Dec 23, 2024: Our weekly Institutional Insights explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

 explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

Weekly Highlight — Market Expects New Record for U.S. Equities in 2025; Will Crypto Follow?

Wall Street’s leading firms have recently shared their forecasts for the S&P 500 in 2025, and the predictions sound strikingly similar to those made in prior years. The average forecast anticipates a 9.1% gain, evoking a sense of déjà vu among investors. A review of 376 firm forecasts over the past 25 years reveals that 53% fell within the modest range of 0% to 10%.

This clustering of forecasts is particularly perplexing when we contrast it with the actual volatility of the market. Over the past eight years, the S&P 500's returns have often exceeded these predictions, suggesting that strategists frequently underestimate the index’s potential for growth. Historical data indicates that significant gains and losses have been more prevalent than single-digit increases, which occurred only 14 times in 97 years.

Moreover, strategists' forecasts have shown a consistent tendency to miss the mark — on average, off by more than 15 percentage points — with the most accurate firms still missing by around 10 points. This discrepancy underscores the challenges in market forecasting, as 57% of the analyzed forecasts were below the actual market returns, indicating a widespread inclination toward pessimism.

Given this history, financial planner Elliott Appel advises investors to approach these forecasts with skepticism. He suggests treating them as entertainment, rather than actionable advice. The disparity between forecasted and actual returns highlights the inherent uncertainties in predicting market behavior. Therefore, investors should remain cautious and consider broader market trends and data, rather than relying solely on these forecasts for making investment decisions. In a landscape characterized by volatility, understanding the limitations of these predictions is crucial for informed investing.

Weekly Crypto Highlight — Bitcoin’s Price Whipsawed Following Hawkish Fed Remarks

Bitcoin is on track for its first seven-day decline in eight weeks, driven by hawkish signals from the Federal Reserve that prompted traders to sell, despite the cryptocurrency more than doubling in value this year.

On Friday, Bitcoin fell as much as 5.3% to $92,149, having reached an all-time high just above $108,000 earlier in the week. Its price has dropped around 5% since Sunday (December 22) and was trading at approximately $97,400 in New York. This downturn has had an impact particularly on smaller cryptocurrencies like Ether and Dogecoin, even as U.S. equities have moved higher.

A group of U.S. ETFs directly investing in Bitcoin reported a record outflow of $680 million on Thursday (December 19), breaking a 15-day streak of inflows. This shift in sentiment highlights the growing uncertainty in the market.

The market volatility follows a rally that occurred after Donald Trump’s victory in the U.S. presidential election on Nov 5, 2024. In our view, positioning has become "overly bullish," making digital assets susceptible to shifts in the Fed's tone as it focuses on controlling inflation.

As the holidays approach, uncertainty in the crypto markets is likely to persist, especially with Trump threatening tariffs against both allies and adversaries. With the Fed expected to slow its easing measures, attention is shifting to the speed of institutional adoption of cryptocurrencies.

The interplay of monetary policy, institutional adoption and political developments will keep Bitcoin sensitive to both macroeconomic and crypto-specific factors through 2025.

Open interest for Bitcoin futures at CME Group reached near-record highs on Tuesday, but has since declined. It’s advisable to take caution in the short term, noting that while a price collapse isn't imminent, the momentum has waned, with buyers losing control.

, as we delve into recent movements of Bitcoin and the S&P’s forecast for FY2025. 

Advanced

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Weekly Institutional Insights: Bitcoin Retreats Following Equity Sell-Off; Market Expects New ATH for U.S. Equities in 2025

Monad is a next-generation Layer 1 blockchain that achieves 10,000 transactions per second through parallel execution. Learn more about how it works here.

Scalability remains a critical bottleneck for blockchain adoption, with current solutions forcing difficult trade-offs between performance and compatibility. As existing platforms struggle with these limitations, Monad emerges as the “most performant 

 and backed by $225 million in funding, Monad aims to solve blockchain's scalability challenge through innovative architecture. This article looks at its technical components, examines potential use cases, analyzes key challenges and explores its road map toward mainnet launch.

 is a next-generation Layer 1 blockchain that achieves 10,000 

 (TPS) through parallel execution. With full EVM compatibility at its core, Monad enables seamless deployment of high-performance blockchain applications.

