PAAL AI (PAAL) is an AI-focused Ethereum-based crypto project offering custom virtual assistants, AI trading, content creation, audits, and more.

 (AI) and machine learning (ML) are undoubtedly the hottest current topics in the world of crypto, and in the entire business world, for that matter. Riding the wave of wild AI enthusiasm, AI-focused blockchain projects and coins are experiencing unprecedented growth. Projects like Artificial Superintelligence Alliance (FET), 

 (AGIX), all focused on the AI sphere and its use cases, have been receiving massive attention from users and industry observers.

Another high-profile AI-oriented crypto project, Paal AI (PAAL), has also benefited from the niche's surging popularity. As of late December 2024, the project has grown to occupy one of the top spots in the crypto market's category of AI agents.

While the majority of other AI-focused blockchain projects specialize in one or two specialized applications of the technology, Paal AI has taken a more comprehensive approach. The platform offers a wide variety of AI products and services, including task automation through AI bots and agents, AI-driven content creation, crypto trading supported by AI algorithms, automated 

 audits and AI model training using outsourced GPU processing power. 

At the platform's core is a service that allows users to create intelligent AI bots and agents to automate various complex tasks and business processes. However, a quick glance at the platform's overall product line clearly demonstrates that Paal AI aims to leverage AI technology for many different things, all at the junction of AI and blockchain technologies.

 (DApp) that offers crypto users a variety of AI-powered products and services, with the core product being an easy-to-use functionality to create custom AI virtual assistants.

 In addition to this service, the platform features various other products supported by AI algorithms, including AI-driven content creation using images and video, crypto trading automation, cryptocurrency market insights, automated smart contract audits and even AI model training via GPU power rentals.

The platform's diverse product line also includes the user-friendly Paal AI Web Widget, which can be integrated into any website. It offers a chatbot that delivers information and insights on the crypto market, and even conducts general online searches.

Another key product devised by the project is Paal as a Service (PaaS), a customized way to address the AI needs of various industry sectors, including online betting, trading, digital collectibles and more.

The Paal AI platform was launched on Ethereum in June 2023. The project's only publicly identified co-founder is mononymously known as 

. As of December 2024, Paal AI is among the top five leading crypto projects in the AI agents niche, with a market cap exceeding $280 million.

Paal AI Studio is a web application that provides a user-friendly interface for interacting with its diverse range of AI tools. It has four primary modes: MyPaal, Explore, Creative Lab and Agents.

The first mode, MyPaal, allows you to create AI bots with personalized knowledge bases and traits. Bots created via this mode can be used for custom applications and business processes requiring specific domain knowledge.

The second mode, the aptly named Explore, lets you browse through and select pre-built AI solutions that fit specific business needs. You can choose a suitable solution and use it out of the box, or configure it to better suit your specific task automation requirements.

Creative Lab mode provides AI tools to help you create content using images and video. This capability may be useful for creators whose content requirements involve rich media beyond textual information.

The last mode, Agents, lets you easily create and deploy 

 for various task automation and workflow optimization purposes.

MyPaalBot is an AI service that lets you create your personalized bot to carry out various tasks, including delivering information on the crypto market, trading automation and more. You can create your own personalized bot through the Paal AI Studio interface, and customize it for specific domains and tasks.

MyPaal can interact with users such as online community members, automate processes and integrate into platforms like Telegram and the Paal AI Web Widget. Bots created with MyPaalBot can engage in discussions with you, just like the ubiquitously popular 

. However, the difference between Paal-based bots and ChatGPT is that you can customize the former for specific domains, including cryptocurrency and trading, while the latter is simply a general-purpose chat bot, albeit a powerful one.

PaalX is the platform's solution for AI-powered crypto trading. It offers models, automated trading strategies and tools to help traders at all experience levels. Using PaalX, you can place manual orders, set up AI agents to execute automatic trades, track specific tokens using AI-based tracking tools, analyze the crypto market and access trading alerts.

In addition to its trading tools, PaalX offers access to a knowledge base and an FAQ section, as well as the opportunity to engage with other platform users via Telegram.

