BlackRock has launched the iShares Bitcoin ETF (IBIT) on Cboe Canada, offering Canadian investors access to Bitcoin through brokerage accounts.

The S&P 500 rose 0.16% as focus shifts to inflation data and earnings reports from major banks. Coindesk Indices, an index measuring broader cryptocurrency market performance was down by 0.16%, with Bitcoin and Ether dropping by 1.14%  and 4.65%, respectively in the past 24 hours.

Today's top performer is AAVE, which surged 4.3% after the announcement of Aave and GHO's expansion across networks for broader integration.

Aave (AAVE), founded in 2017, is a decentralized lending platform on Ethereum for lending, borrowing, and earning interest on 17 cryptocurrencies. It uses smart contracts, collateral for loans, and aTokens for interest, along with features like instant loans. Aave is 

 to multiple networks, with ARFCs passed for Linea, Celo, and World Liberty Finance, while Sonic, Mantle, BOB, and Rootstock are in earlier stages. GHO stablecoin is also growing, with expansions to Avalanche and Base already approved. Aave and GHO aim for widespread integration.

Check Out the Latest Prices, Charts, and Data of 

 the iShares Bitcoin ETF (IBIT) on Cboe Canada, offering Canadian investors access to Bitcoin through brokerage accounts. The ETF mirrors Bitcoin's price performance by investing in the U.S. iShares Bitcoin Trust ETF, which holds long-term Bitcoin assets. This launch highlights BlackRock’s focus on innovation and simplifying Bitcoin exposure by addressing operational and custody complexities. Cboe Canada, known for pioneering financial products, emphasizes its role in expanding the crypto ecosystem. IBIT and IBIT.U join seven other iShares ETFs on Cboe Canada, enabling investors to trade via standard investment channels.

Yesterday, BTC Spot ETFs experienced outflows totaling $313.6M, including $89M from GBTC and $224.6M from non-GBTC sources.

 its governance token, $ANIME, in January 2025 with a total supply of 10 billion (7.69 billion initially circulating). Community allocation is 50.5%, including 2% for Hyperliquid stakers, Kaito yappers, and Arbitrum users. Completing Azuki's points tasks might help with eligibility for the airdrop.

Beginner

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BlackRock Launches iShares Bitcoin ETF on Cboe Canada for Simplified Crypto Access

Holoworld is an AI-powered storytelling engine and comprehensive platform that democratizes the creation of interactive virtual characters. Learn more here.

The transformative potential of AI-powered characters remains largely untapped, constrained by technical barriers that limit widespread deployment. Holoworld emerges as a pioneering solution, offering an AI-powered storytelling engine that transforms the way we bring virtual characters to life.

This article examines Holoworld's revolutionary approach to digital character development and evaluates its potential impact on the future of AI-powered interactions. We'll examine its feature-rich ecosystem, analyze its development road map and evaluate its first AI agent token, AVA, as an investment opportunity.

 is an AI-powered storytelling engine and comprehensive platform that democratizes the creation of interactive virtual characters, enabling seamless development and deployment across digital platforms without coding knowledge.

Established in 2023 by Tong Pow and Hongzi Mao, Holoworld emerged from Hologram Labs, a San Francisco-based startup specializing in next-generation AI social technology. Built on years of technical expertise in motion capture, machine learning and 3D animation, the platform was conceived to democratize AI character creation and transform digital interaction.

The Holoworld project quickly attracted notable backing from investors, including Polychain Capital, Linkin Park's Mike Shinoda, BRC-20 token standard creator Domo, BitMEX co-founder Arthur Hayes and more.

Through collaborations with major brands like Arbitrum, BNB Chain, L'Oréal and Bilibili, as well as notable NFT projects such as 

, Hologram Labs has demonstrated its ability to create distinct digital identities through advanced AI technology.

Holoworld's primary mission is to democratize access to sophisticated AI character development by breaking down technical barriers that have previously limited creative expression. Through its intuitive platform, Holoworld empowers creators of all skill levels to transform their imaginative concepts into interactive digital personalities.

By making AI character creation accessible to everyone, regardless of technical expertise, Holoworld creates new possibilities for digital storytelling and interaction. The platform's seamless integration with popular social media and content platforms ensures these AI characters can reach and engage with audiences across multiple channels.