Monad Labs emerged in 2022 from a team with extensive experience in high-frequency trading systems at Jump Trading. The project was founded by three technical pioneers: Keone Hon (CEO), James Hunsaker (CTO) and Eunice Giarta (COO).

The inspiration behind Monad came from the team's direct experience with blockchain infrastructure limitations. Having worked on low-latency trading systems, they recognized that sequential processing in EVM-compatible chains created unnecessary bottlenecks.

 platform, its technical constraints have held the entire industry back. Monad’s founders believed their background in distributed systems and high-performance computing could help solve these challenges.

Their vision gained significant validation in early 2024 when the project secured $225 million in funding through a round led by Paradigm. Notable investors included Electric Capital, Coinbase Ventures and GSR Ventures, providing the resources needed for their planned Q1 2025 mainnet launch.

Monad aims to solve the fundamental scalability challenges that have plagued EVM-compatible blockchains. Traditional chains like Ethereum can only process 15–30 TPS, creating bottlenecks during high-demand periods.

Monad addresses the growing frustration with high gas fees and slow transaction times that have limited blockchain adoption. By implementing parallel execution, Monad targets a throughput of 10,000 TPS, with 1-second block times and single-slot finality.

Most existing scaling solutions require developers to learn new programming languages or adapt to unfamiliar environments. Monad takes a different approach, maintaining full EVM compatibility so developers can port their Ethereum applications without code modifications.

Monad's architecture introduces four key technological components that work together to achieve its performance goals.

 is a custom consensus mechanism derived from the HotStuff algorithm. Optimizing the traditional three-phase process into two phases enables faster block finalization, while maintaining 

Monad's parallel execution enables simultaneous processing of multiple transactions. Rather than checking for dependencies up front, the system optimistically executes transactions in parallel and efficiently resolves any conflicts that arise.

Monad implements deferred execution by separating 

 from transaction processing. This approach lets nodes agree on transaction orders first, creating a more efficient pipeline that enhances overall throughput.

 provides a custom-designed database optimized for parallel processing. It focuses on maintaining current state data rather than complete history, enabling faster reads and writes during transaction execution.

Monad introduces several key benefits that address critical challenges in the blockchain space.

Monad's innovative architecture represents a breakthrough in blockchain scalability. Through parallel execution, MonadBFT's optimized consensus and efficient state management, the platform achieves 10,000 TPS while maintaining decentralized security.

The synergy between these components enables one-second block times and near-instant transaction finality. This performance unlocks new possibilities for blockchain applications that require exceptional throughput and rapid processing, from 

As an EVM-compatible blockchain, Monad solves developer accessibility at the bytecode level. This allows teams to deploy existing applications directly to Monad, eliminating the need for code rewrites or the adoption of new tooling.

Developers can continue to use familiar frameworks, wallets and analytics tools while gaining access to Monad's superior performance. This compatibility-first approach removes traditional barriers to adopting new Layer 1 platforms.

As the Monad network prepares for its mainnet launch, the platform faces challenges in converting its technical advantages into widespread adoption.

While Monad's technical architecture is impressive, success in the blockchain space requires more than just advanced technology. Building a thriving Monad ecosystem depends upon attracting developers, projects and users to the platform.

Despite full EVM compatibility that makes it easier for Ethereum developers to port their applications, convincing teams to migrate to a new Layer 1 requires significant community building, ecosystem support and grants for new teams.

Significant venture capital involvement in Monad, while providing substantial resources for development, raises questions about potential centralization. With over $225 million in funding from major investors, there are concerns about token distribution and governance control.

The custom nature of components like MonadDb and the modified EVM implementation also introduces questions about the level of decentralization in the platform's architecture. These proprietary elements require careful consideration regarding their impact on network autonomy.

Monad's combination of high throughput, low fees and EVM compatibility creates possibilities for various blockchain applications previously constrained by technical limitations.

Monad's architecture fundamentally transforms what's possible in 

Monad's architecture creates new possibilities for 

 and digital asset markets that require high-performance transaction processing:

Monad's unique architecture opens up new possibilities for businesses handling real-world data streams and operations at scale:

These use cases leverage Monad's ability to handle multiple concurrent state changes while maintaining data consistency, enabling enterprise-grade applications that were previously impractical on 

Understanding how Monad compares to existing Layer 1 solutions helps contextualize its position in the blockchain ecosystem. Let's examine the key differences between Monad and other major platforms.

