments. Pendle offers a way to handle this by separating the initial investment from the profits it generates, so users can trade or manage each part however they like. This breaks new ground by bringing ideas from traditional finance to DeFi, making yield trading more accessible and flexible.

What Is Pendle?

Pendle is an open platform where anyone can trade parts of their yield-bearing crypto assets. It splits these assets into:

Principal Tokens (PT): These represent your original amount invested and can be claimed back after a set period. Since the earnings part is taken out, PTs usually cost less than the full asset, offering a “fixed return” option.

Yield Tokens (YT): These represent the profits the asset makes, such as interest or rewards. Holding YT lets you collect those earnings and gives you a chance to bet on how profitable the asset will be.

This system gives users the freedom to choose whether they want a steady income, bet on higher earnings, or protect themselves against losses.

How Does Pendle Work?

Turning yield into tradable pieces

Pendle takes yield-generating tokens and wraps them into a standard form called SY (Standardized Yield). These are then broken down into PTs and YTs. For example, staking ether (ETH) with the Lido protocol gives you stETH, which earns staking rewards. Pendle wraps this into SY-stETH and creates PT-stETH (the original ETH you staked) and YT-stETH (the staking rewards).

Each token has a specific maturity date when you can claim your principal, and the yield token expires as earnings stop after that time.

Pendle’s automated market maker (AMM)

Pendle’s AMM facilitates efficient trading of PT and YT tokens through a single liquidity pool per asset. It uses flash swaps to enable simultaneous PT and YT trades with minimal slippage and reduced impermanent loss.

PENDLE and vePENDLE tokens

The PENDLE token encourages people to provide liquidity and participate in platform governance. Users who lock up their PENDLE tokens get vePENDLE, which gives them voting rights on how rewards are shared, boosts their earnings, and grants a share of protocol fees. This encourages users to stay engaged with the platform in the long term.

What Can You Do With Pendle?

Pendle offers several ways to manage your crypto earnings:

Lock in a fixed return: Buy PT tokens at a discount and hold them until maturity to secure a predictable profit.

Bet on yield changes: Purchase YT tokens to profit if the asset’s future earnings go up or remain steady.

Protect yourself against yield drops: Sell YT tokens or use advanced strategies to guard against falling yields.

Earn from providing liquidity: Supply funds to Pendle’s pools and get rewarded from the trading fees generated.

What’s Next for Pendle?

Pendle’s ongoing roadmap emphasizes scalability and market expansion:

Enhanced V2 features: Improving dynamic fee mechanisms, governance participation, and user interface to empower third-party pool creation and optimize liquidity balance.

Citadels: Expanding beyond EVM ecosystems to non-EVM chains like Solana and TON, alongside launching KYC-compliant products targeted at traditional financial institutions.

Boros: A new product vertical introducing yield perpetuals that enable users to trade floating versus fixed yield streams on various yield sources, starting with funding rate markets on perpetual futures, broadening the protocol’s reach into both CeFi and TradFi yield domains.

Risks to Keep in Mind

Like all DeFi platforms, Pendle has risks. Smart contracts are audited, but bugs or attacks are always possible. Also, the underlying assets that generate yield can be volatile. Tokenized yield products have expiration dates, so users need to track and manage their positions actively. Also, governance through vePENDLE could present risks if voting power becomes too concentrated.

Closing Thoughts

Pendle brings a fresh take to earning and managing crypto yields by breaking down investments into tradable pieces. This flexibility can suit many different users, from casual investors to sophisticated traders and institutions. With ongoing innovation and plans to expand across ecosystems, Pendle is an interesting project in the decentralized yield landscape, helping connect the crypto world with traditional finance concepts.

Further Reading

What Is Liquid Staking?

What Are DeFi Aggregators and How Do They Work?

What Is a Yield Curve and How to Use It?  

Impermanent Loss Explained 

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

Open interest (OI) is the total number of active futures and options contracts that have not yet been closed or settled.

It shows how many traders have open positions that are still live.

When open interest goes up, it usually means new money is coming into the market. When it goes down, it suggests that money is leaving.

Open interest helps us understand how much interest and activity there is in a trading pair (contract), but doesn’t directly tell us where prices will move.

