Binance Academy

Disclaimer: This content is 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. Products mentioned in this article may not be available in your region.

Key Takeaways

Binance Futures has expanded its commodities offerings to include Platinum and Palladium. You can trade these metals under the tickers XPTUSDT and XPDUSDT.

These contracts offer some advantages over traditional industrial metal markets, such as round-the-clock trading and the ability to trade with smaller capital amounts.

Traders can use leverage to amplify their exposure to these precious metals, though this increases the risk of liquidation and requires disciplined risk management.

The "Funding Rate" mechanism ensures the futures price stays aligned with the spot price, with fees settled every four hours.

Platinum and Palladium Futures on Binance

On Binance, Platinum and Palladium are traded as USDT-margined perpetual contracts. This means that while the price tracks the real-world value of ounces of Platinum or Palladium, the settlement is conducted in the stablecoin USDT.

Platinum Futures: Ticker XPTUSDT

Palladium Futures: Ticker XPDUSDT

Unlike physical settlement, where a trader might theoretically take delivery of the metal, these contracts are cash-settled. Traders speculate on the price movements of the metals without needing to worry about storage fees, insurance, or logistics.

The concept is simple: If you believe industrial demand or scarcity will drive the price up, you buy (Long). If you anticipate a price drop, you sell (Short). All profits and losses are denominated and settled in USDT.

Benefits of Trading White Metals on a Crypto Exchange

The digitization of commodity trading offers many improvements over the "old way" of trading futures.

1. 24/7 market access

Traditional commodity markets operate on fixed schedules and close on weekends. However, supply chain news or geopolitical events affecting major producers (like South Africa or Russia) can happen at any time. Binance Futures operates 24 hours a day, 7 days a week. If breaking news hits the wires on a Sunday, you can manage your Platinum or Palladium positions instantly, rather than waiting for Monday morning.

2. Lower barriers to entry

In traditional markets, a single futures contract for Palladium or Platinum can be prohibitively expensive due to the high value per ounce and large contract sizes. Binance Futures allows for fractional trading, meaning you can enter a position with a much smaller amount of capital than traditional exchanges require.

3. Leverage

Futures contracts allow traders to gain exposure to larger positions with a smaller amount of upfront capital (margin). While leverage varies by asset and market conditions, it allows for capital efficiency. For example, using leverage allows a trader to control a significant position in Platinum with a fraction of the value held as margin.

Understanding Funding Rates

If you are new to crypto futures, the concept of Funding Rates might sound confusing, but it’s actually quite simple. Since these perpetual contracts never expire, the system needs a mechanism to tether the contract price to the spot price of the metal.

The funding payment: This is a payment exchanged between traders (buyers and sellers) at regular intervals (typically every 4 or 8 hours). Note that this is not a fee paid to the exchange.

The opportunity: If the funding rate is positive, longs pay shorts. If negative, shorts pay longs. In strong trends, holding a position against the crowd can result in earning passive income from these funding fees.

Risk Management

Trading these assets is easier than ever, but that means you can lose money faster than ever, too.

Leverage risk: Remember that leverage is a multiplier. Even moderate leverage can present significant risk in volatile metal markets. Example: If you use high leverage and the price of Palladium drops by a small percentage, you could face forced liquidation, losing 100% of your margin.

Market volatility: Platinum and Palladium are often more volatile than gold due to their reliance on industrial cycles and supply constraints.

How to stay safe

To stay safe, traders often employ risk management strategies, including:

Setting strategic stop-loss orders to cap potential losses.

Managing position size to ensure account longevity.

Avoiding excessive leverage, especially during periods of low liquidity or high volatility.

How to Trade Platinum and Palladium on Binance Futures

1. Log in to your Binance account, navigate to the [Futures] tab, then go to [USD(S)-M Futures].

Note: this product may not be available in certain regions.

2. Next, open the drop-down menu and search for XPTUSDT (for Platinum) or XPDUSDT (for Palladium).

You can also find these and other contracts under the [TradFi] category.

3. At the bottom right, you can check your Futures account balance. If your balance is zero, you can use the [Transfer], [Buy Crypto], or [Swap] features to add funds.

If this is your first time using Binance Futures, you will be required to open a Future Account.

You may also be required to complete a Futures Quiz before getting started.

4. When you are ready, you can use the order panel to buy or sell futures contracts.

5. If you click or tap [Cross] at the top right, you can switch between Cross Mode and Isolated Mode.

The Cross Margin Mode will consider all the assets in your futures account and all futures positions when calculating your margin and liquidation levels. This means that your open positions can affect each other, even if they are in different assets. For example, your gold position could be liquidated to cover losses on your silver position, even though they are different trading pairs.

The Isolated Margin Mode allows you to manage your risk on individual positions by restricting them to a specific asset. This means that your isolated position won’t be affected by fluctuations in other open positions you might have.

For more information, check out the following article: What Are Isolated Margin and Cross Margin in Crypto Trading?.

6. At the bottom of your screen, you can check your Positions, Open Orders, Order History, and much more.

For more detailed information, please check the FAQ: Perpetual Futures on Traditional Assets.

Closing Thoughts

The launch of XPTUSDT and XPDUSDT pairs on Binance Futures provides traders with a modern bridge to the precious metals market. By removing the common barriers related to capital and rigid trading hours, Binance Futures offers a convenient way to get exposure to Platinum and Palladium. Still, remember to respect the risks and make sure you understand how the product works before getting started with futures trading.

Further Reading

How to Trade Gold and Silver on Binance Futures 

What Are Funding Rates in Crypto Markets?

What Are Isolated Margin and Cross Margin in Crypto Trading? 

Disclaimer: This content is presented to you on an “as is” basis for general information and or 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. Where the content 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. 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. For more information, see our Terms of Use, Risk Warning and Binance Academy Terms.

Disclaimer: This content is 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. Products mentioned in this article may not be available in your region.

