Key Takeaways

Binance Copy Trading allows users to automatically replicate the trades of experienced traders, providing an easy way for beginners to participate in the cryptocurrency market.

It also offers flexibility and control, allowing users to adjust their copy trading settings and manage risk with tools like maximum loss limits.

Binance Copy Trading is available for Spot and Futures markets, and can be useful for novice traders who wish to learn from seasoned traders or for those who prefer a more hands-off approach to trading.

Introduction

Cryptocurrency trading can be complex and time-consuming, requiring knowledge and constant monitoring of the market. For those who may not have the time or expertise to trade actively but still want to participate in the markets, copy trading is a viable solution. In this article, we will explain what Binance Copy Trading is, how it works, and provide a step-by-step tutorial to help you get started.

What Is Binance Copy Trading?

Binance offers a Copy Trading feature that allows users to automatically copy the trades of more experienced traders, making it easier for beginners to participate in the market. By using this feature, users can automatically execute the same trades as their chosen Lead Trader, without needing to constantly monitor the market. 

As of May 2024, Binance Copy Trading is available for Spot and Futures markets in selected locations. These products can be particularly useful for novice traders who wish to learn from seasoned traders or for those who prefer a more hands-off approach to trading.

How Binance Copy Trading Works

1. Selection of traders

The first step in using Binance Copy Trading is to select a Lead Trader to copy. Binance provides a list of Lead Traders, each with a detailed profile that includes their trading performance, strategies, risk levels, and historical data. This information helps users make a more informed decision when choosing a trader to follow.

2. Automatic execution

Once a user has selected a Lead Trader to copy, all of the trader's future trades are automatically mirrored in the user's account. This includes opening and closing positions, as well as adjusting stop-loss and take-profit levels. The automation ensures that users can benefit from the trader's expertise without having to manually execute each trade themselves.

3. Control and flexibility

While Binance Copy Trading automates the trading process, users still retain control over their accounts. They can adjust their copy trading settings, such as the amount of capital they wish to allocate or the ability to stop copying a trader at any time. This flexibility allows users to manage their risk and investment according to their preferences.

Risk Management

Binance provides various risk management tools to help users protect their investments. These tools include the ability to set maximum loss limits and allocate only a portion of the total capital to copy trading. By using these tools, users can minimize their risk exposure and protect their funds from significant losses.

However, it’s important to remember that all types of trading involve risks. If the strategy you follow is unsuccessful, you may experience losses. Do careful research and only risk funds you can afford to lose.

Benefits of Binance Copy Trading

1. Access to experienced traders

By copying experienced traders, users gain access to the knowledge and strategies of seasoned professionals. This can help them learn about trading techniques and market analysis, potentially improving their own trading skills over time.

2. Time-saving

Copy trading eliminates the need for constant market monitoring and manual trade execution. This can be particularly beneficial for users who have other commitments and cannot dedicate significant time to trading.

3. Diversification

Users can diversify their investments by copying multiple traders with different strategies and risk profiles. This can help spread risk and increase the chances of achieving consistent returns in the long term.

Getting Started With Binance Copy Trading

Step 1: Create a Binance account

If you do not already have a Binance account, you will need to create one. Visit the Binance website and click on the "Sign Up" button. Follow the instructions to complete the registration and verification process, which includes verifying your email address and identity.

Step 2: Deposit funds

Once your account is set up, you will need to deposit funds into your Binance account. Navigate to the "Wallet" section and select "Deposit." Choose the cryptocurrency you wish to deposit and follow the instructions to transfer funds from your external wallet to your Binance account.

Step 3: Access the Binance Copy Trading platform

After depositing funds, navigate to the [Trade] menu at the top, and click on the [Copy Trading] option to access the platform.

Step 4: Browse and select a Lead Trader

On the Copy Trading platform, you will find a list of available traders to copy. Each trader's profile will include important information such as their trading performance, strategies, risk levels, and historical data. Take your time to review this information and select a trader that aligns with your investment goals and risk tolerance.