Beyond accessibility, Holoworld is building a sustainable ecosystem in which creators can monetize their virtual characters. This commitment to creator success is reinforced by the platform's community-driven approach, which ensures continual evolution based on user needs and feedback.

Holoworld operates through a sophisticated yet user-friendly interface that combines advanced AI technology with intuitive character-creation tools. It’s powered by cutting-edge technology, including OpenAI's GPT-3.5 Turbo model, with Ava AI’s (see below) deep learning neural network boasting over 175 billion machine learning parameters.

The character creation process consists of the following five main components.

The platform provides essential tools for defining character identity:

This phase involves bringing the character to life through carefully crafted behaviors and responses:

Characters can be equipped with information through 

The final step involves generating and customizing 3D avatars, giving characters their visual presence in the digital world. This completes the transformation from concept to fully realized digital personality.

Holoworld offers a comprehensive feature suite that empowers creators and brands to build and manage their AI characters. All of the components work seamlessly together to provide a complete AI-powered storytelling and interaction platform.

Ava AI represents Holoworld's flagship AI chatbot. Built on OpenAI's GPT-3.5 Turbo model, Ava AI features a sophisticated deep-learning neural network with over 175 billion machine-learning parameters. The system includes fast AI chat functionality, allowing users to ask anything and receive instant responses.

 represents Holoworld's flagship launchpad for on-chain 

. This innovative marketplace enables anyone to create and deploy multimodal AI agents, equipped with full-body avatars, customizable voices and upgradeable skills — all without coding knowledge.

The platform's reach extends across multiple social channels, particularly emphasizing X platform integration. What sets Agent Market apart is its deep integration with the upcoming Holoworld Launchpool, whereby AVA token holders can gain privileged access to new ecosystem projects.

The marketplace has already attracted an impressive array of partners and creators, from gaming studios and NFT communities to academic researchers from Stanford and Harvard, all preparing to use the platform to bring their unique AI agent visions to life.

The inventory system provides comprehensive management tools for users' digital assets. Users can efficiently organize their character assets, track resources and store customization items in one central location. This systematic approach ensures creators can access all their digital possessions within the platform.

Holoworld's chat system accommodates SFW and NSFW conversations with appropriate content filters. The platform manages token limits intelligently to ensure optimal performance while enabling real-time interactions. Users can engage in multi-character conversations, creating rich and dynamic interactions within the platform.

The playground environment serves as a crucial testing ground for character development. Users can experiment with different personality settings and interaction patterns before publication. This safe space allows creators to refine their characters' behaviors and responses, ensuring they meet desired specifications before going live.

Holoworld has established an ambitious development trajectory that focuses on expanding platform capabilities and enhancing user experience. Its road map encompasses several key areas as follows.

The platform aims to seamlessly integrate with X, Telegram and Discord for AI interactions, as well as TikTok, Twitch, YouTube Live and Instagram Reels for AI avatar livestreaming. These integrations will enable creators to reach broader audiences across multiple platforms.

Holoworld plans to lower barriers for content and IP creation through advanced character-generation capabilities, video-generation tools and a sophisticated animation engine. These improvements will make it easier for creators to produce high-quality content without needing extensive technical knowledge.

The platform is working to elevate user experience by implementing long-term memory for AI characters, enabling multi-agent interactions, developing a comprehensive simulation engine and enhancing voice creation features. These advancements will create more realistic and engaging character interactions.

To increase accessibility, Holoworld is focusing on mobile application optimization, browser extension creation, SDK evolution and desktop application enhancement. This multi-platform approach ensures users can access their AI characters from any device or platform.

Holoworld plans to empower creators through a comprehensive marketplace system that includes a skills marketplace, an asset marketplace and a creator leaderboard system. These features will provide creators with various opportunities to monetize their content and engage with their audiences.