Ethereum's Layer 1 mainnet processes 15–30 TPS with high gas fees. While Layer 2 solutions exist for scaling, Monad aims to achieve 10,000 TPS at the base layer while maintaining full EVM compatibility. However, Ethereum's battle-tested security and decentralization are viewed as unmatched in the industry.

Solana achieves high performance through its parallel processing architecture, and has built a thriving ecosystem. The key distinction with Monad lies in its development approach: Solana utilizes a custom Rust-based environment focused on maximum performance, while Monad aims to bring similar scalability benefits to the EVM ecosystem.

 features a theoretical maximum of 2,222 TPS through a network of 29 active validators. While this provides reliability and EVM compatibility, it trades some decentralization for performance. Monad aims to achieve much higher throughput without the same centralization trade-offs, though this remains to be proven in production.

Each of the above platforms has made distinct architectural choices in addressing the 

 of scalability, security and decentralization. Monad's effectiveness in balancing these factors will become clearer once its mainnet launches.

Since its founding in 2022, Monad has achieved several significant milestones in its development journey, including securing $225 million in funding led by Paradigm in early 2024. Its team has successfully built and demonstrated the platform's core technologies, particularly its parallel execution architecture and MonadBFT consensus mechanism.

The primary focus for Q4 2024 is the launch of Monad's public testnet. This will be the first opportunity for developers and users to interact with the platform's infrastructure and publicly validate its performance claims.

The Monad network mainnet launch is scheduled for Q1 2025, marking the official debut of its high-performance blockchain infrastructure. Following mainnet, the team plans to:

The road ahead focuses on careful testing and refinement to ensure a stable and secure mainnet launch while building a sustainable ecosystem.

Monad represents a significant advancement in blockchain technology, offering a solution that combines the best of both worlds: Ethereum's thriving developer ecosystem, and high-performance scalability through parallel transaction execution.

As the project progresses toward its mainnet launch in 2025, its success will depend upon its ability to foster a thriving ecosystem. While challenges lie ahead, Monad's architectural innovations could be on track to shape the future of high-performance, developer-friendly blockchain infrastructure.

Intermediate

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Monad: A High-Performing, EVM-Compatible Layer 1 Blockchain

Story has introduced the Agent Transaction Control Protocol (Agent TCP/IP), a new standard for agent-to-agent transactions in the AI ecosystem. 

The S&P 500 fell 0.09% and is set for weekly losses amid Fed hawkishness and inflation concerns. Coindesk Indices, an index measuring broader cryptocurrency market performance was down by 3.37%, with Bitcoin and Ether dropping by 4.33% and 7.65%, respectively in the past 24 hours.

Today's top performer is MOCA, which surged 38.6% following the launch of Mocaverse 3.0, a chain-agnostic digital identity system that empowers users and connects ecosystems.

Mocaverse (MOCA), founded in 2017, is an NFT collection and community platform by Animoca Brands, providing access to an exclusive web3 ecosystem through unique digital characters and experiences. 

 introduces a chain-agnostic digital identity system that unifies user data and enables interoperable ecosystems. Through its AIR Kit, users gain control over their identity and rewards, while businesses can verify credentials and connect ecosystems. Backed by Animoca's network, it addresses digital fragmentation across sectors like DeFi, healthcare, and gaming.

Check Out the Latest Prices, Charts, and Data of 

, a new standard for agent-to-agent transactions in the AI ecosystem. Developed in collaboration with leading AI agent frameworks, this protocol enables AI agents to autonomously exchange and monetize intellectual property (IP) without human intervention. Agent TCP/IP allows AI agents to execute legally binding contracts, create a decentralized IP marketplace, and share revenue. The protocol aims to unlock the full potential of AI agents by enabling secure, transparent, and frictionless IP exchanges. A demo showcases how agents can license their IP in a decentralized marketplace.

Yesterday, BTC Spot ETF data showed a total outflow of $673.9 million, including $87.9 million from GBTC and $586.0 million from non-GBTC sources.

WorldShards, a Sandbox MMORPG on the Open Loot platform, is 

 a complete in-game economy in December 2024, ahead of its Token Generation Event (TGE) in early 2025. Key updates include Proxy Tokens for NFT crafting, 30-day free trial access, and airdrops for all active players based on activity. The game has attracted 300,000 community members and achieved $4M in sales since early access in February 2024.