It’s different from trading volume, which counts all contracts traded in a period. Open interest counts only the contracts that remain open.

Introduction

If you're trading futures or options, you've probably heard about open interest. It’s a concept that tells you how many contracts are currently active and unsettled in the market. This helps traders understand how much attention a particular contract is getting and how liquid (or easy to trade) it is.

In this article, we'll explain what open interest means, how it works, why it matters, and how it compares to other related terms like trading volume.

What Does Open Interest Mean?

Open interest refers to the total number of futures or options contracts that are still open and haven’t been closed by offsetting trades, exercised, or expired. It represents the amount of ongoing positions in the market.

To put it simply, if you buy a futures contract and someone takes the opposite side by selling that same contract, open interest increases because there’s now a new active position. If one trader sells a contract and another buys it, but the buyer is closing an existing position, open interest stays the same.

For example, imagine a situation where no contracts are open, and a trader buys 10 new contracts. This raises open interest to 10. Later, if 5 contracts are closed and 10 more are opened, open interest grows by 5 to reach 15.

How Does Open Interest Change?

Open interest changes every trading day, based on how many positions traders are opening or closing:

Open interest grows when more new contracts are created than closed. This usually means new participants are entering the market or traders are adding to their positions.

Open interest shrinks when more contracts are closed or settled than new ones opened. This may show people are leaving the market or reducing their exposure.

Open interest doesn’t change when contracts are just passed from one trader to another without new positions being opened or closed.

Changes in open interest can help traders understand the flow of money and market sentiment.

Open Interest Compared to Trading Volume

Open interest and trading volume are often confused, but they mean different things:

Trading volume counts the total number of contracts traded in a certain period, no matter if they’re new or closing positions. It shows how busy or active the market is.

Open interest counts how many contracts are still active and open at a particular moment. It reflects how many positions remain live.

For example, if a trader sells 10 contracts to another trader who just bought them, volume goes up by 10, but open interest stays flat because, effectively, positions just changed hands.

Why Is Open Interest Important?

Open interest is helpful because it gives clues about how liquid a market is, i.e., how easy it is to buy or sell without affecting prices too much. A higher open interest usually means more participants and better liquidity.

It also gives a hint about market sentiment. If open interest rises alongside prices, it could suggest the upward trend is supported by a new inflow of money. If open interest rises but prices fall, it might indicate an increasing selling pressure.

Still, open interest on its own won’t tell you if prices will go up or down. It’s best used together with other signals and analysis tools to reduce risks.

Closing Thoughts

In futures and options trading, open interest is a key metric that shows how many contracts remain open and active. Watching open interest helps traders understand how much attention a contract is attracting and how liquid it is.

While it doesn’t directly tell you where prices are headed, changes in open interest can show if new money is coming into the market or investors are pulling out. Combining this information with other tools can help you make better trading decisions.

Further Reading

What Is Options Trading?

What Are Funding Rates in Crypto Markets?

What Is Basis Trading and How Does It Work?

What Is Crypto Market Sentiment?

What Is Liquidity and Why Does It Matter?

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

Key Takeaways

Quant is a fintech platform that helps traditional financial systems connect with different blockchains using standardized APIs.

Overledger is Quant’s API gateway that enables applications to connect with multiple blockchains and enterprise systems simultaneously.

The platform features Quant Flow for programmable payments, QuantNet for tokenized settlement, Quant Fusion for multi-ledger execution, and PayScript for automated financial logic.

QNT is the network’s native token. It’s used for transaction fees on the Multi-Ledger Rollup, to facilitate cross-chain transfers, and to support staking for node participation.

What Is Quant?

Quant is a fintech platform that helps connect traditional financial systems with blockchain networks. The platform’s interoperability layer, Overledger, uses a unified API framework to link different ledgers, payment systems, and digital asset platforms. This enables institutions to share data and interact across systems without major changes to their existing infrastructure.

Quant’s technology has been developed with the Bank of England, the UK Regulated Liability Network, and the European Central Bank. It’s used by global banks to improve operational efficiency and support compliant digital finance. Businesses can also apply Quant’s software to enable programmable payments, tokenized asset settlement, and cross-chain functionality within their applications.  