Step 5: Allocate funds to copy trading

Once you have selected a trader, you will need to allocate funds to copy their trades. Note that your Binance Copy Trading account balance is separate from your regular Binance account.

Click [Copy] to select the method and specify the amount of capital you wish to allocate.

Binance Copy Trading offers two methods: Fixed Amount and Fixed Ratio. 

The Fixed Amount will set a fixed cost per order until the total copy amount runs out. It allows you to control the amount invested. You can also define the Total Stop Loss to protect a percentage of your funds in case of losses.

The Fixed Ratio will open orders in proportion to the lead trader’s position size and your available balance. 

For example, if your Lead Trader has a portfolio of $10,000 and places an order worth $1,000 (10%), your order will be opened using the same 10% ratio. If you invested $1,000, your order will be worth $100 (10%).

Under [Advanced Settings], you can set additional parameters, such as margin mode, leverage, and position risk.

Step 6: Monitor and adjust

While copy trading automates the trading process, it is still important to monitor your account regularly. Keep an eye on the performance of the copied trades and the overall market conditions. If necessary, adjust your copy trading settings or stop copying a trader if their performance does not meet your expectations.

Closing Thoughts

Binance Copy Trading is a valuable tool for those who want to participate in the cryptocurrency market without the need for extensive knowledge or constant monitoring. By allowing users to replicate the trades of experienced traders, it provides an opportunity to benefit from professional expertise while saving time and effort.

Remember to conduct thorough research, use risk management tools, and stay informed about market conditions to make the most of Binance Copy Trading.

Further Reading

Crypto Copy Trading: A Game-Changer for Traders

Your Guide to Binance Spot Trading

The Psychology of Market Cycles

7 Common Mistakes in Technical Analysis (TA)

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

TL;DR

Tokenomics is a term that captures a token’s economics. It describes the factors that impact a token’s use and value, including but not limited to the token’s creation and distribution, supply and demand, incentive mechanisms, and token burn schedules. For crypto projects, well-designed tokenomics is critical to success. Assessing a project’s tokenomics before deciding to participate is essential for investors and stakeholders.

Introduction 

A portmanteau of “token” and “economics,” tokenomics is a key component of doing fundamental research on a crypto project. Aside from looking at the white paper, founding team, roadmap, and community growth, tokenomics is central to evaluating the future prospects of a blockchain project. Crypto projects should carefully design their tokenomics to ensure sustainable long-term development.

Tokenomics at a glance 

Blockchain projects design tokenomics rules around their tokens to encourage or discourage various user actions. This is similar to how a central bank prints money and implements monetary policies to encourage or discourage spending, lending, saving, and the movement of money, Note that the word “token” here refers to both coins and tokens. You can learn the difference between the two here. Unlike fiat currencies, the rules of tokenomics are implemented through code and are transparent, predictable, and difficult to change.

Let’s look at bitcoin as an example. The total supply of bitcoin is pre-programmed to be 21 million coins. The way bitcoins are created and entered into circulation is by mining. Miners are given some bitcoins as a reward when a block is mined every 10 minutes or so. 

The reward, also called block subsidy, is halved every 210,000 blocks. By this schedule, a halving takes place every four years. Since January 3, 2009, when the first block, or the genesis block, was created on the Bitcoin network, the block subsidy has been halved three times from 50 BTC to 25 BTC, 12.5 BTC, and 6.25 BTC currently.

Based on these rules, it’s easy to calculate that around 328,500 bitcoins will be mined in 2022 by dividing the total number of minutes of the year by 10 (because a block is mined every 10 minutes) and then multiplying by 6.25 (because each block gives out 6.25 BTC as rewards). Therefore, the number of bitcoins mined each year can be predicted, and the last bitcoin is expected to be mined around the year 2140.

Bitcoin’s tokenomics also include the design of transaction fees, which miners receive when a new block is validated. This fee is designed to increase as transaction size and network congestion rise. It helps prevent spam transactions and incentivizes miners to keep validating transactions even as block subsidies keep diminishing. 