Beginner

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Story Unveils Agent TCP/IP as a Breakthrough Protocol for Autonomous AI Agent IP Transactions

Lumia (LUMIA) revolutionizes RWA tokenization with DeFi liquidity, MEV protection, and zk-rollup technology.

Real-world assets (RWAs) are quickly becoming a leading topic within the blockchain ecosystem, with many protocols and chains starting to offer asset tokenization services. However, many of these solutions are based on simply moving a variety of physical and digital assets to a 

 environment without regard for how these tokenized on-chain products will be further utilized. As a result, after companies tokenize their assets on-chain, they realize that the lack of liquidity is hampering the assets' further circulation and adoption.

 project that has taken a much more comprehensive approach to asset tokenization. The platform allows businesses to tokenize various RWAs, including a diverse range of commodities, and provides ways to boost their liquidity and applications within the 

 (DeFi) realm. Based on Polygon's modular 

 (Polygon CDK), Lumia provides a robust, secure, compliant, cost-effective and scalable infrastructure to put RWAs to active use within the world of web3.

Having started its operations under the name of 

 (ORN) as an Ethereum (ETH)-–based app that aggregated liquidity from various 

 (DEX) exchanges, the project rebranded to Lumia in 2023 and expanded its functionality to focus on the RWA niche. As of late 2024, Lumia remains one of the pioneers of liquidity-enhanced RWA use on blockchain.

 (LUMIA) is a Layer 2 blockchain designed for tokenization and use of RWAs in DeFi applications. 

The platform allows businesses to bring a variety of physical and digital assets 

, securely tokenize them and further use the assets for collateral provision, lending and other crypto finance use cases.

The Lumia platform's origins date back to 2020, when Orion Protocol (ORN) was launched on Ethereum. Co-founded by Alexey Koloskov and Kal Ali, Orion offered liquidity aggregation from multiple CEX and DEX platforms. In late 2023, Orion announced its rebranding to Lumia, focusing more specifically on RWAs and their active use through enhanced liquidity provision.

The project also transitioned from Ethereum to its own Layer 2 chain in October 2024, with ORN tokens to be migrated to the new platform's native token, LUMIA, at a 1:1 ratio. As of December 2024, the major crypto exchange platforms have migrated ORN to LUMIA or are in the process of migrating it.

 (ZKP)–based rollup network built using thePolygon CDK, a versatile, open-source blockchain development framework provided by the 

 project. The Lumia platform is highly modular, with different components used for its execution, data availability (DA) and settlement layers.

Chain Abstraction and Account Abstraction

 to offer chain abstraction (CA), and with thirdweb to offer account abstraction (AA) services. Lumia's CA service is designed to provide DeFi users with a single-chain experience by accessing liquidity and opportunities across multiple blockchain networks. Meanwhile, AA allows users to transact across multiple platforms on a single, user-friendly interface. By leveraging 

–based addresses instead of the standard externally-owned account (EOA) addresses, users can seamlessly transact across platforms using a single wallet tied to these smart contracts.

By providing a unified, user-friendly interface, Lumia's AA lets Web 2.0 users enter the world of web3-based DeFi with a minimal learning curve involved. AA’s additional benefits include enhanced security at the smart contract level and gasless, Lumia-sponsored transactions.

Lumia users can also take advantage of intent-based trading, meaning they specify their transaction intents, and orders only execute if a matching deal is found across the entire ecosystem accessible to Lumia. Special liquidity nodes process intent-based orders and offer the best rates they can source for the user’s intent. This helps ensure that Lumia users get the best possible deals.

This advanced trading mechanism is powered by 

, which introduces various unique advantages to enhance the user experience. For instance, it provides robust security against 

 (MEV) attacks, one of the most common exploits in the world of DeFi. It also optimizes price efficiency and minimizes the negative price impact of trades by leveraging its Resolvers to source liquidity across the entire DeFi market.

Built using the Polygon CDK, Lumia is a ZK–based rollup running on a 

 processing engine. Based on a highly modular design, the Polygon CDK allows rollups to easily incorporate different execution, DA and settlement layers and other associated technologies. Lumia, for instance, integrates various execution engines, such as the privacy-focused Privado ID and Miden. Privado ID allows Lumia to securely and privately identify users. Based on zk technology, Privado ID enables individuals and businesses to control their personal data by sharing only the required identity information to DApps without revealing any private or financially sensitive details.