Key Features

Overledger

Overledger is an API-based system that helps businesses connect their existing systems to multiple blockchain networks through a single unified interface. An application programming interface (API) acts as a bridge between software programs, allowing them to send and receive information. 

By keeping request and response formats consistent, Overledger enables developers to work across different blockchains without needing to learn each network’s technical details. Overledger also supports the development of multi-chain decentralized applications (mDApps), which can run on multiple blockchains at the same time. 

Quant Flow

Quant Flow is an API-driven platform that allows banks, fintechs, and payment service providers to introduce programmable digital money into their existing systems. Built on Overledger technology, the platform can help automate account processes and support payments triggered by specific events. Quant Flow also includes compliance features, fraud monitoring, and liquidity controls to help organizations manage risk and maintain oversight of funds. 

QuantNet

QuantNet is a system that helps financial institutions move tokenised money and digital assets across different networks without relying on separate ledgers or manual processes. Instead of each institution using its own isolated systems, QuantNet provides a single gateway that connects public and private blockchains, payment networks, and asset platforms.

QuantNet’s ISO 20022–native design means it adheres to the common global messaging standard used in the financial industry. This allows different systems to communicate in a consistent format, reducing the need for extra reconciliation tools or middleware. QuantNet can also automate post-trade processes and coordinate asset movements across various systems.

Quant Fusion

Quant Fusion is a framework that links public blockchains with permissioned networks. This enables organizations to move data and assets across systems without relying on bridges or wrapped tokens. Fusion is built around two main components: the Multi-Ledger Rollup (MLR) and the Network of Networks. 

Quant’s MLR allows activity to be processed and settled across multiple blockchains at once, unlike traditional rollups that only connect to a single chain. The Network of Networks lets participants connect their own nodes or blockchains to create an interconnected system. 

Fusion’s rollup is flexible and can support many types of blockchains over time, including public networks, enterprise systems, and regulated environments that require controlled interoperability. To maintain privacy, Quant Fusion doesn’t offer a typical public block explorer. Instead, users can view information about their own activity, such as balances, transaction details, and smart contracts, through dedicated APIs and user interfaces.

PayScript

Quant PayScript is a financial scripting tool that enables banks and businesses to define how money moves and behaves. The tool supports both traditional bank accounts and stablecoins, enabling automated payments, streamlined workflows, and more efficient management of complex transactions. By using Quant PayScript’s rules engine, organizations can define clear instructions for money flows without needing specialized programming skills.

Use Cases

Central bank digital currencies (CBDCs): Public institutions can test and deploy CBDC models using Quant’s interoperability tools that connect payment systems, private ledgers, and regulated networks.

Enterprise supply chains: Companies can streamline settlement, track assets, and automate compliance by linking supply-chain platforms with blockchain networks through Quant’s APIs.

Cross-network execution: Organizations can process transactions or run smart contracts across multiple public and private blockchains using Quant Fusion’s multi-ledger environment.

Programmable payments: Institutions can automate payroll, tax processes, treasury functions, and event-based transactions using Quant Flow’s payment tools.

Tokenized settlement: Banks and financial platforms can settle tokenized deposits, funds, and assets in real time through QuantNet’s shared and compliant infrastructure.

The QNT Token

QNT is the native token of the Quant ecosystem, and it has multiple use cases: 

Gas fees: QNT can be used to pay for transactions on the Multi-Ledger Rollup. When deposited, it functions as the rollup’s native token.

Cross-chain transfers: QNT can facilitate deposits and withdrawals of ERC-20 tokens on the Multi-Ledger Rollup, supporting a cross-chain asset model.

Staking: QNT can be staked by node operators who assume the roles of sequencer or verifier. Participants can earn QNT rewards for contributing to network operations and security.

Closing Thoughts

Quant is built to help financial institutions move toward a more connected and programmable digital infrastructure. Its interoperability layer enables systems to communicate across multiple ledgers, while products like Quant Flow, QuantNet, Quant Fusion, and PayScript support tokenized settlement and cross-network execution. Together, these tools aim to simplify how financial organizations adopt blockchain technology and build compliant digital-money solutions.

Further Reading

What Are Modular Blockchains?

What Are Zk-Rollups? The Layer-2 Scalability Technique

What Are Appchains (Application-Specific Blockchains)?