Key Takeaways

Binance Futures has expanded beyond cryptocurrencies to include traditional assets like gold, silver, and stocks. You can now trade Tesla under the ticker TSLAUSDT.

These contracts offer unique advantages over traditional equity markets, including 24/7 trading hours and fractional trading options.

You can utilize leverage (up to 5x) to trade with more exposure than your capital allows, though this requires strict risk management.

A mechanism called "Funding Rates" ensures price stability, with fees settled every four hours.

Introduction

Historically, trading equities like Tesla (TSLA) was restricted to traditional stock exchanges like the Nasdaq. This often meant dealing with rigid market hours, complex brokerage accounts, and limitations on who could participate. However, the integration of traditional financial assets into cryptocurrency exchanges is breaking down these barriers.

Binance Futures offers contracts for Tesla (TSLA), allowing users to trade the price movements of one of the world's most popular stocks with the flexibility of the crypto ecosystem.

What Are Tesla Futures on Binance?

On Binance, Tesla is traded as a USDT-margined perpetual contract. This means that while the price tracks the real value of Tesla Inc. (TSLA) shares listed on the Nasdaq exchange, the settlement is conducted in the stablecoin USDT.

The ticker for Tesla Futures on Binance Futures is TSLAUSDT. Unlike buying a share on a traditional brokerage, these contracts are cash-settled derivatives. This means you do not receive voting rights or dividends, but you can still try to profit from both upward and downward price movements.

The concept is simple: If you think the price of Tesla will go up, you buy (Long). If you think the price will go down, you sell (Short). All profits and losses are denominated in USDT.

Benefits of Trading Tesla on a Crypto Exchange

The digitization of equity trading offers several improvements over the "old way" of trading stocks.

1. 24/7 market access

Traditional stock markets, like the Nasdaq, operate during limited business hours and close on weekends. If breaking news about Tesla emerges on a Saturday, traditional shareholders are stuck until the market opens on Monday. On Binance Futures, the TSLAUSDT contract trades 24 hours a day, 7 days a week. This allows you to react to market-moving news instantly, regardless of the time or day.

2. Lower barriers to entry

In traditional markets, buying full shares of high-value stocks can be expensive for retail traders. Binance Futures allows for fractional trading. The minimum trade size for the Tesla contract is set at just 0.01 TSLA, making it accessible to traders with smaller amounts of capital.

3. Leverage

Futures contracts allow traders to gain exposure to larger positions with a smaller amount of upfront capital (margin). As of February 2026, Binance Futures offers leverage of up to five times (5x) for the TSLAUSDT contract. This means a trader could potentially operate $500 worth of Tesla contracts with roughly $100 of margin.

Understanding Funding Rates

Since these perpetual contracts never expire, the system needs a way to make sure the contract price stays close to the real price of Tesla stock. That’s where Funding Rates come in.

The funding payment: This is a payment exchanged between traders (buyers and sellers) every four hours. Note that this is not a fee paid to the exchange.

The opportunity: If the funding rate is positive, longs pay shorts. If negative, shorts pay longs. Funding rates for this contract are generally capped at plus or minus 2% proactiveinvestors.com. In certain market trends, holding a position may result in the trader earning passive income from these funding fees.

Risk Management

Trading these assets is easier than ever, but that means you can lose money faster than ever, too.

Leverage risk: Remember that leverage is a multiplier. While 5x leverage is lower than some crypto contracts, it still presents significant risk. Example: If you use 5x leverage, and the price of Tesla drops by 20%, you can lose 100% of your margin. This is called forced liquidation.

Market volatility: Tech stocks like Tesla can be highly volatile. Combined with the nature of crypto-derivative markets, prices can fluctuate rapidly.

How to stay safe

To stay safe, traders often employ risk management strategies, including:

Placing strategic stop-loss orders to limit potential losses.

Managing position size to ensure account longevity.

Avoiding excessive leverage, especially during volatile periods.

How to Trade Tesla (TSLA) on Binance Futures

1. Log in to your Binance account, navigate to the [Futures] tab, then go to [USD(S)-M Futures].

Note: this product may not be available in certain regions.

2. Next, open the drop-down menu and search for TSLAUSDT.

You can also find this and other contracts under the [TradFi] category.

3. At the bottom right, you can check your Futures account balance. If your balance is zero, you can use the [Transfer], [Buy Crypto], or [Swap] features to add funds.

If this is your first time using Binance Futures, you will be required to open a Futures Account.

You may also be required to complete a Futures Quiz before getting started.

4. When you are ready, you can use the order panel to buy or sell futures contracts. The minimum trade size is 0.01 TSLA.

5. If you click or tap [Cross] at the top right, you can switch between Cross Mode and Isolated Mode.

The Cross Margin Mode will consider all the assets in your futures account and all futures positions when calculating your margin and liquidation levels. This means that your open positions can affect each other.

The Isolated Margin Mode allows you to manage your risk on individual positions by restricting them to a specific asset. This means that your isolated Tesla position won’t be affected by fluctuations in your other positions.

For more information, check out the following article: What Are Isolated Margin and Cross Margin in Crypto Trading?.

6. At the bottom of your screen, you can check your Positions, Open Orders, Order History, and much more.

Closing Thoughts

The launch of the TSLAUSDT pair on Binance Futures is helping bridge the gap between traditional equity markets and the crypto space. Without some of the barriers common to more traditional trading methods, Binance Futures offers a convenient way to get exposure to Tesla. But remember never to risk more than you can afford to lose. Make sure to manage risks and understand how the product works before getting started.

Further Reading

How to Trade Gold and Silver on Binance Futures 

What Are Funding Rates in Crypto Markets?

What Are Isolated Margin and Cross Margin in Crypto Trading? 

Disclaimer: This content is presented to you on an “as is” basis for general information and or 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. Where the content 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. 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. For more information, see our Terms of Use, Risk Warning and Binance Academy Terms.