In turn, Miden is also a ZK–based platform that offers private accounts and transaction execution. Operating as a rollup network, Miden is a highly scalable environment for DeFi operators and users who value data confidentiality, an essential consideration for any finance-focused platform.

 with other blockchain environments, achieved by leveraging two modular interoperability layers: AggLayer and Hyperlane.

AggLayer is Lumia's primary interoperability layer. Built into the Polygon CDK, AggLayer offers cross-chain transaction capacity across various Polygon-based Layer 2 rollup networks. It unifies liquidity across the entire ecosystem of AggLayer-connected chains, allowing Lumia to provide deep liquidity for tokenized assets.

Hyperlane, the other interoperability protocol used by Lumia, is a solution designed to help developers easily and efficiently send arbitrary data across chains. It expands Lumia's reach beyond Polygon's ecosystem. Theoretically, it may allow Lumia to access resources and liquidity across the entire ecosystem of chains that have adopted Hyperlane. As of late 2024, there are dozens of such Hyperlane-powered blockchains outside of the Polygon environment.

Lumia provides a streamlined process for RWA tokenization. As the first step, the asset owner needs to provide proof of ownership documentation and undergo any other required due diligence procedures. Following that, a Bailment Agreement is signed between the asset owner and the Lumia Foundation, the legal entity behind the project.

Within the contexts of blockchain technology and RWAs, Bailment Agreements are utilized to entrust physical assets to an authorized custodian, while the actual tokenized representations of these assets are held and used within the blockchain space.

After the parties sign a Bailment Agreement, the asset is appraised by third-party valuators and then tokenized on-chain. The tokenized version of the asset can now be used in DeFi applications accessible via Lumia for typical crypto finance operations, e.g., collateral provision, lending, borrowing, staking, yield management and more.

 protocol, sources liquidity from multiple exchange platforms. (This is the core service from which Lumia started its operations when it was known as Orion Protocol.) It accesses liquidity across the crypto market to provide Lumia-based RWAs with much more than tokenized on-chain representation. Besides access to liquidity, Lumia Stream features MEV protection for all trades conducted on the platform, and 

, which allow tokenized assets to be bridged across blockchain platforms.

Using Lumia Stream, developers can also implement virtual 

, which show optimal trading paths between multiple exchanges. These virtual order books can also transform pricing information from the structure used in 

 (AMM) pools to a format compatible with the standard order book model.

Lumia has several specialized node types, including DNLP (Delta Neutral Liquidity Provisioning) nodes and DAC (Data Availability Committee) nodes. The former are designed for decentralized liquidity provision on the network, while the latter play a key role in data validation.

There are also HyperNodes that can be used either to provide the licenses for the operation rights of virtual Lumia machines or supply the licenses used to delegate to DNLP and DAC node operators. HyperNodes can choose to run a DNLP or DAC node or delegate to these node types and earn ecosystem rewards. 

Lumia first made HyperNode licenses available for purchase in July 2024. The license releases and the associated rollout of HyperNodes will be gradual.

The platform uses a network of zkProvers that are responsible for the generation of validity proofs — cryptographic stamps that certify the validity of transaction blocks. Currently, Lumia utilizes the default zkProver infrastructure provided by the Polygon CDK. However, the project has plans to introduce a custom prover layer in partnership with 

, a provider of low-cost and highly scalable ZK validation services. Per the project's documentation, there will be further announcements on integrating a Gevolut-based zkProver system in Q1 2025.

Lumia's early 2025 plans also include creating a decentralized sequencer network (DCN). Sequencers are critical parts of any rollup system. These nodes organize transactions into blocks for further validation. A typical rollup network uses only one sequencer, an issue often cited as one of the key vulnerabilities of rollups.

Lumia aims to introduce a decentralized network of multiple sequencer nodes tailored to the Lumia platform to optimize its security and performance. The project plans to provide incentives in the form of LUMIA tokens to sequencer service providers in order to build its DCN.

We’ve already mentioned some of the specialized node types on Lumia — DNLP, DAC and HyperNodes. Another crucial node variety on the platform is DA (lightclient) nodes. They play a pivotal role in decentralized data availability by ensuring transaction data is securely stored and easily accessible across the Lumia network. Transaction data on Lumia is distributed and stored across the network of DA nodes to provide validators with easy retrieval when data is required.