Disclaimer: This content is presented to you on an “as is” basis for general information and educational purposes only, without representation or warranty of any kind. It should not be construed as financial, legal or other professional advice, nor is it intended to recommend the purchase of any specific product or service. You should seek your own advice from appropriate professional advisors. Products mentioned in this article may not be available in your region. Where the article is contributed by a third party contributor, please note that those views expressed belong to the third party contributor, and do not necessarily reflect those of Binance Academy. Please read our full disclaimer for further details. Digital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance Academy is not liable for any losses you may incur. This material should not be construed as financial, legal or other professional advice. For more information, see our Terms of Use and Risk Warning.

🗞️ In The News
Bitcoin price retreated below $90,000, extending its recent pullback.The US added 119,000 jobs in September while the unemployment rate increased by 4.4%.CoinGlass reports nearly $2 billion liquidated in crypto markets within 24 hours.UK launches investigation into suspected $28 million Basis Market crypto scam.Japan’s Metaplanet plans to raise ~$135 million to buy bitcoin.
SGX Derivatives will launch new bitcoin and ether perpetual futures, expanding crypto derivatives offerings on Singapore’s main exchange.Michael Saylor’s Strategy has acquired 8178 BTC for ~$835.6 million at ~$102,171 per bitcoin. Mastercard is extending its Crypto Credential program to self-custody wallets, enabling users to send and receive crypto using verified, human-readable aliases on Polygon.Aave introduced a new savings app that offers yield deposit options and real-time interest tracking for retail users.

📖 Binance Academy Knowledge
What Are Tokenized Stocks?What Are Perpetual Futures Contracts?Who Is Michael Saylor?What Is Ondo (ONDO)?What Is Aave (AAVE)?How to Use the Crypto Trade Analyzer

🔥 Binance Blog Highlights
Binance Academy and Injective Launch a New Course on Blockchain Use in Web3 Finance VIP Community AMA Recap – Binance VIP Program Updates, AI Tools, and Exclusive RewardsYour 2025 End-of-Year Holiday Gift Guide With Binance PayUnpacking the Decline in Illicit Crypto Use: How Binance is Driving Industry-Wide ProgressHow to Become a Binance P2P Merchant in 2025 – Complete Guide and Perks ExplainedBinance Pay Surpasses 20 Million Merchants as Stablecoin Adoption Accelerates

Key Takeaways

The Crypto Trade Analyzer is a tool that mirrors how trades really happen, considering live order book depth, fees and token discounts. It compares real trading costs across exchanges.

Going beyond headline prices, the analyzer calculates how liquidity and slippage affect real execution, revealing the true cost behind displayed prices.

The Crypto Trade Analyzer also provides fair, standardized comparisons. Each exchange’s average price, fees and effective cost are shown side by side for easy comparison.

The tool features real-time, live updates, so prices and order books update automatically, mirroring what’s happening in the market right now.

The analyzer is built for all types of traders. It’s simple enough for anyone to pick up, yet offers serious, analytical depth for those who need it.

Introduction

Locating the most cost-efficient place to trade seems simple. However, even when prices look similar on different exchanges, information like fees, liquidity and slippage can significantly change the final trading costs.

The Crypto Trade Analyzer eliminates this guesswork by simulating actual trade execution across exchanges in real-time. Rather than just displaying listed prices, it mimics executing an actual trade across various exchanges as it happens. 

The tool analyzes order book depth, applies trading fees and token discounts and calculates the total cost in both native and USD terms. In the image below, you can see Crypto Trade Analyzer comparing BTC/USDT execution costs across multiple exchanges in real time.

The tool shows users the true cost (including fees) so they understand what they’ll genuinely get for their trades. The goal is simple: to help users make better-informed trading decisions based on real execution quality rather than headline prices.

For newcomers seeking simple comparisons or professionals analyzing execution performance, the Crypto Trade Analyzer delivers a clear, fact-based look at how much trades actually cost across various exchanges. The tool currently supports major exchanges including Binance, Bybit, Coinbase and OKX, with more being added regularly.

You can access the Crypto Trade Analyzer at binance.github.io/crypto-trade-analyzer.

Who Should Use This Tool

The Crypto Trade Analyzer is designed for anyone who wants to optimize their trading costs:

Beginners learning how trading costs work beyond the displayed price.