AVA is the first AI agent token of the Holoworld ecosystem, launched based on its first AI agent, Ava AI. The token’s distribution is structured with a maximum supply of 1 billion AVA, with current metrics on Coingecko showing the following:

Looking to trade AVA tokens? Bybit now offers the AVAAIUSDT Perpetual contract. To get started, you’ll first need to create a Bybit account, then fund it with cryptocurrency and navigate to the 

While Holoworld demonstrates innovative technology in the AI agent and virtual character space, investors must carefully consider its strengths and risk factors before making any investment decisions.

With its strong token utility, notable partnerships and innovative approach to democratizing AI agent creation, Holoworld shows promising potential. However, potential investors are advised to 

 and consider their risk tolerances before investing.

Holoworld represents a significant leap forward in democratizing AI character creation and interaction. With its comprehensive platform featuring Ava AI, robust development tools and a clear road map for future growth, Holoworld is positioning itself at the forefront of the AI-powered virtual character revolution.

Intermediate

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Holoworld (AVA): Bringing Imagination to Reality With AI

Kaia (KAIA) unites Klaytn & Finschia for Asia’s web3 growth. Backed by KakaoTalk & LINE, it offers scalability, low fees, & bridges Web 2.0 to web3.

 (TON) in 2024, largely attributable to its Telegram-based mini 

 (DApps), has put the spotlight on the use of 

 technologies in instant messaging platforms. However, the Telegram-linked project isn't the only one that has identified the potential in this area. As early as February 2024, two blockchain platforms with links to popular Asian messaging networks announced their high-profile merger. 

The merger of Klaytn (KLAY) — backed by the South Korean instant messaging platform KakaoTalk — and Finschia (FNSA) — operated by the owner of the Japan-based LINE messaging app — may have a far-reaching impact on the entire crypto industry. The merged entity, branded Kaia (KAIA), aims to become the leading web3 platform in Asia. With its deep links to Web 2.0 messaging giants, the Kaia blockchain could also challenge the dominance of TON in the niche of messenger-based mini DApps.

Kaia’s faith in its ambitious plans is well-founded. The KakaoTalk and LINE messenger apps boast a combined user audience of nearly 300 million across several Asian countries. With the vast number of easily accessible target users, Kaia is ideally positioned to become the main bridge between Web 2.0–based online messaging and web3. However, the multimillion army of potential users on KakaoTalk and LINE isn't the only trump card of the Kaia project: the blockchain features great scalability, near-instant finality, excellent throughput capacity and low transaction costs. 

With all of these benefits on offer and backing from some of the most prominent players in Asia's instant messaging sector, the Kaia chain might become the crypto industry's up-and-coming growth leader for the year 2025.

 (KAIA) is a Layer 1 blockchain that has emerged due to the merger of two web3 platforms — the Klaytn and Finschia blockchains. 

Klaytn and Finschia had operated as separate networks for several years, Klaytn since 2019 and Finschia since 2018, before their governance communities voted in February 2024 to approve the merger. The Kaia 

The merger immediately attracted the attention of industry observers, as it involved two platforms backed by Asian instant messaging giants — South Korea’s Kakao Corporation, the developer of Klaytn and KakaoTalk instant messenger, and Japanese LY Corporation (previously Line Corporation), the entity behind the LINE messenger app and the Finschia blockchain. As of early 2025, KakaoTalk boasts over 50 million active monthly users, mostly in South Korea, while the LINE messenger has around 230 million active monthly users spread across its key markets — Japan, Indonesia, Taiwan and Thailand.

The sheer size of the combined user audience of KakaoTalk and LINE, and their connection to the newly formed Kaia blockchain, suggest the project may become a leading platform by integrating web3 functionality into both messengers, similar to the way TON’s chain has become a champion of Telegram-based mini DApps. However, the goals of the merged project go well beyond the integration of Web 2.0 messaging and web3 functionality, and the Kaia project hopes to leverage its potential reach to become Asia’s leading blockchain platform.

 (EVM)–compatible blockchain that boasts outstanding technical properties, including one-second block generation times, a throughput capacity of 4,000 

 (TPS) and near-instant finality. It also offers low transaction fees (1/10th of Ethereum’s fees).

 of the original Klaytn blockchain. Following the merger, Klaytn's testnet, Baobab, has become Kaia’s testnet under the new name of Kairos.