Key Takeaways

Zama is an open-source cryptography project building a Confidential Blockchain Protocol powered by Fully Homomorphic Encryption (FHE).

The protocol allows smart contracts to compute on encrypted data without decrypting it, enabling privacy-preserving applications on public blockchains.

Zama's technology works as a cross-chain solution, allowing developers to build confidential applications on top of any Layer 1 or Layer 2 blockchain (like Ethereum or Solana).

The ZAMA token is the native utility asset used for gas fees, governance, and incentivizing the network of validators and provers.

Introduction

Public blockchains like Ethereum and Bitcoin are transparent by design. While this transparency ensures trust and verifiability, it also means that all data is visible to everyone. This lack of privacy limits the types of applications that can be built, especially for industries like finance, healthcare, and enterprise.

Zama addresses this challenge by introducing Fully Homomorphic Encryption (FHE) to the blockchain. This cryptographic technique allows data to remain encrypted even while it is being processed. By building a protocol that enables confidential smart contracts, Zama aims to bring true privacy to the decentralized web without sacrificing the benefits of public verifiability.

What Is Zama?

Zama is an open-source cryptography company and protocol focused on making FHE accessible to developers. Its flagship product is the Zama Confidential Blockchain Protocol, which enables privacy-preserving smart contracts.

The core idea is simple but powerful: instead of revealing sensitive data to a blockchain (or a centralized server) to process it, users encrypt their data locally. The blockchain then processes this encrypted data and produces an encrypted result, which only the user can decrypt. This ensures end-to-end confidentiality for on-chain applications.

How Does Zama Work?

Zama's architecture leverages FHE to solve the "privacy vs. transparency" dilemma.

1. Fully Homomorphic Encryption (FHE)

FHE allows computations to be performed directly on encrypted data. In a typical blockchain transaction, data must be public to be processed (e.g., checking if a user has enough funds). With Zama's FHE, the smart contract can check the funds and other things while the data remains encrypted. The network validates the transaction without ever seeing the actual balance or amount.

2. Confidential smart contracts (fhEVM)

Zama has developed the fhEVM (Fully Homomorphic Ethereum Virtual Machine). This allows developers to write confidential smart contracts using standard Solidity, the same programming language used on Ethereum. Developers can specify which parts of the contract should be public and which should be private (encrypted), making it easy to integrate privacy into existing DApps.

3. Cross-chain compatibility

Zama is designed to be a "layer" that sits on top of other blockchains. It works with Ethereum, Layer 2 networks, and others. This means a developer doesn't have to leave their favorite blockchain to get privacy; they can just use Zama's technology on top of it.

Potential Use Cases

Zama's technology opens up new possibilities for blockchain applications that require data protection.

Confidential DeFi: Users can trade, lend, and borrow without revealing their positions or strategies to the public, preventing front-running and copy-trading.

On-chain identity: You can prove you are over 18 or a citizen of a certain country without uploading a photo of your ID card.

Encrypted voting (DAOs): Governance proposals can use secret ballots where votes are counted correctly, but individual choices remain private, preventing coercion and bribery.

Gaming: On-chain games can use Zama’s technology to hide certain information (e.g., "fog of war" mechanics or hidden card hands).

The ZAMA Token

The ZAMA token is the native utility asset of the Zama ecosystem. It plays a central role in securing and operating the network.

Gas fees: Users pay ZAMA tokens to execute confidential transactions and smart contracts.

Governance: Token holders can vote on protocol upgrades and parameter changes.

Incentives: Network operators who perform the computationally intensive FHE tasks (proving and verifying) can get rewarded in ZAMA tokens.

Zama (ZAMA) on Binance

Binance listed the Zama (ZAMA) token for trade on February 3, 2026 with the Seed Tag applied. Trading pairs available at launch included ZAMA/USDT and ZAMA/USDC. The announcement also included a spot trading campaign from February 3 to February 17. Eligible users will have a chance to share a total prize pool of 45,000,000 ZAMA in token vouchers.

Closing Thoughts

Privacy is one of the final frontiers for blockchain adoption. For institutions and regular users to fully embrace Web3, they need the ability to keep certain data private. Zama’s use of Fully Homomorphic Encryption offers a promising solution to data privacy. By allowing blockchains to compute on data without seeing it, Zama is laying the groundwork for a more secure, private, and usable decentralized internet.

Further Reading

What Is Fully Homomorphic Encryption (FHE)?

What Is ZKsync and How Does It Work?

What Is zkPass (ZKP)?

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.

Disclaimer: This content is 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. Products mentioned in this article may not be available in your region.

Key Takeaways

Binance Futures has expanded beyond cryptocurrencies to include traditional assets. You can trade gold and silver under the tickers XAUUSDT and XAGUSDT.

These contracts offer unique advantages over traditional commodity markets, including 24/7 trading hours and lower capital barriers to entry.

You can also use leverage to trade with more money than you actually have. This can lead to bigger profits, but also bigger losses. It’s important to do proper risk management.

A feature called "Funding Rates" helps keep prices fair, and in certain conditions, traders can get paid just for keeping a position open.

Introduction

Historically, trading precious metals like gold and silver was done mostly through large financial institutions. It often required navigating complex traditional futures markets with high capital requirements and rigid trading hours. Fortunately, the increasing integration of TradFi assets into cryptocurrency exchanges is making these assets more accessible to all sorts of traders.

Binance Futures now offers contracts for gold (XAU) and silver (XAG), allowing users to trade these traditional stores of value with the flexibility and technology of the crypto ecosystem. This article explores how these contracts work, their benefits compared to traditional finance (TradFi), and some of the risks involved.

What Are Gold and Silver Futures on Binance?

On Binance, gold and silver are traded as USDT-margined perpetual contracts. This means that while the price tracks the real value of ounces of gold or silver, the settlement is conducted in the stablecoin USDT.