PaalX's user-friendly interface allows you to specify your manual order configuration in great detail, with options to set key parameters, such as trade sizes based on the percentage of available balance, the percentage of gain to close an order for take-profit and stop-loss levels based on token price fluctuations, and maximum tolerable 

If you'd like to automate your trading, PaalX lets you easily set up an AI agent, specify basic parameters — and then sit back and let your AI trading assistant execute your prespecified strategies.

Ask.Paal is an AI chatbot that delivers market insights, in addition to real-time analytics for cryptocurrency and blockchain projects and assets. You can ask it anything related to the crypto market or blockchain industry, or browse the featured projects listed on its interface for more in-depth information.

Ask.Paal offers the user a choice between different large language models (LLMs), such as PaalGPT, IBM

 and others. You can experiment with different LLMs to select the one that provides the most robust crypto research and fits your preferences in terms of its conversational style and knowledge.

There are also plugins available for Ask.Paal to extend its base functionality. Some of the more interesting plug-ins include Narratives Plugin, a tool to explore or create community-validated narratives about the crypto market or hot crypto trends; Voice Output, which allows Ask.Paal to respond to your queries in voice rather than text; and Image Search, which delivers infographics and visuals related to specific crypto projects or assets.

Audit.Paal is a solution to help you audit specific tokens and smart contracts for research and fraud detection purposes. Your personal AI agent scans the projects and assets you specify to identify issues like potential honeypots, 

 prevalent in the cryptocurrency world. For each token you query, Audit.Paal provides comprehensive analytics related to token permissions and potential vulnerabilities. You can also access your audit history and pending audits for efficient audit management.

As of December 2024, Audit.Paal is capable of scanning and analyzing assets on Ethereum, 

. Paal AI also provides an API to help developers integrate Audit.Paal into their platforms.

Deploy.paal is a service that lets AI model developers rent GPU processing capacity from the Paal AI platform on a flexible, per-use basis to train AI models and run AI algorithms. Training and running AI models often requires significant processing power, especially considering the ever-increasing user demands on AI-supported functionality. The amount of data typically used for model training and inferences is substantial. At the same time, hardware processing capacity is quickly becoming a scarce resource.

Using Deploy.paal, developers can access significant GPU capacity on a flexible and affordable basis to train and run their AI models. The platform offers two primary machine instances via the cloud to run GPU-intensive tasks: g4dn.xlarge and g4dn.2xlarge. One hour of processing by these machines costs $0.07 and $0.10, respectively. Developers pay only for the amount of time they utilize these resources; there are no lock-in contracts or initial setup fees, making Deploy.paal a convenient and cost-effective way to train and run AI algorithms.

Deploy.paal users can also scale their machines up and down anytime, depending on their current capacity requirements. Overall, Deploy.paal is probably among the most flexible GPU renting services in the 

 (NFT) collections for its user community. In August 2023, during the platform's first months of operation, Paal AI released the free Beta Bots collection, consisting of 213 NFTs, each dedicated to a step or milestone in the evolution of AI. Initially, the NFTs were distributed to community members for free, though they’ve since become available for purchase on the secondary market through 

The second collection, PaalX Bots, was released in March 2024 and consists of 1,000 items, each one opening access to a range of benefits and perks on the platform. PaalX Bots NFT holders can enjoy various benefits, such as trading on PaalX with no transaction fees, earning a share of trading volume revenues and accessing advanced trading options. NFTs from this collection are also available on the secondary market through OpenSea.

The platform's native cryptocurrency, PAAL, is an 

 token issued on the Ethereum blockchain. PAAL mainly provides access to AI products, agents and various functions on the platform. It can also be used to unlock special features or qualify for reward distributions.

The PAAL token is supply-capped, with a total and maximum supply specified at 1 billion.

Another key functionality of the PAAL token is 

. PAAL stakers can earn competitive APY rates by locking their funds in the platform's staking pools.

As of the time of this writing (Dec 26, 2024), you can select three staking periods — 14, 28 and 56 days, with the longer commitment periods offering higher APY rates. Currently, the platform offers APYs of 3%, 10% and 15% for 14-, 28- and 56-day staking periods, respectively.