In short, the tokenomics of Bitcoin is simple and ingenious. Everything is transparent and predictable. The incentives surrounding Bitcoin keep participants compensated to keep the network robust and contribute to its value as a cryptocurrency. 

Key elements of Tokenomics

As a catch-all term for a wide range of factors influencing a cryptocurrency’s value, “tokenomics” refers first and foremost to the structure of a cryptocurrency’s economy as designed by its creators. Here are some of the most important factors to consider when looking at a cryptocurrency’s tokenomics. 

Token supply

Supply and demand are the primary factors impacting the price of any good or service. The same goes for crypto. There are several critical metrics measuring a token’s supply. 

The first is called maximum supply. It means that there is a maximum number of tokens coded to exist in the lifetime of this cryptocurrency. Bitcoin has a maximum supply of 21 million coins. Litecoin has a hard cap of 84 million coins, and BNB has a maximum supply of 200 million.

Some tokens don’t have a maximum supply. The Ethereum network’s supply of ether increases every year. Stablecoins like USDT, USD Coin (USDC), and Binance USD (BUSD) have no maximum supply as these coins are issued based on the reserves backing the coins. They theoretically can keep growing without limits. Dogecoin and Polkadot are two more cryptos with uncapped supply.

The second is circulating supply, which refers to the number of tokens in circulation. Tokens can be minted and burned, or be locked up in other ways. This has an effect on the price of the token as well.

Looking at the token supply gives you a good picture of how many tokens there will be ultimately.

Token Utility

Token utility refers to the use cases designed for a token. For example, BNB’s utility includes powering the BNB Chain, paying transaction fees and enjoying trading fee discounts on the BNB Chain, and serving as community utility token on the BNB Chain ecosystem. Users can also stake BNB with various products within the ecosystem to earn additional income.

There are many other use cases for tokens. Governance tokens allow the holder to vote on changes to a token’s protocol. Stablecoins are designed to be used as a currency. Security tokens, on the other hand, represent financial assets. For instance, a company could issue tokenized shares during an Initial Coin Offering (ICO), granting the holder ownership rights and dividends.

These factors can help you determine the potential use cases for a token, which is essential in understanding how the token’s economy will likely evolve.

Analyzing token distribution 

Aside from supply and demand, it’s essential to look at how tokens are distributed. Large institutions and individual investors behave differently. Knowing what types of entities hold a token will give you insight into how they are likely to trade their tokens, which will in turn impact the token’s value. 

There are generally two ways to launch and distribute tokens: a fair launch and a pre-mining launch. A fair launch is when there is no early access or private allocations before a token is minted and distributed to the public. BTC and Dogecoin are examples of this category. 

On the other hand, pre-mining allows a portion of the crypto to be minted and distributed to a select group before being offered to the public. Ethereum and BNB are two examples of this type of token distribution. 

Generally, you want to pay attention to how evenly a token is distributed. A few large organizations holding an outsized portion of a token are typically considered riskier. A token held largely by patient investors and founding teams means stakeholders' interests are better aligned for long-term success. 

You should also look at a token’s lock-up and release schedule to see if a large number of tokens will be placed into circulation, which puts downward pressure on the token’s value. 

Examining token burns

Many crypto projects regularly burn tokens, which means pulling tokens out of circulation permanently. 

For example, BNB adopts coin-burning to remove coins from circulation and reduce the total supply of its token. With 200 million BNB pre-mined, BNB’s total supply is 165,116,760 as of June 2022. BNB will burn more coins until 50% of the total supply is destroyed, which means BNB’s total supply will be reduced to 100 million BNB. Similarly, Ethereum started to burn ETH in 2021 to reduce its total supply. 

When the supply of a token is reduced, it’s considered deflationary. The opposite, when a token’s supply keeps expanding, is deemed inflationary. 

Incentive mechanisms

A token’s incentive mechanism is crucial. How a token incentivizes participants to ensure long-term sustainability is at the center of tokenomics. How Bitcoin designs its block subsidy and transaction fees is a perfect illustration of an elegant model.