Aiming to become the largest web3 environment in Asia, Kaia offers decentralized projects and developers opportunities across a wide variety of sectors, with a particular focus on three niches — 

Transition From Klaytn and Finschia to Kaia

The original Klaytn blockchain was launched in June 2019 by GroundX, a subsidiary of the South Korean technology giant Kakao Corporation. The key aim of Klaytn was to provide a low-

, high-throughput, developer-friendly platform for enterprise-grade applications. Klaytn was forked from Ethereum, and was highly EVM-compatible. It quickly grew popular in the South Korean market, propped up by support from the powerful Kakao Corporation.

Soon after its launch, the blockchain became the dominant web3 platform in South Korea. In 2021, the Bank of Korea selected Klaytn as the provider of choice for its 

 (CBDC) project. Kaia's great technical capabilities primarily derive from the original Klaytn network.

As for Finschia, the origins of this platform go back even further, to 2018, when Japan’s LINE Corporation — now known as LY Corporation, after a merger of several related business entities — developed and launched the LINK blockchain. In 2020, the platform was rebranded from LINK Chain to LINE Blockchain. This wasn't the last name change in its history, as the project’s penchant for rebranding proved unstoppable. Three years later, in April 2023, LINE was rebranded to Finschia.

The Finschia chain aimed to accommodate a wide variety of use cases, sporting an ambitious motto —

In January 2024, a proposal to merge Klaytn and Finschia was tendered for consideration by the platforms’ governance communities. One key aim of this proposed merger was to combine the potential reach of the two chains in Asia (estimated at around 250 million users for the two messenger apps at that time) in order to create the continent’s largest web3 environment.

The proposal was approved in February 2024 with overwhelming support, with 90% of Klaytn and 95% of Finschia governance representatives voting in favor of the merger.

In late August 2024, the Kaia mainnet launched, signifying the practical start of the ambitious project. As a fork of Klaytn, Kaia inherited its technical setup. This meant that DApps in the Klaytn ecosystem could seamlessly transition to the new network, with minimal modifications. Finschia DApps, on the other hand, need to be migrated to the new platform. Finschia Foundation, a nonprofit that supported the original Finschia project (and continues to provide support during the merger phase) can provide advice to DApps undertaking migration from the Finschia blockchain to Kaia.

The Kaia blockchain uses a specialized block validation process known as Practical Byzantine Fault Tolerance (PBFT). Distinct from 

 models employed in the industry, PBFT is a modification of the Istanbul BFT (IBFT) consensus algorithm, an innovative network consensus model designed to power secure block validation in distributed networks.

Kaia's PBFT algorithm randomly selects a committee of 

 to process and validate transaction blocks at one-second intervals. One validator node in the committee is assigned the proposer role. This node generates and proposes a transaction block for validation. The committee’s members need to sign the block to endorse its validity. In order for a block to be validated and written to Kaia's permanent ledger, more than two-thirds of the committee members must approve it. The committee isn't fixed, and a new one is formed from the pool of validator nodes for each block to be processed. Given Kaia's one-second block intervals, this committee selection process takes place every second.

Kaia's PBFT is designed to reliably process transaction blocks even when some proportion of validators on the network act maliciously. As such, PBFT is a highly fault-tolerant consensus model, a property it inherited from the original IBFT algorithm.

 (DLT) employs a three-layer architecture to power the network's operations. The underlying consensus layer is made up of consensus nodes (CNs), whose job is to process and approve blocks of transactions. These are the validator nodes we discussed above in the context of Kaia's PBFT consensus algorithm.

Above the consensus layer is the proxy layer, which is made up of core cells — mini networks consisting of one CN and two proxy nodes (PNs). PNs serve as an interface linking the underlying and outer layers of the blockchain. Within each core cell, a trio of one CN and two PNs work together to receive data from the outer layer and process transaction blocks.

This outer layer consists of endpoint nodes (ENs) that process data from service chains — app-specific Kaia chains that can be customized for the needs of each application or service.

The image below summarizes Kaia’s three-layer architecture, showing the three layers and the node types operating on each of them.