The project funnels any token buybacks of PAAL into its staking pools to boost reward rates and earnings for stakers.

The PAAL token is available on Bybit's Spot market as a 

As of Dec 26, 2024, the PAAL token is trading at $0.3385, or 60.7% lower than its ATH of $0.8598 on Mar 10, 2024, and 737,122% higher than its ATL of $0.00004587 on Jul 24, 2023.

Long-term price forecasts for PAAL are bullish. DigitalCoinPrice 

 $0.81 in 2025 and $2.32 in 2030, while CoinCodex 

 that the token will trade at $1.507 in 2025 and $1.319 in 2030.

You might consider investing in the PAAL token based on the following factors:

Naturally, before investing in PAAL or any other cryptocurrency, you’re encouraged to do your own 

AI and ML technologies are currently fueling massive growth in the cryptocurrency industry. A cursory look at crypto market data reveals that AI-linked coins are currently among the most popular assets, attracting investors who aren't shy of risk in search of high rewards. Since its launch in mid-2023, Paal AI has steadily gained its footing among the top crypto projects dedicated to the AI agents subsector. As we move into 2025, the platform's comprehensive set of AI products and services will be its key differentiation point, potentially helping it cement its place among the most popular AI cryptocurrencies.

The PAAL token is currently off the head-spinning heights it climbed to earlier in 2024, a development that’s quite characteristic of many other AI cryptos. While this indicates that the wild, unbridled enthusiasm for these assets is receding, overall interest in these cryptocurrencies will likely remain strong, albeit at more realistic and objectively justified levels. 

With interest in AI — particularly AI agents — expected to thrive in the years to come, Paal AI has every chance to solidify its already respectable market position.

Intermediate

what is PAAL AI.png

PAAL AI (PAAL): Customizable Virtual Assistants Tailored for Your Needs

WhiteRock has introduced a direct tokenization platform for securities listed on the NYSE, Nasdaq, and LSE, connecting traditional finance with decentralized finance (DeFi). 

Daily Top Performer — Urolithin A (URO)

The S&P 500 was closed on Wednesday. Coindesk Indices, an index measuring broader cryptocurrency market performance, was up by 0.32%, with Bitcoin rising by 1.88% and Ethereum dropping by 0.70% in the past 24 hours.

Today's top performer is URO, which surged 43.6% following the announcement of Pump Science's tokenomics design and $BIO airdrop for $RIF and $URO holders.

Urolithin A (URO), launched in November 2024, is a meme coin on Solana blending humor with decentralized science (DeSci), inspired by a compound linked to mitochondrial health and longevity. It combines entertainment with scientific exploration for a unique crypto proposition. 

: first, the completion of its tokenomics design, where 5% of future token supply will be allocated to holders of existing tokens ($RIF, $URO), rewarding long-term holding with new token launches. Second, $BIO will be airdropped to $URO and $RIF holders, pending governance approval to bridge $BIO to Solana, with more airdrops under consideration. Tokens held on centralized exchanges will not count for the airdrops.

Check Out the Latest Prices, Charts, and Data of 

WhiteRock has introduced a direct tokenization platform for securities listed on the NYSE, Nasdaq, and LSE, connecting traditional finance with decentralized finance (DeFi). The platform allows over 500 stocks to be traded on-chain, with a weekly trading volume exceeding $100 million. It offers transparency, regulatory compliance, and products such as tokenized assets, the $WHITE token, and USDX stablecoin. Upcoming phases include a lending platform, expanded use of USDX in the DeFi ecosystem, the launch of a decentralized exchange (WhiteX), and the tokenization of additional assets like real estate and commodities.

Yesterday, the Bitcoin Spot ETF market was closed for the holiday.

, offering a double airdrop opportunity for Berachain and Stakestone. Depositors receive beraSTONE, which can later earn $MORPHO tokens on Morpho. Withdrawals are locked until April 2025, but beraSTONE is tradable on Uniswap. Deposits of at least 0.2 ETH are recommended for larger airdrop rewards.