The Proof of Stake mechanism is another validation method that is gaining prevalence. This design lets participants lock their tokens in order to validate transactions. Generally, the more tokens are locked up, the higher the chance to be chosen as validators and receive rewards for validating transactions. It also means that if validators try to harm the network, the value of their own assets will be placed at risk. These features incentivize participants to act honestly and keep the protocol robust. 

Many DeFi projects have used innovative incentive mechanisms to achieve rapid growth. Compound, a crypto lending and borrowing platform, lets investors deposit cryptos in the Compound protocol, collect interests on them, and receive COMP tokens as additional reward. Moreover, COMP tokens serve as a governance token for the Compound protocol. These design choices align the interests of all participants with that of Compound’s long-term prospects.

What’s next for tokenomics

Since the genesis block of the Bitcoin network was created in 2009, tokenomics has evolved significantly. Developers have explored many different tokenomics models. There have been successes and failures. Bitcoin’s tokenomics model still remains enduring, having stood up to the test of time. Others with poor tokenomics designs have faltered.

Non-fungible tokens (NFTs) provide a different tokenomics model based on digital scarcity. The tokenization of traditional assets such as real estate and artworks could generate new innovations of tokenomics in the future.

Closing thoughts

Tokenomics is a fundamental concept to understand if you want to get into crypto. It’s a term capturing the major factors affecting the value of a token. It’s important to note that no single factor provides a magical key. Your assessment should be based on as many factors as possible and analyzed as a whole. Tokenomics can be combined with other fundamental analysis tools to make an informed judgment on a project’s future prospects and its token’s price.

Ultimately, the economics of a token will have a major impact on how it is used, how easy it will be to build up a network, and whether there will be much interest in the use case of the token.

This article was provided by Trezor.io


Cryptocurrencies have brought lots of exciting possibilities, but they are also full of risks and dangers for the inexperienced. Follow the three main security principles outlined below to mitigate some risks associated with using, holding, and trading cryptocurrencies.


Maintain your privacy

Thanks to the nature of the internet, information can propagate very quickly, and sometimes, in undesirable directions.

There are plenty of people with malicious intent employing nefarious tactics in an attempt to steal your cryptocurrencies. Most threats and attacks are typically broadly targeted and work as a net — trying to catch everyone gullible and distracted enough, but not necessarily targeting a specific individual. However, if you unintentionally make yourself a target by revealing sensitive information, more sophisticated and focused attacks are possible.

It is recommended:

To consider the risks of boasting about your successful trading rallies

 Not to share your previously used addresses

To be careful mentioning your balances

To avoid sharing information which is connected to your offline identity

To use encrypted communication channels

Think long term. Those few satoshis on your addresses can be worth significantly more in the years to come. Or not. You may even get rid of your cryptocurrencies in the meantime. But does it matter? A potential attacker, distant relatives, or just envious strangers and acquaintances may not get the memo in time.


Protect yourself

Users of both the traditional banking system and cryptocurrencies are often victims of similar scams and frauds. However, with cryptocurrencies, various factors are pushing the burden of responsibility on the shoulders of the end-user — mainly an inherent lack of trust and immutability of processed transactions.

Banks, regarded as trusted entities, have total custodial control of your money. Banks are regulated, and they communicate with each other which makes it easier to prevent and fight against fraud. If you get victimized or make an honest mistake while transferring money from your bank account, you can usually ask for a chargeback. In cryptocurrencies, once the transactions are propagated to the network and confirmed, they are irreversible.
Be vigilant. Learn about common phishing tactics, find out what keyloggers are, and get to know common threats described in Binance Academy. Getting familiar with these dangers will help you keep your coins secure.

Using strong and unique passwords and enabling the 2FA protection for your online accounts should be the first step towards improving your general security.
You should not forget about protecting yourself against yourself too because you are (probably) a human and people make errors. Making a typo while creating your backups, sending your tokens to a wrong address or simply making a wrong decision may compromise your security and cause a lot of inconveniences.

‘Measure twice, cut once’ says the proverb many of us heard from our parents. When it comes to using and protecting cryptocurrencies, it becomes increasingly relevant.