Kaia is an EVM-compatible chain capable of 

. The Kaia Virtual Machine (KVM) powers smart contracts and their processing on the network. KVM is derived from Ethereum’s virtual engine, the EVM, so blockchain developers can easily port Ethereum applications to Kaia with little modification. Common development technologies used in the Ethereum environment — such as the Solidity programming language, and the Hardhat development framework — are available to blockchain programmers building Kaia-based DApps.

The Kaia Governance Council, a group of reputable organizations in the blockchain industry, carries out the platform's governance. Council members consider proposals submitted by advisors and other stakeholders, analyze the proposed changes and vote to decide on them. While the Council currently drives the platform's governance process, Kaia aims to eventually fully decentralize its decision-making structure by introducing a community-based 

 (DAO). This will provide a more democratized and inclusive way for the wider user community to have a say in the network's strategic direction and rules.

Kaia uses an account-based model similar to the one employed by Ethereum, as opposed to the 

 (UTXO) model commonly associated with the Bitcoin (BTC) blockchain. However, the similarities between Ethereum’s and Kaia's account structures end here. 

One distinct feature of Kaia accounts is the ability for users to generate multiple key pairs. On most other blockchains, including Ethereum, an 

 can be associated with only one public-private key pair. This has several disadvantages, the most relevant of which is reduced security. By allowing multiple key pairs for account addresses, Kaia improves the overall security of account management for ordinary users and smart contract owners alike.

Each key pair generated for the address can be assigned a specific purpose or role. These role-based keys essentially mimic the functionality offered by 

, further enhancing account security and enabling more flexible access control modes.

There are two types of Kaia accounts: externally owned accounts (EOAs), which are used for cryptocurrency storage and transfers, and smart contract accounts (SCAs), which are capable of processing and storing smart contract code. While DApps leverage SCAs to power their functionality, most individual crypto users choose EOAs.

To make the management of EOAs easier and more user-friendly, the project team has developed a native wallet solution for the blockchain, Kaia Wallet, which operates as a browser extension. Available for Google Chrome, Kaia Wallet lets you manage your account via the familiar web-based interface.

The platform also offers a solution for multisig accounts, 

, which may better suit the needs of institutional users with sophisticated access control requirements.

A novel feature built into Kaia accounts is fee delegation, the ability for a user to send KAIA, the network's native token, without having to cover the transaction fee. Instead, the sender requests in the message that the fee is to be covered by the recipient party. The platform even supports partial fee delegation, whereby the sender can stipulate a specific proportion of the fee to be covered by the receiver.

The fee delegation feature may be used for multiple transaction types, involving both EOAs and SCAs.

KAIA is the Kaia platform's native cryptocurrency. It represents a rebrand of Klaytn's native token, KLAY. Following the Klaytn and Finschia merger, all KLAY tokens on the network were transferred automatically to the new KAIA tokens. For Finschia's FNSA token holders, the procedure to convert to KAIA is a bit more involved. They can utilize the Kaia Portal to 

 their FNSA tokens held on the Finschia chain, and then claim the equivalent amount of KAIA on the new blockchain.

KAIA is used to pay for smart contract operations on the network and 

 for transactions. It also has some staking functionality built in. Organizations admitted to the Kaia Governance Council need to stake at least 5 million KAIA to join.

The token is also used to pay block validation rewards. Earlier, we described a procedure involving node committees that process transaction blocks on the Kaia chain. For each generated block, 9.6 KAIA is split between the committee members involved in validating that block and two critical funds on the platform — the Kaia Ecosystem Fund (KEF) and the Kaia Infrastructure Fund (KIF). The validator committee members earn 50% of the block reward, while KEF and KIF receive 25% each.

KAIA’s total supply as of Jan 13, 2025 stands at nearly 5.9 billion. Since the token is continually issued for block rewards, its supply is subject to inflation and has no maximum cap.

 market as a swap pair with the USDT stablecoin, 

 market as a USDT-based perpetual futures contract.

As of Jan 13, 2025, the KAIA token is trading at $0.209, which is 48.9% lower than its ATH of $0.4067 on Dec 3, 2024, and 83.7% higher than its ATL of $0.1131 on Nov 4, 2024.