Beginner

1.png

WhiteRock Launches Tokenization Platform Bridging Traditional Finance and DeFi

Streamflow is a token management infrastructure with a convenient interface that allows users to design and release personal tokens. Learn more here.

As the crypto market expands, there’s also a growing need for support products. Streamflow is a service that aims to simplify the process of token management. By allowing people to create and manage tokens — no matter the level of their technological skills — Streamflow helps to diversify the 

 space. In addition to providing some helpful services, Streamflow also offers some advantages for investors. Explore this guide to learn more about Streamflow and the upcoming STREAM token launch. 

 is a token management infrastructure. Its convenient interface allows users to design and release personal tokens. The Streamflow system can manage everything from token vesting schedules to token staking rewards.

Streamflow was founded in 2021 by a team of cryptocurrency enthusiasts and developers. The lead founder of Streamflow, Mališa Stanojević, initially worked at Toptal as a full-stack developer. However, in his time working with various startups, Stanojevic realized there was a need for more curated token management systems. 

Since its creation, the project has helped over 5,000 organizations launch cryptocurrencies, and now has over 1 million users. Streamflow has also 

 from reputable investors, such as Solana Ventures and Hypersphere. 

Streamflow was created to address security and convenience issues with current token launches. Its creators noticed that many users were wary of new crypto projects, due to 

. At the same time, many businesses were cautious about entering crypto spaces because new technology can seem overwhelming. 

Ultimately, Streamflow's main goal is to create a 

 way to manage crypto. It hopes to align stakeholders’ and token holders’ interest in order to create a system that’s mutually beneficial. To do so, Streamflow has prioritized the creation of a streamlined process that helps users with every step of creating, launching, vesting and 

 tokens. Unlike less transparent systems, Streamflow promises an 

, data-accessible experience with real-time updates.

 for the smooth flow of its token management system. 

The base layer, the Protocol Layer, consists of a set of 

Next, the Infrastructure Layer includes a variety of software development kits and application programming interfaces (APIs). These programming modules handle the automation tasks that run the smart token contracts on the Protocol Layer. 

Finally, the Business Layer is the user-facing layer. It consists of easy-to-understand buttons and menus that users can click on to operate various decentralized token management tools.

People who use Streamflow for their token distribution, token vesting and token management have access to many different features. Following are ways the ecosystem can help you manage a token project.

Streamflow lets users set up completely automatic token vesting schedules. The ecosystem will unlock tokens for clients and transport tokens to their recipients' wallets immediately. 

If a company wants to distribute tokens via an 

, Streamflow can help. Its system can handle millions of recipients in minutes, and supports both 

Streamflow’s staking platform enables users to encourage community participation and build token stability. With just a few clicks, token providers can set up rewards for token holders who don’t wish to trade their tokens. Streamflow's customizable system provides token locks and rewards for any Solana token.

Companies can also choose to permanently or temporarily lock away their own tokens in a 

. Streamflow provides complete transparency and security so organizations can easily build trust with their users. 

Companies that wish to handle payroll through a cryptocurrency system can use Streamflow's payment automation system to set up one-time or recurring payments to employees, contractors and suppliers. 

In addition to managing tokens, Streamflow can also help users create tokens. Its minting services guide people through everything from choosing a chain to figuring out distribution. 

Streamflow's services are all easily handled through its project dashboard. The on-chain, data-accessible dashboard ensures users have full access to token contracts and schedules. It provides both convenience and transparency so users always know exactly what's happening with their tokens.

Since its creation in 2021, Streamflow has already achieved a lot. In addition to helping multiple companies with their token distributions, Streamflow has also successfully managed its own upcoming STREAM token launch. Once the upcoming STREAM token is fully released to the public, Streamflow plans to enhance its system's technological features. Some of Streamflow’s many 

 that allows token holders to participate in decision-making for the platform. Holding the upcoming token unlocks access to exclusive areas on the platform and lets people enjoy premium services. The STREAM token will have a total supply of 1 billion, which the company will distribute according tothe 

After initially launching at around $0.18, the STREAM token’s price has decreased to around $0.1073 as of Dec 26, 2024. However, despite the decline in value, CoinMarketCap 

 a bullish outlook for STREAM. Not only is there a possibility for more ecosystem growth, but the token might also benefit from an overall bullish market with prices that rise around the holidays. 