Be your own bank

To ensure the availability of your coins and maximize your security, it is recommended to hold your private keys offline. Although exchanges are generally much safer than ever before, it is still recommended to keep substantial amounts on the exchange accounts only if you are an active trader. Furthermore, similar to money in a bank account, unless you own and have exclusive access to your private keys, you cannot claim ownership of your coins, and you are left with a promise.

For the first time in history, you have a chance to own a digital asset in the same way you own physical cash or a chunk of precious metal. Unlike these other forms of assets, you can back up your cryptocurrencies on a piece of paper and gain access to your possessions safely anywhere in the world.

Of course, holding and protecting these keys to your cryptocurrencies bring many perils, as indicated in the previous section. Luckily, there are tools ready to help you keep up with these challenges and allow you to reap the full benefits of these new technologies.

The types of cryptocurrency wallets designed to hold your private keys vary in their security, ease of use, number of use cases, and even availability. Consider your options and choose a type that fits your needs.

Software and mobile phone wallets offer a wide variety of features and are usually very easy to use. The big disadvantage from the security perspective is that they are connected to very complex and often online environments such as your mobile phone or a computer. These factors open many opportunities for viruses and hackers to access your coins; therefore, inexperienced users should only use these for smaller amounts of cryptocurrencies.

Paper wallets, which hold your private keys written on a piece of paper (or engraved to a plate of metal) are often regarded as one of the safest ways to store private keys. They are, however, quite difficult to manage and usually only viable for one-time use.
Hardware wallets are typically the best at balancing the ease of use and high level of security. These pocket-sized devices protect the private keys against malware and hackers by keeping them offline but will cost you between $70 to $200, and they require physical confirmation for most actions.

Remember, security is never absolute and finished. Take your time to update your knowledge base from time to time and check your potentially weak points on a regular basis.

Disclaimer: This article is for educational purposes only. The information provided through Binance Academy does not constitute advice or recommendation of investment or trading. Binance does not take responsibility for any of your investment decisions. Please do your own research and seek professional advice before taking financial risks.

Key Takeaways

ZKsync is a Layer-2 scaling solution that makes transactions on Ethereum cheaper and faster by utilizing zero-knowledge rollups (zk-rollups) and zero-knowledge proofs (ZKPs).

The ZKsync airdrop distributed 17.5% of the total supply to users and contributors, with a focus on active network participants and contributors to the ZKsync ecosystem.

Compared to optimistic rollups, ZKsync offers improved security and faster settlement times due to its use of ZKPs.

Introduction

Scalability is one of the key problems of blockchain technology. In the context of blockchains, it refers to the ability of networks to handle a growing number of simultaneous transactions. The main problem is that as more transactions are added to the backlog of pending transactions, networks typically become slower and more costly.

Zero-knowledge solutions offer a promising way to address scalability issues. In this article, we will explore the ZKsync scaling solution, how it works, how it differs from optimistic rollups, and some of its benefits. We will also discuss the ZK token usage and distribution via airdrops.

What Is ZKsync?

ZKsync is a Layer-2 scaling solution designed to make transactions on Ethereum faster and cheaper by processing them off the main Ethereum chain. It does this by using the so-called zero-knowledge rollups (zk-rollups). Zk-rollups are solutions that bundle multiple transactions together and process them off-chain.

We can think of layer 2 solutions as an extra lane added to a congested highway. By providing more space for cars (transactions) to move, it reduces traffic jams on the main highway (Ethereum). This extra lane represents the off-chain transaction processing that ZKsync does with zk-rollups.

How Does ZKsync Work?

1. Aggregating transactions

Everything starts with using zk-rollups to collect and bundle off-chain transactions into batches. ZKsync avoids processing them individually to reduce the load on the main Ethereum chain.

For instance, imagine a post office where instead of separately mailing each letter to a specific address, they are collected and grouped first and then delivered all at once, making the process way more efficient.