Data on the DA node network is stored in a secure, cryptographically protected format. Both the encryption and the distributed storage mode ensure confidentiality and high security for Lumia's transaction data.

DA nodes are incentivized with LUMIA tokens, based on their contributions to the network. Node operators are encouraged to actively participate, as the rewards are determined by both the amount of data processing they handle and their network uptime.

The platform's native cryptocurrency, LUMIA, is used for a wide variety of functions:

The LUMIA token was launched in mid-October 2024, replacing the earlier ORN token, the platform's native crypto. ORN was introduced in July 2020, along with the launch of Orion Protocol. As mentioned above, the platform has announced the migration of ORN to LUMIA at a rate of 1:1. As of December 2024, ORN tokens are still in circulation, but are expected to eventually be migrated to LUMIA completely.

LUMIA is a supply-capped token, with a total and maximum supply of 238,888,888.

 as a Perpetual contract based on USDT. Under the terms of the contract, you can trade LUMIA with up to 12.5x leverage.

Bybit's Innovation Zone offers perpetual trading users access to promising new higher-risk/higher-potential cryptocurrencies selected by the platform's professional team.

As of Dec 19, 2024, the LUMIA token is trading at $1.61, or 36.2% lower than its ATH of $2.49 on Dec 4, 2024, and 72.8% higher than its ATL of $0.9205 on Nov 4, 2024.

Long-term price forecasts for LUMIA are bullish. DigitalCoinPrice 

 at $4.19 in 2025 and $12.06 in 2030, while CoinCodex 

 that the token will trade at $7.50 in 2025 and fall slightly to $6.53 in 2030.

Lumia isn't your ordinary RWA-based blockchain project. While countless new platforms help users tokenize physical world assets, very few offer viable ways of further using the tokenized crypto assets within the DeFi ecosystem. Recognizing the gap, the Lumia project team has decisively taken on the task of making RWAs a highly liquid and actively used form of cryptocurrency.

The project also features a solid infrastructural backbone, supported by the Polygon CDK and its high architectural modularity. Using technologies like Miden, Privado ID, AggLayer and Hyperlane adds to the security and interoperability of the Lumia platform. At the same time, Lumia isn't done yet with sculpting its architecture into a piece of blockchain art — in 2025, the project plans to implement a decentralized sequencer network and partner with Gevolut to provide an efficient zkProver layer.

As Lumia builds up its architecture, tokenizing and 

 will undoubtedly become even more efficient, convenient and secure — and decisively more DeFi-esque.

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Lumia (LUMIA): Bridging RWA & DeFi for a New Financial Era

Bybit Learn

Staking

Explore whether crypto staking aligns with Islamic law in our comprehensive guide. Learn the key considerations for compliance. Read more to find out!

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Many blockchain networks' well-regarded decentralization and security benefits are highly dependent on one specific activity — 

. Staking involves contributing crypto funds to 

 (PoS) blockchains to power the transaction validation activity on them. Stakers — which can be institutional entities or individuals — lock their cryptocurrency funds on these blockchains to receive the chance to validate blocks of transactions. In return, they receive cryptocurrency rewards for their work, making crypto staking a potentially viable income source. 

Many individuals and smaller business entities who lack the technical capacity or financial reserves to act as blockchain validators can still earn staking rewards by delegating their funds to their preferred validator on a PoS blockchain.

Along with liquidity mining, yield farming and crypto coin trading, crypto staking is one of the critical ways to earn income within the blockchain industry. Many Muslim investors may wonder if crypto staking is a halal activity. In this article, we cover all the key details related to crypto staking and its status from an Islamic law perspective, in order to help Muslim investors decide whether staking cryptocurrencies is halal or haram.

In order to maintain their operations and process transaction blocks, certain blockchain platforms (those based on a PoS block validation model) require the availability of crypto funds contributed to the network. This is because these blockchains award the right to validate transaction blocks to 

 that have staked/contributed a certain amount in the network's native cryptocurrency. In the most standard implementation of PoS, the more funds a node has staked on a platform, the higher their chance of being selected as the validator of the next block. This system is used to encourage participation from validators who have 

 — that is, those genuinely interested in supporting the network and ready to contribute funds for this purpose.