The STREAM token is still too new for detailed price analysis. However, it is getting some positive buzz on social media. Crypto influencers like Stock Investor 

 the token a little, and it's also had some 

. Overall, these social media trends support the idea that an eventual price increase is likely to occur for STREAM.

Looking to trade Streamflow tokens? Bybit now offers the STREAM/USDT Spot trading pair. To get started, you’ll first need to create a Bybit account, then fund it with cryptocurrency and navigate to the 

To celebrate this listing, Bybit is holding two exclusive events where you can earn a share of the 

STREAM does have some potential if you like investing in crypto companies. Its ecosystem has reliable backers and a history of solid development. Furthermore, the token has a lot of utility within a system that's providing a valuable service to consumers. 

However, the STREAM token launch didn't go quite as well as some token holders had hoped. With declining prices right after release, the token has struggled to make headlines and generate interest. Of course, there's always the likelihood that STREAM prices will rise in the future, but if you're looking for the hottest up-and-coming token, this one might not work for you. 

Ultimately, STREAM does have a place in certain portfolios, but it's important to invest thoughtfully. Make sure you 

 market conditions carefully and avoid overextending yourself financially to buy STREAM or any other altcoin. 

Streamflow’s platform enables users to take control of their token management. By offering a broad range of decentralized token management tools, Streamflow ensures that even those people without a background in crypto can easily release crypto projects. Though the organization is still in the early days of its token launch, the upcoming STREAM token is likely to attract some fans of streamlined web3 design.

streamflow.png

Streamflow (STREAM): Simplifying Token Distribution for Projects

Our weekly crypto derivatives analytics report delves into macro events, the current state of crypto and trading signals from spot trading volume, and futures, options and perpetual contracts.

December's end-of-year options expiration is poised to be significant, with over $525 million in options contracts set to expire this Friday (Dec 27, 2024) for BTC and ETH. However, volatility expectations remain low and have been more responsive to recent spot price movements. Realized volatility has surged as spot prices fluctuate within their recent range, yet short-term options haven’t kept pace with this increase. 

While ETH's volatility structure has inverted, BTC's hasn’t reacted similarly after the recent U.S. elections. Additionally, funding rates across cryptocurrencies have shifted into a new market phase, occasionally dipping into negative territory alongside declines in spot prices. In terms of perpetuals , funding rates have moved from neutral to intermittently negative, aligning with spot price movements. Meanwhile, among options, BTC's volatility structure has been less responsive to spot changes, whereas ETH short-term options are exhibiting significant fluctuations at elevated levels. 

Please check out the report’s highlights.

Market Hasn’t Factored in BTC Options Expirations Volatility 

For the third time this month, spot prices have shown higher realized volatility than that implied by 1-month-tenor constant maturities. Each occurrence has eventually led to a decline in realized volatility, as implied levels have remained relatively stable. Open interest in BTC options continues to be high, contributing to a significant end-of-year options expiration, with approximately $360 million in put and call contracts set to expire. 

This week nearly marked a full inversion of the at-the-money volatility term structure, highlighted by a spike in front-end volatility on Dec 21, 2024. However, the elevated level of realized volatility hasn’t triggered a similar inversion to that seen with ETH.

Realized volatility has surged above implied volatility, as spot prices have fluctuated sharply between $3.2K–$3.6K. After a strong mid-week inversion, the resulting term structure is relatively flat. Despite its changing shape, levels haven’t risen significantly above the range maintained over the past month. As we enter the final week of 2024, open interest remains predominantly in call options, although put options are experiencing the majority of trading activity as the year comes to a close.