2. Using zero-knowledge proofs

Then, ZKsync creates zero-knowledge proofs (ZKPs) to verify the batches. ZKPs ensure that transactions within the batches are valid while keeping their details private.

You can think of ZKPs as a method of proving you know a secret password without actually sharing it. For instance, if Alice wants to prove that she knows the password to a secret club, she can answer specific questions that only someone with the password would know, without ever revealing the actual password itself.

3. Submitting proofs to Ethereum

These ZKPs are then submitted to the Ethereum mainnet where they are thoroughly checked. Once verified and validated, they are accepted by the Ethereum network, meaning transactions are officially recorded and confirmed on the blockchain.

ZK Token

ZK tokens allow users to participate in the ZKsync governance system by offering voting power. Their voting power can be activated through the process of delegation. Let’s take a look at how it works:

To activate the voting power of your ZK tokens, you must delegate it to a ZKsync address. It can be your own or someone else's.

The person who controls that address becomes a Delegate who can vote on governance proposals.

Delegating does not change token ownership but activates the voting power for the chosen address.

Delegation can be changed at any time by the token holder and lasts until altered or tokens are transferred.

Delegation cannot be split across multiple addresses. All voting power held in one wallet is delegated to a single address.

The ZK token was listed on Binance with the seed tag applied on June 17, 2024. Please refer to the official listing announcement for more details.

ZKsync Airdrop

The ZK token airdrop distributed 17.5% of the total supply to eligible wallets. The allocation was divided between users and contributors.

Usage-based airdrop

To be eligible for the airdrop as a user, you had to bridge your funds onto ZKsync Era and meet at least one of the following seven criteria:

Interact with at least 10 non-token smart contracts on ZKsync.

Use paymasters for at least 5 transactions on ZKsync Era. Paymasters are special accounts designed to cover transaction costs for other accounts, potentially making certain transactions free for end-users.

Trade at least 10 distinct ERC-20 tokens on the ZKsync Era decentralized exchanges (DEXs).

Provide any amount of liquidity to the tracked DEXs and Lending/Borrowing protocols on ZKsync Era.

Hold at least one Libertas Omnibus non-fungible token (NFT) at the time of the snapshot. 

Be active for over 3 months on ZKsync Lite before the ZKsync Era mainnet.

Donate to Gitcoin via rounds hosted on ZKsync Lite.

ZKsync airdrop allocations

According to ZKsync, the allocations were based on a value-scaling formula that consisted of multiple steps:

1. The first step was to determine the daily balance of crypto assets held by an address. This included both the wallet balance and the crypto sent to decentralized finance (DeFi) protocols.  

2. Next, crypto assets in DeFi protocols were valued at 2x their nominal value. For example, if you had $100 worth of crypto in a DeFi protocol, the formula would count it as $200.

3. Finally, the daily balances were summed up and divided by the snapshot period (366 days) to calculate the time-weighted average balances.

For example, imagine that Alice sent $200 worth of crypto assets to ZKsync Era 30 days before the snapshot and immediately allocated 1/4 of them ($50) to a DeFi protocol. The other $150 was kept in her wallet until the snapshot. Now, let’s calculate her time-weighted average balance (TWAB):

TWAB = ( ($150 * 30 days) + ($50 * 2 * 30 days) ) / 366 = $20.50

Each address could receive additional multipliers based on specific activities that indicated genuine user behavior or contribution to ZKsync. These multipliers were added on top of the allocations. Here are some activities that could add multipliers:

1. Hold at least one of the following ZKsync native NFT collections at the snapshot: Dudiez, Hue, Moody Mights, Webears, ZKPENGZ, zkSkulls, or zkVeggies.    

2. Hold at least 50% of the ARB/OP/ENS airdrop for more than 90 days after claiming it.

Contribution-based airdrop 

The ZK token airdrop also included specific allocations for various contributors to the ZKsync ecosystem. Here is a detailed breakdown of the contribution-based airdrop:

1. ZKsync native projects: 215,250,000 ZK tokens were allocated directly to the contributors and treasuries of native projects building on ZKsync Era, including DeFi protocols, gaming, ZK chains, NFT collections, infrastructure, and more.