Long-term price forecasts for KAIA are generally bullish.DigitalCoinPrice 

 of $0.72 in 2027 and $1.12 in 2030, whileCoinCodex 

 at $ 0.2178 in 2027 and $ 0.68 in 2030.

The merger of Klaytn and Finschia has produced an enormously influential platform with potential access to nearly 300 million users of KakaoTalk and LINE. Moreover, this multimillion-strong potential audience isn't the only source of users that Kaia could tap into. Offering outstanding scalability, a highly secure consensus mechanism, low transaction costs and a unique account model capable of handling multiple key pairs per address, the Kaia blockchain is ripe for adoption by the enterprise world.

As of the start of 2025, the merged chain is still in the early months of its operation. While it might be a bit early to declare Kaia as the next big thing in the 

, the project is quickly shaping up as one of the best candidates for that designation, at least in the vast expanse of the Asian continent.

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Kaia (KAIA): Merging Klaytn & Finschia for Mass Web3 Adoption

SpaceS, the beloved Bybit Web3 Telegram game bot, just got a major upgrade with the launch of FarmX! Learn more about how to earn rewards with FarmX here.

the beloved Bybit Web3 Telegram game bot, just got a major upgrade with the launch of FarmX! This new decentralized farming platform creates opportunities for users to earn rewards by completing simple farming tasks and participating in various campaigns. With its easy-to-use setup and multiple reward pools, FarmX caters to both new and experienced crypto users, making it a fun and rewarding experience for all. This guide shows you what FarmX offers, how to get started and the best ways to maximize your returns.

 is a web3-enabled Telegram game bot that Bybit Web3 has developed. It blends entertainment with blockchain technology, offering players an interactive space-themed game in which they can earn points by dodging obstacles or flying automatically in farming mode. Beyond its gameplay, 

 introduces a social element, allowing players to invite friends and form fleets to play together.

FarmX is a decentralized platform on which users can easily earn rewards by participating in various farming activities. Simply connect your wallet, hold 

 or TON Points, and meet the activity conditions to start participating in reward pools. 

With multiple farming options available, FarmX caters to different investment preferences, making it suitable for both beginners and experienced users to explore and maximize their earning potential.

 on Telegram and tap on Start, followed by Launch Game.

: To access ongoing campaigns, tap on the 

: Browse the available campaigns to view the following:

 for participation and act quickly to secure your spot. Don’t miss out!

: Once you've selected a campaign, tap on 

: You will then be required to complete two simple tasks:

: When you join a campaign, you’ll automatically be participating in 

If you want to increase your earnings from the TON Pool, simply top up your TON deposit in your connected Bybit Wallet. 

The rewards you receive are determined by two key factors: the total amount of TON you’ve deposited, and the length of time your deposit remains active in the campaign. 

Simply put, the larger your deposit and the longer you participate, the greater your potential rewards. However, keep in mind that there’s a 

maximum deposit limit of 20 TON per account

, so plan your deposits strategically in order to maximize your returns.

Once you’ve completed the above steps, there’s nothing more you need to do — except wait for your rewards to be airdropped directly to your wallet. With multiple campaigns regularly updated, you’ll always have new opportunities to earn. 

 FarmX offers a unique and engaging way for users to explore 

 (DeFi) while earning rewards through gamified farming. It’s an accessible platform that caters to users with varying levels of experience, ensuring everyone has the chance to benefit. Dive in today, join your first campaign — and start farming your way to exciting rewards!

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Bybit SpaceS FarmX: How to Earn Rewards Through Farming

DeFi

Decentralized exchanges are being touted as the 'next big thing' in the DeFi space. Read all about how they work here.

DEX.jpeg

 makes it possible to exchange assets of value on a peer-to-peer basis without relying on any centralized entity to govern the transaction. But when it comes to purchasing and exchanging crypto assets, users still tend to favor centralized platforms.

Decentralized exchanges (DEXs) are, however, gaining in popularity. Yet, just like anything else, DEXs have their pros and cons. In this article, we will talk about DEXs and compare them to their centralized alternatives. Let’s first, though, look at decentralized finance (

Traditional financial institutions imply control of a single, central source. DeFi stands for “decentralized finance,” a collective term for various financial applications, products and services that don’t need intermediaries like banks, credit units or insurance funds. 