Staked funds aren't given away or "donated" by validators — they remain the property of the validator, and can be reclaimed/unstaked if and when the network participant who has provided them decides to stop their block processing activities. To encourage users' participation in the block validation process, validator nodes earn staking rewards for each block they help process.

Most crypto users don't act as full validator nodes on PoS networks, as this often requires substantial minimum staking amounts and technically intricate processes to set up and run a node. However, these users can also earn income from staking crypto in various more affordable and user-friendly ways. Examples include delegating their funds to their preferred validator on blockchains supporting such delegation, or participating in a staking pool (more on that below). Via these options, users can earn a share of the total staking rewards awarded to full validator nodes.

Additionally, crypto users can earn staking rewards using specialized products on crypto trading platforms and crypto exchanges. One such product is 

, previously known as Bybit Staking, which allows you to earn staking rewards without the complexities of staking in blockchain environments. Staking products on exchanges often provides a wider choice of crypto tokens and coins than direct blockchain-based staking. This is because blockchain-based staking options are limited to native coins of PoS networks, whereas exchanges frequently offer additional assets, such as popular 

Independent staking involves setting up and running your own full validator node on a PoS blockchain network. You are responsible for technical setup procedures and are typically required to keep your node online and ready to process blocks without significant downtime.

Minimum staking requirements for independent staking are often substantial. For instance, the 

 (ETH) blockchain requires validator nodes to stake at least 32 ETH (around $80,000 as of Nov 1, 2024), while becoming a 

 (BNB) validator requires an investment of 10,000 BNB (currently around $5.7 million). Technical uptime requirements aren't child’s play, either, as validator nodes are encouraged to be online at all times, and frequent downtimes may lead to penalties in the form of slashing, whereby you lose some portion of your staked funds.

The advantage of independent staking is that you can earn substantial amounts by receiving full staking rewards from the blockchain. On PoS platforms such as Ethereum, full validators don't need to pay anyone commission fees or other charges, nor do they have to share their rewards with others. In comparison, on 

 (DPoS) blockchains, independent validators share the rewards with those who have delegated their funds to them, but typically still earn a more significant cut than each individual delegator.

For most crypto users, the technical and financial requirements of independent staking are too high. As an alternative, these users can join a staking pool to earn crypto rewards. Staking pools are platforms that facilitate the pooling of crypto funds from many users. These funds are then used to manage the actual direct staking, for instance by running validator nodes or delegating the funds to blockchain validators. By joining a staking pool, you can earn a share of staking rewards commensurate to the share of funds you’ve provided. With PoS staking pools, you only need to contribute crypto, and don't have to worry about providing computing capacity.

Understanding Islamic Finance and Crypto Staking

For many Muslim investors, adhering to the principles of Islamic finance and Shariah law is important when choosing an investment product. Islamic finance principles state that any investment should avoid interest (riba), speculation/gambling (maysir) and excessive uncertainty (gharar). It also shouldn’t involve trading assets that you don't actually own, or be related to haram activities or products, such as drugs, alcohol, pork, gambling, betting or pornography.

When evaluating whether crypto staking is a halal activity, it's important for investors to differentiate it from other popular forms of earning crypto income: liquidity mining and yield farming. 

 involves providing crypto funds to coin swap pools on 

 (DEXs). These funds are required by some DEXs — those based on the 

 (AMM) model — to have enough liquidity for swap operations. Liquidity providers earn a share of transaction fees from swaps involving the assets in the pool. In turn, 

 refers to the strategic allocation of crypto funds across various 

 (DeFi) protocols to maximize yields earned. Yield farming allocations can often involve borrowing and lending activities, often with the involvement of interest (riba).

Learn all about Bybit Islamic Account and

Unlike many yield farming activities, crypto staking doesn't usually involve riba. There is no lending or borrowing of funds with interest in crypto staking. Stakers invest their funds to support the operations and security of blockchain networks, and earn staking rewards based on the amounts they’ve contributed. These reward payouts aren't based on money that has been lent to someone with interest.

As noted above, crypto staking isn't an interest/riba–based activity. Additionally, there's no maysir, or gambling/speculation, in crypto staking: stakers earn a certain amount of relatively stable income that has little to do with speculative trading activities. The fixed and stable nature of crypto staking rewards also indicates no gharar, or excessive uncertainty. In fact, crypto staking is considered among the least 

 or speculative forms of earning income in the blockchain industry.