2. Builders: 86,895,375 tokens were allocated to individuals, developers, researchers, communities, and companies who contributed to the ZKsync ecosystem through development, advocacy, or education.

GitHub developers: Developers with at least 25 commits across eligible repositories before March 24, 2024.

Protocol Guild: Ethereum researchers and developers.

ZK quest participants: Participants in the ZK quest developer activations at Istanbul Devconnect 2023 and/or ETH Denver 2024.

And many others.

3. On-chain communities. 102,375,000 tokens were allocated to a small group of experimental on-chain communities for exploring ways to use tokens and NFTs, such as:

Season 1 DEGEN token airdrop recipients.

Season 1 BONSAI token airdrop recipients.

Participants in Seasons 1 and 2 of Crypto The Game (CTG) and the CTG team.

Pudgy Penguin and Milady Maker holders.   

How to Claim the ZKsync Airdrop?

Be wary of fake websites and phishing attacks. Make sure you are using the official websites and channels. 

Follow these steps to check your eligibility and claim your ZK tokens:

1. Visit the official airdrop website and check whether you are eligible for the airdrop. Enter your wallet address or GitHub username and press [Check].

2. Click [Connect wallet] and follow the prompts to connect your crypto wallet.

3. Next, you will have to delegate the voting power of your ZK tokens. You can either delegate to yourself or any community member.

4. Finally, press [Claim your tokens] and follow the prompts. If you encounter an error, click [Claim your tokens] again.

How to Claim the ZKsync Airdrop on Binance?

To claim ZK tokens from Binance, eligible users need to deposit a minimum of 0.02 ETH from a whitelisted address on the ZKsync Era network to their Binance account. Only deposits made directly from addresses included in the active ZKsync user whitelists will be considered valid for this distribution.

Whitelisted Address Batches:

Batch 1

Batch 2

Batch 3

Batch 4

ZK tokens will be distributed on a first-come, first-served basis to users who meet the criteria. Each user can only claim ZK tokens once (i.e., one claim per Binance User ID), with a limit of 200 ZK tokens per user. Even if a user deposits 0.02 ETH from multiple addresses to a single Binance UID, they can only claim the airdrop once for a total of 200 ZK tokens.

The first ZK Token airdrop on Binance is scheduled to start on June 25, 2024. Please refer to the official announcement for more details on the Binance ZK Token Distribution Program.

Sybil Attacks and Community Criticism

The ZKsync airdrop has sparked controversy among the cryptocurrency community, raising concerns about its execution and fairness.

The ZKsync airdrop was criticized for the lack of effective measures against Sybil attacks. Many users argued that it was easy to exploit the eligibility criteria, allowing the creation of multiple wallets to trick the system and get more tokens.

In response, ZKsync developers explained that they deliberately chose not to use overly strict Sybil detection to avoid accidentally excluding many organic users. Instead, they implemented value scaling and multipliers to detect potential Sybil attacks while prioritizing organic users.

Some argued that ZK tokens were not fairly distributed. Critics stated that the maximum cap of 100,000 ZK tokens per address was too small as it unfairly cut the rewards for users who were heavily involved in the ZKsync ecosystem. Some users claimed they didn’t get anything despite following the eligibility criteria and using ZKsync’s products for multiple years.

To address these concerns, ZKsync clarified its distribution strategy, emphasizing its focus on rewarding active participants. The team pointed out that 89% of the airdropped tokens were given to users who actively engaged with ZKsync Era.

ZKsync vs. Optimistic Rollups

Security mechanism

Optimistic rollups start by assuming that all transactions are valid. They use a method where nodes are paid to check the transactions after they are processed. If any problems are found, they are reported, and transactions are corrected. The issue with this approach is its reliance on human actors who can easily make mistakes.

In contrast, ZKsync uses ZKPs to ensure transaction security. This approach can offer a relatively higher level of accuracy compared to optimistic rollups.