Frequent traders looking to minimize costs across hundreds of trades.

Arbitrage traders seeking price discrepancies and liquidity differences between exchanges.

High-volume traders optimizing for the lowest effective execution price.

Anyone comparing exchanges before opening an account or moving funds.

How the Crypto Trade Analyzer Works

The Crypto Trade Analyzer combines live market data, exchange fee structures and user preferences to estimate the real cost of executing a trade on each supported exchange. Its purpose is to show the effective price, what a trader would actually pay or receive after considering fees and slippage.

At a high level, the process involves four main steps:

Collecting live market data: The analyzer taps into each exchange’s order book to get live price feeds for the selected trading pair. This ensures that calculations are always based on current market conditions.

Simulating an order execution: Rather than simply checking the best bid and best ask, the tool explores the order book level by level. It figures out what would happen if someone tried to buy or sell that amount right now. A volume-weighted average price (VWAP) shows how much trading activity impacts costs, revealing the difference between the quoted price and actual execution price for sizable orders.

Applying fees and discounts: Every exchange applies its own maker-taker fees, tier levels (account levels that determine fee rates based on trading volume) and token discounts. The analyzer automatically applies these parameters to each calculation so the output reflects the true cost of execution after fees. Results include both the raw execution price and the final price after deductions.

Converting and comparing results: All outputs are converted into a standard format showing: average execution price, fees (in native asset and USD), slippage and the effective price after fees. Exchanges are ranked from the most to the least cost-efficient, with live updates reflecting new market data in real time.

Price, Fees, and Slippage

When evaluating trading costs, it’s important to look beyond the visible market price. The number users see on an exchange, the best bid or best ask, isn’t the whole story regarding how much a trade truly costs. What traders ultimately pay, or receive, comes down to three key factors: price, fees and slippage.

Market price and order book depth

Price reflects a balance between buyers wanting low prices and sellers aiming high. Yet the actual cost paid hinges on whether there are willing participants at that exact price. A modest transaction could be completed right away at the best available price. However, substantial trades often require working through several price tiers, thereby shifting prices. The analyzer examines the entire order book, not just the top level, to assess available liquidity.

Trading fees

Each trade incurs a cost, typically depending on if it contributes to or diminishes available orders:

Maker fee: charged when adding liquidity

Taker fee: charged when removing liquidity

Because the tool simulates immediate execution, it assumes taker behavior by default. Moreover, it considers individual preferences like:

Fee tiers may depend on trading volume or account level.

Token-based discounts may apply (e.g., paying fees with BNB on Binance).

Custom or promotional rates when available.

It guarantees figures align with what traders actually pay when things are comparable.

Slippage

Sometimes, a trade doesn’t go quite as planned. Slippage is what happens when the execution price differs from what was initially seen, often because prices move while order processes, especially with sizable trades that fill across different price levels in the order book.

For example, buying 1 BTC quoted at $110,000 may fill at an average of ~$110,050 if the order consumes higher ask levels.

The analyzer quantifies the cost impact of limited liquidity and book movement – essentially, what a trader gives up when buying or selling.

The effective price

The effective price is what users actually pay for a trade after accounting for market conditions, fees, and slippage. This comprehensive figure reveals the true cost of execution.

It shows performance as a clear number, listed in the local currency also alongside USD, so users can quickly see how well trades did on various exchanges with differing cryptocurrencies.

How to Use the Tool

Crypto Trade Analyzer breaks down every trade, showing exactly how the numbers work. It walks users through everything, choosing what to trade, then comparing exchanges in a clear ranking.

Choose a trading pair and order direction: Start by selecting the desired trading pair and specifying the order side (Buy or Sell). The tool automatically fetches live data from supported exchanges for that pair. Once the pair is chosen, the analyzer begins monitoring the corresponding order books in real time.

Enter the trade size: Next, enter the amount to trade. The size can be expressed in either the base asset (e.g., BTC) or the quote asset (e.g., USDT). This flexibility allows users to simulate trades the same way they would on an exchange (i.e., buying 0.5 BTC or spending 55,000 USDT).

Select the exchanges to compare: The analyzer supports many popular exchanges. Users can choose which ones to include or exclude, so they see only the comparisons that matter. After picking an exchange, the analyzer subscribes to the exchange’s live order book and computes the cost breakdown.