While all these intermediaries were indeed useful in the past, helping different parties conduct deals and providing the security of their funds, the traditional systems of finance have lost the trust of the public over time — for various reasons. 

DeFi systems, on the contrary, do not need the superstructure of third parties because they are automated and run on the blockchain. Thanks to 

, it’s become possible to set up agreements that are fulfilled automatically. This means cheaper transfers, low-cost transactions and investments, and more efficient access to the funds for all participants. 

, as the whole crypto ecosystem would not be possible without decentralized means of payment. With the growth of interest in the field, the number of tradable coins and tokens increases as well, having started with 

Not every project can handle the fees imposed by centralized exchanges to provide their users with easy access to their native tokens. As a result, the demand for decentralized exchanges has grown as well.

Decentralized exchanges (or DEXs) are cryptocurrency exchanges that don’t require the services of third parties for operations with crypto assets. Thus, they allow traders to conduct deals directly with each other. Their functions are similar to those of traditional centralized platforms, but in contrast to them, DEXs provide a direct peer-to-peer trading mechanism based on smart contract execution.

Such a type of trading presupposes that all the participants in the deal keep control over their digital assets and private keys, with no necessity to pass them to any intermediary or custodian. In other words, DEXs function as platforms for users to search for matches on their buy and sell orders, without a central authority responsible for asset storage and swapping.

As the idea of creating such platforms was put to practice in 2013–2014, it isn’t easy to define which platform became the pioneer in this field, since different resources give different names. 

Today, numerous decentralized exchanges with different functions can be easily found on the web. GitHub alone lists over 250 fully operational DEXs at the time of writing. The most popular examples include 

, Compound, Curve Finance, 1inch Exchange and PancakeSwap.

It’s worth mentioning, though, that in reality, many online exchanges calling themselves decentralized are not absolutely decentralized. They use their own servers to store the trading data, though they don’t have access to users’ private keys.

DEXs perform similarly to their centralized counterparts in some ways but are different in others. There are several types of DEXs available to users, but the main feature that is common to all of them is that orders are executed on-chain. Some DEXs offer cross-chain token sales (e.g., AnySwap), but usually they are focused on a single blockchain (e.g., 

 or Binance Chain). There can be three differentiated basic categories of DEXs: on-chain order books, off-chain order books, and automated market makers. 

 implies that each order and each transaction is recorded on the blockchain. This requires lots of network nodes and hence seems rather impractical, as operations often cannot be performed in real time.

As for off-chain order books, such DEXs cannot be called entirely decentralized as records of transactions are carried out of blockchain, which may require the third party to be involved. Some specialists call such exchanges hybrid, since they combine the functions of centralized and decentralized exchanges.

These are protocols that provide liquidity to specific markets through automated algorithmic trading. This model doesn’t require any order book.

In fact, most DEX servers still host order books, but they don’t keep private keys. 

The purposes of decentralized and centralized exchanges are the same: they give access to high-quality financial tools and services for any person who requires them (and has a connection to the internet). The main difference between them is in the form of management.

The centralized exchanges are managed by a definite organization or individual who is responsible for the protection of the users’ personal data and funds. These entities have absolute control over the exchange and make decisions on the exchange’s functions and development themselves.

The decentralized platforms are managed in an automated manner, and their participants are often involved in the process of decision-making. These exchanges provide the technical possibility for the direct interaction of the participants and voting for or against important proposals.

Currently, a centralized model is dominant. As has already been mentioned above, the number of decentralized exchanges is over 250, while the number of their centralized counterparts exceeds several thousand. 

 reports that by the end of 2020, only 19% of all trading platforms are decentralized, while trading volumes provided by these platforms make up around 1%. DEXs are still in the early development stage, but they undoubtedly implement an innovative concept that is demanded by cryptocurrency markets.

No doubt, DEXs have been a breath of fresh air to the world of online exchanges, but they have both advantages and disadvantages. 

Most of such platforms’ strong points result from their distributed architecture and the absence of a single management center. Here are some of the key advantages that they provide:

Decentralized exchanges provide complete anonymity for their users. In the majority of cases, they don’t require any form of sign-up process. That is why no personal data is collected. Investors don’t have to pass KYC and AML compliance procedures or other identity checks. 