Gold Futures: Ticker XAUUSDT

Silver Futures: Ticker XAGUSDT

Unlike physical settlement, where a trader might eventually take delivery of the metal, these contracts are cash-settled. Traders speculate on the price movements of the metals without needing to worry about storage, insurance, or logistics.

In other words, when you trade these contracts on Binance, you are not buying physical bars of gold or silver. Instead, you are trading a digital contract that tracks the real-world price of the metal.

The concept is simple: If you think the price will go up, you buy (Long). If you think the price will go down, you sell (Short). All profits and losses are paid in USDT.

Benefits of Trading Metals on a Crypto Exchange

The digitization of commodity trading offers several improvements over the "old way" of trading futures.

1. 24/7 market access

Old-school commodity markets have opening and closing times, and they take weekends off. If major political or economic news breaks on a Saturday, traditional traders are stuck until Monday morning. On Binance, the market is open 365 days a year. If news breaks at 3:00 AM on a Sunday, you can react and trade immediately.

2. Lower barriers to entry

In traditional markets, a single futures contract for gold is very expensive. It often requires thousands of dollars just to open a trade. This keeps most regular people out. Binance Futures allows you to trade fractions of an ounce, so you can start with a small amount of capital.

3. Leverage

Futures contracts allow traders to gain exposure to larger positions with a smaller amount of upfront capital (margin). While leverage varies by asset and market conditions, it allows for capital efficiency. For example, using 10x leverage means a trader can control $10,000 worth of gold contracts with roughly $1,000 of margin.

Understanding Funding Rates

If you are new to crypto futures, the concept of Funding Rates might sound confusing, but it’s actually quite simple. Since these futures contracts never expire (you can hold them forever), the system needs a way to make sure the contract price stays close to the real price of gold.

The funding payment: This is a payment exchanged between traders (buyers and sellers) every few hours. Note that this is not a fee paid to the exchange.

The opportunity: If the funding rate is positive, longs pay shorts. If negative, shorts pay longs. In certain market trends, holding a position (such as a short during a period of high bullish sentiment) may result in the trader earning passive income from these funding fees.

Risk Management

Trading these assets is easier than ever, but that means you can lose money faster than ever, too.

Leverage risk: Remember that leverage is a multiplier. If you use high leverage, a tiny price drop can wipe out your entire account. Example: If you use 20x leverage, and the price of gold drops by just 5%, you can lose 100% of your money. This is called forced liquidation.

Market volatility: While gold is generally considered a stable "safe haven" asset, the crypto-derivative markets can be volatile.

How to stay safe

To stay safe, traders often employ risk management strategies, including:

Setting strategic stop-loss orders to cap potential losses.

Managing position size to ensure account longevity.

Avoiding excessive leverage.

How to Trade Gold and Silver on Binance Futures

1. Log in to your Binance account, navigate to the [Futures] tab, then go to [USD(S)-M Futures].

Note: this product may not be available in certain regions.

2. Next, open the drop-down menu and search for XAUUSDT (for gold) or XAGUSDT (for silver).

You can also find these and other contracts under the [TradFi] category.

3. At the bottom right, you can check your Futures account balance. If your balance is zero, you can use the [Transfer], [Buy Crypto], or [Swap] features to add funds.

If this is your first time using Binance Futures, you will be required to open a Future Account.

You may also be required to complete a Futures Quiz before getting started.

4. When you are ready, you can use the order panel to buy or sell futures contracts.

5. If you click or tap [Cross] at the top right, you can switch between Cross Mode and Isolated Mode.

The Cross Margin Mode will consider all the assets in your futures account and all futures positions when calculating your margin and liquidation levels. This means that your open positions can affect each other, even if they are in different assets. For example, your gold position could be liquidated to cover losses on your silver position, even though they are different trading pairs.

The Isolated Margin Mode allows you to manage your risk on individual positions by restricting them to a specific asset. This means that your isolated position won’t be affected by fluctuations in other open positions you might have.

For more information, check out the following article: What Are Isolated Margin and Cross Margin in Crypto Trading?.

6. At the bottom of your screen, you can check your Positions, Open Orders, Order History, and much more.

For more detailed information, please check the FAQ: Perpetual Futures on Traditional Assets.

Closing Thoughts

The launch of XAUUSDT and XAGUSDT pairs on Binance Futures is closing the gap between traditional finance and the crypto space. Without the common barriers related to capital and trading hours, Binance Futures offers a convenient way to get precious metal exposure. Still, remember to respect the risks and make sure you understand how the product works before getting started with futures trading.

Further Reading

What Are Funding Rates in Crypto Markets?

What Are Isolated Margin and Cross Margin in Crypto Trading? 

Bitcoin Spot ETF vs. Bitcoin Futures ETF: What's the Difference? 

Disclaimer: This content is presented to you on an “as is” basis for general information and or 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. Where the content 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. 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. For more information, see our Terms of Use, Risk Warning and Binance Academy Terms.

Key Takeaways

Sentient is an open-source Artificial General Intelligence (AGI) platform designed to compete with closed systems like those of OpenAI and Google.

The network operates through the "Sentient GRID," a framework that coordinates data, models, and computing power to function as a unified decentralized entity.

The goal of the project is to reduce the risks of centralized AI by ensuring development is transparent, accountable, and not controlled by a single corporation.

Introduction

Right now, the most powerful artificial intelligence (AI) models are controlled by just a few massive companies. While they have built amazing tools, the core of their technology remains hidden behind closed doors. This means a relatively small group of people can decide what AI learns and who gets to use it.

Sentient (SENT) was created to offer a different path. It’s building a decentralized network where AI is developed in the open. By using blockchain technology, Sentient allows developers around the world to collaborate. The goal is to create a "community-owned" AI that rivals the big corporate labs without needing a centralized model.

What Is Sentient (SENT)?