Review account preferences: Each exchange has different fee schedules, discounted prices and user tiers. Through the Account Preferences, users can adjust:

User tier

Token-based discounts (e.g., paying with BNB)

Custom fees, if available

These preferences directly affect the calculated outcome and make the simulation more accurate for each user’s trading conditions.

View the results and comparison: With everything dialed in, the analyzer calculates:

Average execution price — The volume-weighted average price across all filled orders

Slippage — Absolute slippage amount

Notional — The total value of the trade before fees are applied

Fees — Trading costs shown in both quote currency and USD

Pay: The actual fee amount deducted

Effective Taker Fee: The fee rate applied (e.g., 0.1000%)

Receive (net) / Spend — The actual amount received (for sell orders) or spent (for buys) after all costs.

Each exchange appears as a card showing a real time cost breakdown, while the one with the most favorable result is clearly highlighted with a “BEST” badge. Results update automatically as market data changes, ensuring the comparison always reflects current conditions.

Interpret the “Save vs” metric: Alongside the best exchange, the analyzer displays how much a trader would save or lose compared to other exchanges for the same trade. This gives traders a quick overview of the cost difference between the selected exchanges.

Tips and Limitations

The Crypto Trade Analyzer gives users a pretty solid idea of what trades will cost, though it’s never perfect. Because markets move fast, actual results might not match exactly what the tool predicts. Knowing when to rely on it, as well as where it falls short, will help you read its output correctly.

Tips for using the analyzer effectively

Use realistic order sizes: Large simulated orders can produce a big slippage if they exceed available liquidity. For a fair comparison, enter trade sizes similar to those typically executed.

Keep exchange preferences updated: Fee tiers and token-based discounts can change. Adjusting account settings in the tool ensures the calculations reflect current trading conditions.

Monitor volatile markets carefully: During high volatility, order book depth can change between updates. Refreshing or briefly pausing can prevent misleading comparisons.

Compare multiple pairs: Liquidity varies widely between trading pairs. An exchange that offers the best execution for BTC/USDT might not be the same for ETH/BUSD or smaller altcoin pairs.

Check the “Save vs” metric carefully: Even small savings can compound significantly over time for frequent traders. The analyzer highlights those differences to help identify long-term efficiency.

Limitations to keep in mind

Simulated, not executed: The analyzer estimates how trades will execute by looking at what buyers and sellers are offering right now, using the live order book. However, the real outcome could be different – particularly if markets swing wildly or aren’t very active.

Taker-oriented simulation: The model assumes immediate market-style fills and does not account for maker rebates, partial fills or advanced execution strategies.

No guarantee of future depth: Book orders shift quickly; what users see available might vanish as costs change. Consider it a quick look, not a promise.

Exchange-specific rules may differ: Order acceptance hinges on details like price increments, trade quantities, and the smallest transaction value. Though these rules always apply, they shift from one exchange to another.

USD conversion depends on external sources: Values are also shown in USD using third-party pricing; brief discrepancies are possible during rapid moves or outages.

Closing Thoughts

Trading costs used to be hard to gauge; the Crypto Trade Analyzer makes them clear. Instead of switching between exchanges, the analyzer brings everything into one view. It shows everything in one place: available liquidity, applicable fees, token discounts and expected costs.

Before this tool, comparing execution costs across exchanges required manual calculations, spreadsheets, or assumptions about fee tiers. The analyzer removes that friction by running those comparisons live, with real order book data.

It focuses on outcomes, not just quoted prices. It clarifies how savings happen, trades perform, or liquidity impacts price, turning tricky details into straightforward guidance.

Trading now happens at lightning speed, scattered across many places. This tool offers assistance to traders seeking sharper insights. Newcomers find it clarifies the components of each trade. Seasoned professionals also use it to assess and improve how they operate.

Ultimately, it comes down to transparency, making things previously obscured by details readily visible, measurable, but above all, weighed against each other.

Further Reading

What Order Types Can You Use on Binance?

Your Guide to Binance Spot Trading

What Is an Order Book and How Does It Work?

Understanding Matching Engines in Trading

Bid-Ask Spread and Slippage Explained

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