Advanced

block-scholes-x-bybit-report.jpeg

Bybit X Block Scholes Crypto Derivatives Analytics Report (Dec 24, 2024): Volatility Remains Muted Ahead of Friday’s Mega Options Expirations

Bybit Learn

Blockchain

A Merkle tree is a structure that is used to verify data integrity in a set. Find out how it works and its role in blockchain in this article.

image4.png

image1.png

image2.png

20221210-163219.png

image5.png

Merkle trees are used in computer science applications as a data structure for data verification and synchronization. Merkle trees are also used to more securely and efficiently encrypt 

With cryptocurrencies, a Merkle tree database is used to securely split the block's data and ensure that it is not lost, damaged, or altered. This method of data management makes it possible to validate specific transactions without downloading the entire, terabyte-sized blockchain. It is a reliable, secure, and cryptographic method of running the blockchain.

 giant, FTX, many CEXs have built and implemented Merkle Tree as a form of 

 to assure users that their funds are safe. In this article, we will be discussing what are Merkle trees, their role in blockchain and how a user can validate their funds using the Merkle tree.

Ralph Merkle, a computer scientist renowned for his work on 

, proposed Merkle trees in the 1987 paper "A Digital Signature Based on a Conventional Encryption Function". Cryptographic hashing was also invented by Merkle.

Merkle tree is a hash-based mathematical data structure that compiles the summaries of all the transactions in a block. It is a method for quickly checking the accuracy of data in a decentralization manner. As a result of its functionalities, Merkle trees are utilized more effectively and securely to encrypt blockchain data. 

Merkle trees are often used with peer-to-peer (P2P) networks because of the need to have information shared and independently validated. Let’s understand more about Merkle trees and how they work.

The Merkle tree, also known as a hash tree, has a binary tree structure, with the hashes of the transactional data on the bottom row being referred to as "Leaf Nodes," the intermediate hashes being referred to as "Non-Leaf Nodes," and the hash at the top being referred to as the "Root." Even though the majority of hash tree implementations are binary (each node has two child nodes), they can also have a lot more child nodes.

When looking at the structure of a Merkle tree, all transactions are grouped in pairs. Each pair has a computed hash that's stored directly in the parent node. These nodes are also grouped into pairs, after which their hash is stored on the next level up. This process continues until reaching the root of the Merkle tree.

Let’s take a look at each of the nodes:

These are the hashes of each cryptocurrency transaction in a block, also referred to as transaction IDs (TXIDs). You view the transaction hash when you search for a transaction on a block explorer.

Then, to create a layer of non-leaf nodes above the leaf nodes, these leaf nodes are hashed together in pairs. They are known as non-leaf nodes because, in contrast to leaf nodes, they merely store the hash of the two leaf nodes that it represents and don't contain transaction IDs (or hashes). As a result, there will be half as many hashes (or nodes) in the non-leaf node layer above the leaf nodes as there are in the leaf node layer. As the tree narrows as it ascends, these non-leaf node layers continue to be hashed together in pairs, resulting in half as many nodes per layer. Two nodes will be present in the final non-leaf node layer. This creates the Merkle root and is the location of the last hashing in a Merkle tree.

With Bitcoin, the hashes of all transactions are combined into a single hash and stored in the block header. The Merkle root, also known as the root hash, is this particular hash. The leaf nodes (transaction IDs/hashes) at the base of the Merkle tree can be verified using this Merkle root. When used for cryptocurrencies, the Merkle root makes sure that data blocks are unaltered, undamaged and whole.

A Merkle tree is binary, which means that the total number of different leaf nodes must be even for the tree to be properly constructed. When an odd number of leaf nodes exists, the previous hash will be duplicated to provide an even number of nodes.

A Merkle tree is essentially designed to break large pieces of data into considerably smaller chunks, which ensures that all the transactions can be verified promptly. The tree summarizes every transaction by creating a small fingerprint of a specific set of transactions, which makes it easier for users to verify the availability of transactions in a block. 

Merkle trees are formed by hashing different pairs of nodes until just one hash remains, which is referred to as the 

. These trees are built from the bottom up, with each transaction consisting of hashes. Every leaf node is a singular hash of data. As for non-leaf nodes, these are hashes of previous hashes.

Let's say that a Merkle tree consists of four transactions which are labeled D0, D1, D2 and D3. Each transaction is hashed before the hash is stored directly on the leaf node. When this occurs, hash N0, N1, N2 and N3 are created. Any consecutive pair of leaf nodes will then be summarized in a parent node via the hashing of hash N0 and hash N1, which results in hash N4. If hash N2 and hash N3 are hashed together, hash N5 is created. Both of these hashes, N4 and N5, are hashed once more in order to create the Merkle root.