Sentient is building an open platform for the next generation of AI, often called AGI (Artificial General Intelligence). It aims to compete with (and also complement) closed systems like those from OpenAI, Anthropic, or Google.

The project is rooted in the belief that closed-source AGI presents a core societal risk, where a small number of entities dictate the trajectory of AI development. Sentient is designed to counter this by making the development process transparent and accountable. It ensures that no single entity controls the network, so the benefits of this powerful technology can be shared by the people who build and use it.

How Does Sentient Work?

Sentient acts like a bridge that connects different parts of the AI world. One of its core technologies is called the Sentient GRID.

1. The Sentient GRID

Think of the GRID as a giant digital spiderweb. It connects different partners, data sources, AI models, and computer servers. Usually, independent developers are too small to compete with tech giants. But by plugging into the GRID, they can pool their resources. This allows thousands of smaller pieces to act as one unified, powerful intelligence network.

2. Decentralized cooperation

Instead of a top-down approach used by traditional AI labs, Sentient uses the GRID to form a decentralized alternative. This model allows for a more practical step toward open-source AGI that is able to deliver high-quality results.

3. Community-driven development

Sentient relies on its users. It rewards open-source researchers and developers who contribute to the network. If you provide helpful data, answer questions, or improve the code, the system rewards you. The more active and helpful you are, the more you can participate in the ecosystem.

Investors and Backing

The idea of open AI has attracted a lot of attention. The Sentient project has secured funding from prominent players in the blockchain and venture capital space. It raised capital across multiple rounds, including a seed round backed by Framework Ventures, Pantera Capital, Founders Fund, and HashKey Capital, among others.

Sentient (SENT) on Binance

Binance listed the SENT token on January 22, 2026. The token was with the Seed Tag applied against the USDT, USDC, and TRY trading pairs.

Closing Thoughts

Sentient is trying to change the story of artificial intelligence. By moving away from siloed, corporate-controlled models toward an open, decentralized network, it aims to democratize access to AGI. By using the Sentient GRID to connect data and computers openly, the project is fighting for a more collaborative and transparent future in the AI space.

Further Reading

What Are AI Agents?

Top 6 Artificial Intelligence (AI) Cryptocurrencies 

What Is Sapien (SAPIEN)? 

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

Ripple USD (RLUSD) is a 1:1 USD-backed stablecoin issued by Ripple, designed specifically for enterprise utility and cross-border payments.

The stablecoin is fully backed by segregated reserves of US dollar deposits, short-term US government treasuries, and other cash equivalents.

RLUSD is natively issued on both the XRP Ledger (XRPL) and Ethereum blockchains to maximize liquidity and interoperability across the DeFi ecosystem.

Ripple emphasizes regulatory compliance, issuing RLUSD under a New York Department of Financial Services (NYDFS) Trust Company Charter.

Introduction

For over a decade, Ripple has been a major player in using blockchain technology to improve global finance, primarily through its native asset, XRP. However, as the digital asset market has matured, the demand for stable, regulatory-compliant assets has grown significantly. Financial institutions and enterprises require the speed of blockchain but with the price stability of fiat currency.

To meet this demand, Ripple introduced Ripple USD (RLUSD). This stablecoin bridges the gap between old-school banking and the new crypto economy. It offers a trusted way to send digital dollars globally. Let’s look at how it works and why it matters.

What Is Ripple USD (RLUSD)?

Ripple USD (RLUSD) is a US dollar-denominated stablecoin issued by Ripple Labs' subsidiary, Standard Custody & Trust Company, LLC. RLUSD is designed to maintain a stable value of $1.00.

RLUSD was built with big businesses and institutions in mind. Ripple uses its long history of working with banks to create a digital dollar that meets the strict standards of global finance. It’s designed for high-volume tasks, like settling cross-border trades or moving corporate funds.

How Does RLUSD Work?

RLUSD operates on a transparent and secure model designed to instill confidence in institutional users.

1. Reserves

Trust in a stablecoin relies entirely on its backing. RLUSD is fully backed by a segregated reserve of assets. For every RLUSD token in circulation, Ripple holds an equivalent amount of value in:

US dollar cash deposits.

Short-term US government treasuries.

Other cash equivalents.

These reserves are held in segregated accounts at US depository institutions, ensuring that customer funds are kept separate from Ripple’s corporate funds.

2. Regulatory compliance and transparency

RLUSD is issued under a "Trust Company Charter" from the New York Department of Financial Services (NYDFS). New York has some of the toughest regulatory frameworks in the crypto space. This ensures that RLUSD follows strict laws regarding consumer protection and anti-money laundering. Ripple publishes an attestation report every month showing that the money in the bank matches the tokens in circulation.

3. Multi-chain issuance

To ensure broad accessibility, RLUSD is natively issued on two major blockchains:

XRP Ledger (XRPL): Known for its low fees and high speed, making it ideal for payments.

Ethereum (ETH): The hub of decentralized finance (DeFi), allowing RLUSD to be used in a wide range of smart contracts and dApps.

Potential Use Cases

RLUSD is designed to serve as a foundational layer for various financial applications.

Cross-border payments: RLUSD allows businesses to send funds worldwide in real-time with minimal fees, avoiding the delays of the traditional banking system (SWIFT).

On/off ramps: It serves as a reliable bridge between fiat currencies and digital assets, making it easier for users to move money onto the blockchain.

DeFi and tokenization: Developers can use RLUSD as a stable asset for trading pairs, lending protocols, and the settlement of tokenized real-world assets (RWAs).

Global settlement: Financial institutions can use RLUSD as a settlement asset for foreign exchange (FX) markets and derivatives.

Ripple USD (RLUSD) on Binance

Binance listed the RLUSD token for trade on January 22, 2026. RLUSD was listed for trading against the USDT, U, and XRP pairs. Following the listing, Binance introduced a zero-fee promotion for the RLUSD/USDT and RLUSD/U trading pairs.