There are some legal requirements that cannot be neglected by central authorities, but they don’t work in the case of a truly decentralized platform. Of course, the legislative system will adapt to this kind of exchange with time, but now, thanks to DEXs, it is possible to trade in a completely anonymous manner.

Perhaps the biggest problem with centralized exchanges is the risk of being hacked, as the central storage of users’ funds turns into a honeypot for any attacker that manages to get through. The news about hacking attacks on popular platforms shows up in the media regularly, despite all the security measures put in place.

This results from the custodial nature of centralized exchanges, which means that they hold their investors’ assets themselves. Decentralized exchanges, on the other hand, are noncustodial. They allow users to integrate directly with their wallets. There is no single access point to all the assets and users’ data. This makes hacking more difficult and less profitable because an attacker would have to break into every individual account, instead of stealing from a central hub.

DEXs have no access to users’ funds, which not only lowers the risks of hacking attacks, but also lessens interference from the third parties, either from the management of the exchange or the local authorities. The funds will not be frozen, the withdrawals will not be delayed or denied, and the exchange will not be blocked by legislative authorities.

The absence of third parties makes the transactions much cheaper, compared to their centralized counterparts. While centralized exchanges usually impose taker and maker fees, with DEXs users only have to pay a network fee.

Thus, decentralized exchanges provide users with a much cheaper and safer solution, compared to their centralized alternatives. However, there is another side of the coin as well (so to speak). What about the downsides?

The same peculiarities of the decentralized exchanges’ architecture and full users’ control that result in the advantages mentioned above lead to a number of disadvantages and problems.

Many trading options such as stop losses, margin trading, technical analysis tools and lending are not available on the most decentralized exchanges. To begin trading, it is necessary to become familiar with browser extensions and smart contracts — and the interfaces are often not user-friendly. Decentralized platforms rarely support fiat currencies, and the process of depositing funds may turn out to be rather confusing and complicated.

Decentralized exchanges struggle with liquidity. They support diverse trading pairs, while the number of users is much lower. Their liquidity mainly depends on the number of participants actively trading on the platform, which makes things more complicated since centralized exchanges remain more popular these days.

The distribution of blockchain nodes means low throughput. Centralized platforms demonstrate higher indices because they have centralized servers. That is why the average order execution of centralized cryptocurrency exchanges is much faster. Slower performance on DEXs may lead to so-called “price slippage” when a transaction cannot be executed, due to changes in the prices of the cryptocurrencies that are swapped.

DEXs don’t have customer support that is able to influence the transactions or the users’ accounts. If anything goes amiss, users will have nob one to assist them.

Despite these obstacles, DEXs are still much more reliable and safer when compared to centralized platforms. Moreover, they are a much better fit for experienced users who understand the risks and are ready to take responsibility for their activities there.

The rapid growth of decentralized exchanges has turned out to be a challenge for market regulators, and has raised new legal issues. The status of DEXs is ambiguous because some of their features, like anonymity, contradict some requirements of  applicable legislation.

Different countries try to solve this problem in different ways. The US makes efforts to apply the existing legal basis, while the authorities of Singapore strive to create a new regulatory system for such exchanges. Nonetheless, there is no unequivocal position on DEXs in these countries, while  still others don’t regulate such platforms at all.

One of the main difficulties connected with the regulation of decentralized exchanges is that in most cases, they are not controlled by a definite legal entity or person. This leads to problems with the definition of a responsible person if violations are found. There can be considerable difficulties with regard to the regulation, per se, of trading activities. That is why it is impossible to apply measures and rules to them that are applicable to centralized exchanges.

DEXs resolve most of the issues that centralized platforms struggle with, as they provide users with a much more secure solution to exchange their funds. The recent introduction of Uniswap technology has made it possible to quickly switch ERC-20 tokens, and has pushed the use of decentralized exchanges to new heights.

However, their popularity is still way lower while the legalization questions remain unsolved. DEXs definitely have lots of potential, but they still have a long way to go before they go mainstream.

What Are Decentralized Exchanges (DEXs) and How Do They Work?

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