This process can be used with extensive data sets. The Merkle root is responsible for summarizing the data that's present in specific transactions, all of which are stored directly in the block header. This technique results in data integrity being properly maintained. In the event that one detail within the transaction is changed at some point, the Merkle root will automatically change alongside it.

There are many benefits for blockchain technology and cryptocurrency platforms when using a Merkle tree to verify transactions, which include everything from efficient verification to easy tampering detection.

It's easy for transaction integrity to be verified in practically no time at all. Because of how the data is structured, very little memory needs to be used during the verification process and the computing power required is significantly reduced. 

Because blockchains typically consist of hundreds of thousands of blocks, each of which can contain up to several thousand transactions, validating the data poses two major challenges: memory space and computing power. Every node on the network would have been required to maintain a complete copy of every transaction that has ever taken place on the blockchain if Merkle trees were not a concept in the blockchain. A node would have had to compare each entry line by line when verifying a transaction to ensure that its records exactly match the network records. The network's security could be jeopardized if there was any discrepancy between the records. As a result, to compare the records to make sure there had been no changes, the computer used to validate the data would have needed much more processing power. 

Merkle trees, on the other hand, offer a solution to this issue by drastically reducing the amount of data that must be kept on hand for verification needs. They hash every entry in the ledger, effectively separating the data itself from the evidence supporting it. Without knowing every single TXID in a block, you can check a TXID using the Merkle root with a Merkle tree. A Merkle tree is essentially a great way to demonstrate that something is present in a dataset without having to download the entire set. Consequently, less computing power is needed to validate the transactions.

As a result of the distribution of the transactions on the block among the validators, each validator is working on a different transaction at the same time. Compared to a method where each transaction is sequentially validated after another, this is much more effective.

Simple Payment Verification (SPV), which enables you to confirm a transaction without downloading an entire block or blockchain, is made possible by the Merkle tree. This enables the use of a light-client node, more formally known as a crypto wallet, to send and receive transactions.

The hash structure makes it easy for miners to identify if tampering has occurred with transactions. 

A distinct hash value is generated for each block using the Merkle root. The block links one block to another in the blockchain by including the hash of the preceding block. The hash of any transaction changes whenever that transaction is modified. The block becomes invalid as a result of this change because it cascades up to the Merkle Root and alters its value. This then causes a change in the hash of the following block, rendering the remainder of the Blockchain invalid. As a result, the Merkle tree creates an immutable record of the block's transactions.

Double spending can also be prevented as a result. If an individual tries to double-spend his digital currency, a hash will be generated for that transaction. If that hash matches the existing records present on the Blockchain, that transaction is rejected.

Why Are Merkle Trees Important in Blockchains?

Merkle trees have proven to be essential for blockchain technology because they facilitate quick and easy verification in a manner that's not possible with other techniques. These Merkle trees provide developers with the ability to compress exceedingly large sets of data by getting rid of all unnecessary data, and turning the data that remains into hashes. The various features provided by Merkle trees include:

As mentioned in the beginning, following the downfall of FTX, users have been concerned as to whether their funds are actually kept safe in CEXs. As a result, multiple CEXs have come forth to develop a Merkle Tree Proof-of-Reserve mechanism. In this section, we will be looking into Merkle proofs and how our users can validate their funds.

A Merkle tree proof is a cut from a Merkle tree, not the actual tree. And be represented as an array or sequence (shown by the orange portion in the diagram below).

All of the leaf nodes and the balance information for a particular single user of our company are represented by the figure's last level nodes. Assuming that the pink people in the figure represent the intended recipients of the proofs, we extract the orange portions of the figure level by level and present the proof documents to the users in order of height. It's significant to remember that the Merkle proof has two main components

Taking the volume of 10 million users as an example, the height of the tree can be calculated as Log2(10,000,000) = 23.2534966642 based on the mathematical formula, which gives the height of the tree as 24 levels. Therefore, the nodes in the graph that are intentionally not provided to users will be 24 - 2 = 22.