Closing Thoughts

The launch of RLUSD is a big step for Ripple. By adding a regulated stablecoin alongside XRP, they now have a complete toolkit for moving value. RLUSD offers the stability needed for payments, while the blockchain ensures quick and secure transactions. As governments around the world create tighter rules for crypto, compliant stablecoins like RLUSD will likely become more relevant.

Further Reading

What Is Ripple (XRP)?

What Is a Stablecoin?

What Are Real World Assets (RWA) in DeFi and Crypto? 

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

Fogo is a Layer 1 blockchain built on the Solana Virtual Machine (SVM), specifically optimized for decentralized trading and financial applications.

The network integrates the Firedancer validator client to achieve high throughput, low latency, and reliability. The project’s goal is to bridge the gap between centralized and decentralized exchanges in terms of performance and user experience.

Fogo features an "enshrined" limit order book and native oracle infrastructure directly at the protocol level, reducing fragmentation and dependency on third-party services.

The FOGO token is the native utility asset used for gas fees, staking security, and governance within the ecosystem.

Introduction

People love the idea of decentralized finance (DeFi) because they are free to control their own money. But truthfully, using DeFi can sometimes be slow, expensive, and frustrating compared to centralized exchanges (CEXs).

Fogo was created to fix this gap. It’s a blockchain built for one main purpose: trading at scale. By using the Solana Virtual Machine (SVM) and a new validator system, Fogo strives to offer the best of both worlds: the speed of a centralized exchange with the autonomy of a decentralized one.

What Is Fogo?

Fogo is an SVM-based Layer 1 blockchain with one main mission: to serve as a complete infrastructure for on-chain trading. Unlike some general-purpose blockchains that host everything from NFTs to gaming, Fogo's architecture is vertically integrated to optimize specifically for financial transactions.

The primary goal of Fogo is to eliminate the trade-offs between speed and decentralization. It incorporates a tech stack that includes a curated validator set, native price feeds, and an “enshrined” decentralized exchange (DEX). This allows traders to enjoy the instant execution associated with platforms like Binance, while maintaining full self-custody of their assets.

How Does Fogo Work?

As mentioned, Fogo runs on the Solana Virtual Machine (SVM), which is known for being able to do many tasks at once. However, Fogo adds three special features to make it even better for trading performance.

1. Firedancer integration

The engine inside Fogo is called Firedancer. This is a piece of software developed by Jump Crypto to run the network. It’s designed to significantly increase throughput (transactions per second) and reliability while reducing validator operating costs:

Sub-second finality: Transactions are confirmed almost instantly.

Hyperscaling: The ability to handle hundreds of thousands of transactions per second, preventing congestion.

2. Enshrined order book

Most blockchains require developers to build DEXs as separate smart contracts, which can lead to liquidity fragmentation. Fogo takes a different approach with the so-called Enshrined Limit Order Book (CLOB), built directly into the protocol layer.

This means the core trading engine is implemented into the chain itself. Liquidity providers and traders interact with a single, unified layer of liquidity, meaning deeper markets and better price execution for everyone. This mirrors the efficiency of a centralized exchange engine but runs entirely on decentralized code.

3. Native price tools

Usually, blockchains need outside services (called "Oracles") to tell them the price of Bitcoin or Gold. Sometimes these services are slow. Fogo has these price feeds built in. The people running the network (validators) provide price updates constantly. This helps make the data faster and more accurate.

Potential Use Cases

Fogo’s high-performance infrastructure is designed to support demanding financial applications that tend to struggle on slower chains.

High-frequency trading (HFT): Institutional market makers can run algorithmic strategies on-chain with the certainty that their orders will be executed instantly, similar to traditional stock markets.

Perpetual futures and derivatives: The low latency and native oracle support make Fogo ideal for hosting decentralized derivatives exchanges, where millisecond delays can lead to significant losses.

Real-world asset (RWA) settlement: Traditional finance institutions looking to settle assets on-chain require high throughput and instant finality, both of which Fogo provides.

Cross-chain hub: Fogo can serve as a liquidity hub for the broader SVM ecosystem, allowing assets from other Solana-based chains to be traded efficiently.

Why Is This Good for Users?

Feels like a CEX: It’s snappy and responsive. You don't have to wait minutes to see if your trade went through.

Better prices: Because the trading engine is unified, there is deeper liquidity, meaning you don't lose as much value when making large swaps.

Reliable: The Firedancer technology is designed to stop the network from crashing or pausing, which has been a problem for high-speed chains in the past.

Cheap: Transaction fees are extremely low, even when many people are using the network.

The FOGO Token

The FOGO token is the native utility asset that powers the Fogo network. It has four main use cases:

Gas fees: Users pay FOGO to execute transactions, place orders, and interact with smart contracts.

Staking and security: Validators and delegators stake FOGO to secure the network. Honest participation is rewarded with staking yields, while malicious behavior is penalized.

Governance: FOGO holders can participate in the governance of the protocol, voting on upgrades, parameter changes to the enshrined order book, and other ecosystem initiatives.

Exchange currency: Within the Fogo ecosystem, the token may be used as a primary quote currency or for fee discounts on the native exchange layer.

Fogo (FOGO) on Binance

Binance listed the FOGO token for trade on January 15, 2026. The token was listed with the Seed Tag applied, allowing for trading against the USDT, USDC, and TRY pairs. Following the listing, Binance Spot announced a promotion where eligible users have a chance to share a total prize pool of 38,000,000 FOGO in token vouchers.

Promotion Period: 2026-01-15 13:00 (UTC) to 2026-01-29 13:00 (UTC).

Closing Thoughts

For crypto to reach a billion users, it needs to be fast and cheap. Nobody wants to pay high fees or wait a long time for a transaction to finish. Fogo is attacking this problem by pushing blockchain technology to its limits. By combining the speed of the SVM with the power of Firedancer and focusing on financial services, Fogo is trying to build the ultimate home for decentralized trading.