As such, crypto staking lacks the characteristics of the three fundamental prohibitions in Islamic finance — riba, maysir and gharar. This indicates that staking cryptocurrencies on blockchain platforms may qualify as a halal activity.

Additionally, Muslim investors need to ensure that the blockchain platform they support with staking isn't involved in haram activities, such as those related to alcohol, pork or other products forbidden in Islam.

With crypto staking being a halal activity in most cases, investors might be wondering which staking platforms and coins are the most suitable from the Islamic finance perspective. Below, we list five cryptocurrencies and their associated blockchains that are likely the optimal choices for a Muslim investor looking for staking opportunities. These five options are among the largest PoS networks in the industry. This ensures that their staking processes are among the most stable and predictable in the cryptosphere, which helps minimize the probability of gharar. 

As the largest players in the industry, these chains' native cryptocurrencies also feature some of the highest current trading volumes, which ensures a higher degree of price stability and a lower likelihood of speculation/maysir for these coins. This is also a key factor from an Islamic finance perspective, as you’ll stake and earn rewards in these platforms' respective crypto assets.

Ethereum (ETH) — specifically, its current PoS version, 

 — is the world's largest blockchain currently utilizing staking for block validation. It’s known to provide stable and highly sought-after staking rewards in its native cryptocurrency, ETH. While independent staking on the network, which requires 32 ETH collateral, is financially not viable for many crypto users, you can still join a staking pool to earn rewards.

 (SOL) is another top PoS blockchain. It typically features faster processing times and lower fees for crypto transactions than Ethereum. Unlike Ethereum, Solana doesn't impose a minimum amount to run a full validator node. In theory, that means anyone could run an independent staking operation on the blockchain. However, in practice, the competition among Solana validators for the chance to validate blocks is intense, and those with modest amounts staked in them are unlikely to win the race. The good news is that Solana, unlike Ethereum, supports stake delegation. This gives you two practical options to earn staking rewards as an ordinary user: delegate your stake to a preferred validator, or join a staking pool.

 (ADA) is a leading PoS blockchain network that exclusively uses staking pools for its block validation. This means there's no individual staking on Cardano. To participate in staking on this blockchain, you have two options: run your own pool, or, as a more practical choice for most users, join an existing one.

 scalability solutions for Ethereum. At the heart of its ecosystem is the Polygon PoS blockchain, which supports independent staking via running a validator node, as well as stake delegation. 

Currently, Polygon validators are required to stake their POL on Ethereum’s network, although the platform plans to enable full direct staking via its own chain in the near future. For most users, however, stake delegation is the best option: in this mode, you don't need to worry about technical intricacies, such as which actual network — Polygon or Ethereum — is handling your stake. Besides the stake delegation option, you can also choose an external staking pool provider for the platform's native token (POL).

 (AVAX) is another popular and well-regarded blockchain that offers staking. Somewhat smaller than most of the chains described above, Avalanche is still among the heavyweights of the blockchain industry: its native coin, AVAX, has amassed a 

 of over $10 billion (as of Nov 1, 2024). 

Avalanche offers direct independent staking: you can run your own validator node, or delegate your stake. The independent validator staking option requires collateral of 2,000 AVAX ($49,880 as of Oct 31, 2024), while the minimum requirement for stake delegation is a relatively modest 25 AVAX ($623.50). As is the case with other major PoS chains, you can also find a variety of external staking pool providers for AVAX.

The crypto market features a variety of passive income opportunities, but identifying which ones are halal isn't always straightforward. In its typical format, crypto staking can be considered a halal activity, as it doesn't involve lending or borrowing funds with interest (riba), speculative trading akin to gambling (maysir) or excessive uncertainty (gharar) often associated with some other crypto activities. As such, Muslim investors can use cryptocurrency staking, although it's always important to carefully scrutinize the actual activities of the crypto project offering staking. If these activities aren't linked to haram industries or products, staking may be one of the safest options for a crypto-minded Muslim investor. 

Disclaimer: Due to varying opinions on Shariah compliance of crypto trading, we recommend you to conduct your own further research. Please note that the posts on Bybit Learn should not be considered as fatwa. Our aim is to present information on different topics to empower readers to make informed decisions.

Is Crypto Staking Halal? All You Need to Know

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