Merkle tree is a complete binary tree, which allows us to calculate all of the information about its parent node by simply knowing the left and right nodes. Two parts make up this complete information: the balance data and the hash data.

The validation of the Merkle tree is computed by deriving the B and D and verifying that

By utilizing a hash summary function, the Merkle tree enables users to determine whether they are a part of the entire tree without having to be aware of every purple node in the graph. The Merkle proof is exclusive to that user. For instance, a 24-level Merkle tree requires an array of 23 elements to verify the user's balance information, and this array can only confirm that the user's balance proof is accurate.

The user cannot reconstruct the entire tree based on his or her fragmented information as long as they do not obtain more than half of the total number of users. As a result, the Merkle tree protects both user privacy and the company's ability to prevent the leak of information about the company's overall assets.

There are 2 methods available for you to validate your Bybit account and to check the validity of funds.

This method is the first and only one in the entire network, and it will show the node derivation process of Merkle Tree validation in an intuitive graphical manner on the company's platform.

The company's Merkle tree generation source code and validation code are openly available on github to assist users in programming their own validation. The Merkle tree calculation process involves a huge amount of user calculations, which are usually implemented by big data and Java. 

*An open Java code means that it is open to users without holding back any information.

 for professional users to validate their own Merkle Tree proof file by copying it from their proof of reserves page to their own "sticky" version of the system via the 

 button and storing it as a file named myProof.json to local disk.

Applications of Merkle Trees in Blockchain

Merkle tree and Merkle root structures have already been widely adopted across many different blockchains and cryptocurrency platforms. The following details three such applications.

 uses Merkle trees in several ways, which makes these trees integral to the entire Bitcoin platform. In fact, these trees are present in every Bitcoin block header. The hash for every transaction that's available within the block is placed in the header. When it comes to Bitcoin, the Merkle root is important for mining as well as verification.

Bitcoin blocks consist of headers that contain metadata as well as an extensive list of transactions. This list is usually larger than the block's header. Miners hash data to create an output that adheres to specific conditions, which is necessary when validating a block. The miners can make trillions of separate attempts before they find a valid block. Every attempt requires a number in the header of the block to be changed. Even though thousands of separate transactions can exist in a block, each one must be hashed.

Merkle roots allow miners to make this process much more efficient. When the mining process begins, all that's necessary is for the transactions to be made into a Merkle tree, after which the root hash can be placed within the block header. At this point, the miner is only required to hash the header of the block, as opposed to the entire block.

Another aspect of the Merkle root that's used with Bitcoin involves leverage, which focuses on light clients. When a node is being operated on a relatively weak device that has limited resources, users won't be able to download and hash every transaction in a single block. Instead, a Merkle proof can be requested, which is confirmation that a transaction is present in a block. By reducing the number of hashes that need to be performed during the verification process, verification can occur without using as many computing resources.

 is based on a somewhat modified version of the Merkle tree, which is why it's referred to as the 

. Every block within the Ethereum blockchain consists of three Merkle trees, as opposed to one binary tree — which is what happens in Bitcoin blocks. Each of the three roots has its own purpose.

The initial root is considered to be the root of every transaction. As for the second root, it shows the state of the transaction. The final root is the receipt of the transaction. A user can look at a Merkle root to determine if a transaction is found on a specific block, as well as determine what their account balance is.

, this blockchain platform uses a Merkle tree to compute block data as a hash. The hash value identifies the width of the Merkle tree. Merkle trees on the Hyperledger Fabric platform work just like the ones on the Bitcoin platform.

Merkle trees have proven to be highly useful for cryptocurrency platforms that want to make sure their transaction verification process is as easy and efficient as possible. Without this structure in place, verification would be a time-consuming process because the data would need to be transferred throughout the entire network for verification. The platforms that use Merkle trees benefit from less bandwidth and computational power requirements.

What Is a Merkle Tree & What Is Its Role in Blockchain?

Grab Up to 5,000 USDT in Rewards

Grab Up to 5,000 USDT in Rewards