Further Reading

What Is Solana (SOL)?

What Is the Solana Virtual Machine (SVM)? 

Understanding Matching Engines in Trading 

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

zkPass is a privacy-focused protocol for data verification, acting as a bridge between Web2 data and the Web3 ecosystem.

The zkPass protocol uses Multi-Party Computation (MPC) and Zero-Knowledge Proofs (ZKP) to allow users to prove facts about their data without revealing detailed information.

One of the core innovations of zkPass is "TransGate." It enables users to generate proofs from any HTTPS website using a modified Three-Party TLS (3P-TLS) handshake.

zkPass solves critical issues regarding data sovereignty, eliminating the need for centralized APIs or invasive KYC processes for decentralized applications.

Introduction

The gap between the traditional internet (Web2) and the blockchain ecosystem (Web3) continues to be an obstacle for mass adoption. Web2 holds massive amounts of valuable user data (like financial history, social identity, and legal credentials). However, Web3 applications usually can't access this data without relying on centralized intermediaries or asking you to give up your privacy.

zkPass was built to fix this "data gap." It uses cryptography to let you bring your real-world reputation and data onto the blockchain. You can do this without trusting a middleman with your secrets. Let’s look at how this works and why it matters.

What Is zkPass?

zkPass is a decentralized, privacy-focused protocol designed for private data verification. It functions as an infrastructure layer that empowers users to selectively prove their data from traditional Web2 sources (like banks, e-commerce platforms, or government databases) to Web3 smart contracts.

The primary goal of zkPass is to enable data verification without data disclosure. For example, a user can prove to a decentralized finance (DeFi) protocol that they have a credit score over 700 without revealing the exact score, their name, or their credit report history.

How Does zkPass Work?

The architecture of zkPass is built upon two pillars of modern cryptography: Multi-Party Computation (MPC) and Zero-Knowledge Proofs (ZKP). However, one of its most distinct innovations is how it handles the standard internet connection protocol known as TLS (Transport Layer Security).

1. Three-Party TLS (3P-TLS)

When you log into a bank website, you use HTTPS, which relies on a standard 2-party TLS handshake between you (the Client) and the bank (the Server). This ensures encryption, but the data is only visible to you.

zkPass introduces a "3-party TLS" mechanism. This involves:

The Prover (User): The person accessing the data.

The Verifier (zkPass Node): The entity witnessing the data transfer.

The Web Server: The source of the data (e.g., Google, Amazon, Chase Bank).

In this setup, the Verifier participates in the handshake to guarantee the data is authentic and coming from the correct server. However, thanks to the cryptographic protocols used, the Verifier never sees the unencrypted data. They only see a mathematical proof that the data exchange occurred.

2. TransGate

The user interface for this technology is called TransGate. It serves as a gateway that allows users to generate zero-knowledge proofs from any HTTPS website. When a user activates TransGate, they can selectively parse specific data fields from a webpage and package them into a zk-proof. This proof can then be uploaded to the blockchain for DApps to verify.

3. Zero-knowledge proof generation

Once the data is retrieved and witnessed via 3P-TLS, it is converted into a Zero-Knowledge Proof. This is a cryptographic method where one party proves to another that a statement is true without revealing the input of the statement. This ensures that sensitive personal identifiable information (PII) never leaves the user's local environment in a readable format.

Potential Use Cases

zkPass can be used in a wide variety of applications by bridging off-chain data with on-chain utility.

DeFi and under-collateralized lending: Currently, DeFi loans often require over-collateralization because protocols don't know a user's creditworthiness. Users can use zkPass to prove their off-chain financial status (e.g., bank balances or credit scores), enabling better lending rates without doxing themselves.

Identity verification (DID): Users can prove they are unique humans, over 18, or citizens of a specific country (KYC compliance) without uploading photos of their passports to multiple databases, reducing the risk of identity theft.

Gaming and social: Gamers could verify their ownership of assets or achievements in Web2 games (like Steam or Epic Games) to unlock rewards in Web3 ecosystems.

Creator economy: Influencers could anonymously prove they own an account with over 100k followers to access exclusive DAO memberships or marketing contracts.

The Benefits of zkPass

Privacy preservation: The protocol ensures data sovereignty. Users retain full control over their data, sharing only "results" (proofs) rather than "raw data."

No API required: Unlike traditional oracles that require Web2 companies to provide API access, zkPass works with any standard HTTPS website. This removes the reliance on Web2 giants to "allow" data portability.

Compatibility: The generated proofs are compatible with a wide variety of blockchains, making it a versatile tool for the multi-chain future.

Anti-cheating: By verifying data directly from the source server via TLS, it prevents users from fabricating screenshots or manipulating local HTML code to fake their credentials.

The ZKP Token

The ZKP token is the fuel that runs the zkPass network. It's the main currency used to pay for the services that turn your private data into secure proofs.

ZKP is built as a standard ERC-20 token with a max supply of 1 billion tokens. It also uses technology from LayerZero to make sure the token works smoothly and safely across different blockchains.

The ZKP token has four main use cases:

Payment: Users and apps pay with ZKP to create proofs and verify data.

Security deposit: The people who run the network nodes (validators) must lock up ZKP tokens as a promise to do their job correctly. If they act badly, they lose their tokens.

Access: Developers and companies need ZKP to use the zkPass tools and privacy features.

Voting: Holding the token allows the community to vote on changes to the system.

zkPass (ZKP) on Binance

Binance listed the ZKP token for trade on January 7, 2026. The token was listed with the Seed Tag applied, allowing for trading against the USDT, USDC, and TRY pairs. Following the listing, Binance Spot announced a promotion where eligible users had a chance to share a total prize pool of 7,400,000 ZKP in token vouchers.

Closing Thoughts

The demand for connecting real-world identity and reputation to the blockchain is growing. However, this connection shouldn’t come at the cost of user privacy. zkPass offers a smart solution to this problem. By using the existing secure internet (HTTPS) and adding a layer of "blind" verification with MPC and ZK technology, it makes sharing data safer and more scalable.

Further Reading

What Is LayerZero (ZRO)? 

What Is ZKsync and How Does It Work?

What Is Zero-knowledge Proof and How Does It Impact Blockchain? 

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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Key Takeaways

Brevis is a zero-knowledge (ZK) coprocessor that enables smart contracts to access and compute historical and omnichain data in a completely trust-free manner.

Traditional blockchains tend to struggle with heavy computations or accessing historical data without sacrificing security or incurring high costs.

Brevis is designed to offload these intensive tasks to an off-chain network (ProverNet). It verifies the results on-chain using succinct ZK proofs.

BREV is the native utility token used for proof fees, prover staking, governance, and eventually as gas for the planned Brevis rollup.

Introduction

When it comes to decentralized applications (DApps), smart contracts generally can’t access historical blockchain data or data from other chains without relying on oracles and other trusted intermediaries. Also, performing complex calculations directly on Ethereum or other Layer-1 networks can be relatively expensive.

Brevis aims to solve these scalability and interoperability limitations by introducing a Zero-Knowledge (ZK) Coprocessor. Just as a computer uses a GPU to handle heavy graphics processing alongside the CPU, Brevis sits alongside a blockchain to handle heavy data processing. It allows developers to build data-driven DApps that can utilize arbitrary data across multiple blockchains without having to add new trust assumptions.

How Does Brevis Work?

Brevis operates by separating computation from verification. It moves heavy computational workloads off the main blockchain into a specialized environment, processes the data, and returns a cryptographic proof attesting to the accuracy of the result.

The ZK Coprocessor Model

In the Brevis architecture, the smart contract on the main chain (e.g., Ethereum) requests a specific computation or data query. Brevis processes this request off-chain and generates a Zero-Knowledge Proof (ZKP). This proof is then submitted back to the smart contract, which can cryptographically verify that the computation was performed correctly without having to re-execute the work itself.

ProverNet

The engine powering this system is ProverNet, a decentralized marketplace of provers. These participants compete to generate proofs for requested computations. The system is currently deployed on the Base blockchain but is designed to migrate to a dedicated Brevis rollup in the future. ProverNet ensures that the generation of proofs is decentralized, secure, and competitively priced.

Key Features

Brevis introduces several architectural innovations designed to expand the capabilities of Web3 applications:

Omnichain data access: The platform allows DApps to access and use on-chain data from different blockchains. This enables use cases such as cross-chain reputation systems, historical liquidity analysis, and multi-chain DeFi logic.

Trust-free verification: By relying on ZK proofs, Brevis eliminates the need to trust the off-chain actors. The destination blockchain verifies the mathematical proof rather than trusting the entity that provided the data.

High-performance zkVM: Brevis uses the Pico zkVM to enable high-speed proof generation, aiming to make off-chain compute efficient enough for real-time applications.

The BREV Token

The BREV token is the native utility and governance asset of the Brevis ecosystem. It’s designed to align incentives between developers, users, and the provers who secure the network.

Token utility:

Proof fees: Developers and DApps pay fees in BREV to request and verify zero-knowledge proofs within the ProverNet system.

Staking and security: Participants operating as provers in the network are required to stake BREV. This stake serves as collateral; if a prover acts maliciously or fails to deliver, their stake can be penalized (slashed), ensuring network integrity.

Governance: BREV holders can participate in the governance of the protocol, influencing decisions regarding incentive structures and ecosystem development.

Future gas token: While ProverNet initially launched on Base, the roadmap includes a migration to a dedicated Brevis rollup. Upon this migration, BREV is intended to serve as the native gas token for the network.

Tokenomics

Brevis has a fixed total supply of 1,000,000,000 (1 billion) BREV tokens. The project has emphasized community and ecosystem growth in its allocation strategy.

Token allocation

Ecosystem Growth: 37%

Community Incentives: 32.20%

Team: 20%

Seed Investors: 10.80% 

Brevis on Binance HODLer Airdrops

On January 5, 2026, Binance announced BREV as the 60th project on the Binance HODLer Airdrops. Users who subscribed their BNB to Simple Earn and/or On-Chain Yields products from December 17 to 19 were eligible to receive BREV airdrops. A total of 15 million BREV tokens were allocated to the program, accounting for 1.5% of the total token supply at genesis.

BREV was listed with the Seed Tag applied, allowing for trading against the USDT, USDC, BNB, and TRY pairs.

Closing Thoughts

Brevis is focused on blockchain infrastructure designed for modularity, where specific tasks like heavy computation are offloaded to specialized layers. By leveraging Zero-Knowledge technology, Brevis provides a "coprocessor" that allows smart contracts to see and compute more data without sacrificing decentralization.

Further Reading

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

What Is ZKsync and How Does It Work?

What Is Zero-knowledge Proof and How Does It Impact Blockchain? 

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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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? 

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🗞️ In The News
Bitcoin price remains relatively stable around the $90,000 level.The Fed lowered interest rates by 0.25%, but future rate cuts remain uncertain.YouTube now allows US creators to receive payouts in crypto stablecoins.SEC approves the Depositary Trust and Clearing Company (DTCC) plan to tokenize stocks, bonds, and treasuries,Terra Luna Founder Do Kwon was officially sentenced to 15 years in prison.CFTC announces withdrawal of outdated crypto guidance.Revolut partners with Trust Wallet to offer crypto payments in Europe.

📖 Binance Academy Knowledge
Ethereum Fusaka Upgrade: All You Need to KnowBlockchain Layer 1 vs. Layer 2 Scaling SolutionsWhat Are Concentrated Liquidity Market Makers (CLMMs)?What Are Intent-Based Transactions in DeFi?What Is Zcash (ZEC)?

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