Settlement time

Optimistic rollups have a so-called 7-day challenge period. It is necessary because optimistic rollups initially assume that all transactions are valid, and only corrects them if someone disputes their validity. Transactions are not finalized until this period ends, leading to slower settlement times.

In contrast, ZKsync uses ZKPs to verify transactions. Transactions are finalized as soon as they are verified by the nodes. This approach skips the need for a challenge period, making settlement times faster.

Benefits of ZKsync

Scalability

ZKsync enhances the scalability of the Ethereum network by processing transactions off the main Ethereum chain using zk-rollups. This lowers transaction fees and speeds up transaction times. As a result, ZKsync allows Ethereum to support more users and decentralized applications (DApps).

EVM compatibility

EVM compatibility means that developers who have already created DApps for the Ethereum Virtual Machine (EVM) can migrate them to ZKsync with minimal changes. This reduces the learning curve and makes it easier for them to adopt ZKsync scaling solutions. 

Closing Thoughts

By using zero-knowledge rollups (zk-rollups) and zero-knowledge proofs (ZKPs), ZKsync is a Layer-2 scaling solution that can enhance transaction speed and reduce costs on the Ethereum network. Compared to optimistic rollups, ZKsync can offer better security and faster settlement times. In addition, its EVM compatibility makes it easy for developers to learn and adopt its scaling solutions.

Further Reading

What Is a ZkEVM and How Can It Enhance the Ethereum Ecosystem?

What Are ZKThreads and How Do They Work?

What Are Validiums and How Do They Work?

Blockchain Scalability - Sidechains and Payment Channels

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Key Takeaways 

Meme coins are meme-inspired cryptocurrencies that tend to be more volatile than major cryptocurrencies, like bitcoin (BTC) and ether (ETH). 

Meme coins generally gain popularity due to their low prices, community-driven nature, active marketing through social media, and endorsements from high-profile figures.

Meme coins carry significant risks due to their often inflationary tokenomics, high volatility, and a high potential for rug pulls.

Introduction

Meme coins are a significant part of the cryptocurrency market and are known for their rapid and unpredictable price movements. They are often inspired by internet memes and jokes, gaining popularity through social media and online communities. In this article, we will explore what meme coins are, why they have gained such popularity, and the potential risks associated with them.

What Are Meme Coins?

Meme coins are cryptocurrencies inspired by memes or jokes on the Internet and social media. The first meme coin was Dogecoin (DOGE). Launched in 2013 as a parody, DOGE was inspired by the popular Doge meme of a Japanese Shiba Inu named Kabosu.

Meme coins tend to be highly volatile. They are mainly community-driven and can gain popularity overnight due to online community endorsements and FOMO. Still, their price can also crash unexpectedly when traders turn their attention to the next meme coin.

Another typical characteristic of meme coins is their huge or unlimited supply. For example, Shiba Inu (SHIB) has a total supply of 1 quadrillion tokens, while DOGE has no maximum supply. As meme tokens generally do not have a coin-burning mechanism, the huge supply explains their relatively low prices.

Why Are Meme Coins So Popular?

During the COVID-19 pandemic, the crypto market grew as retail investors looked for ways to hedge against inflation. Amidst the hype, meme coins boomed, increasing in both market capitalization and variety. The phenomenon gained momentum after the "meme stock" saga involving GameStop (GME) and AMC Entertainment (AMC), where the Reddit community significantly boosted the prices of these assets. 

Inspired by this, people started joking about pumping the price of Dogecoin (DOGE) to create a crypto equivalent of GME. This trend, coupled with endorsements from high-profile figures like Tesla CEO Elon Musk, led to a significant rally in DOGE's price. 

The excitement around meme coins was further fueled when traders started exploring other meme coins like Shiba Inu (SHIB), hoping to replicate the success of DOGE. Retail investors were drawn to meme coins because they are typically very affordable, often costing just a few cents or even fractions of a cent. This allows traders to hold thousands or even millions of tokens, which feels different from holding fractions of major cryptocurrencies like ETH or BTC. 

The meme coin frenzy is also driven by community and market sentiments. Meme coins are inspired by popular internet memes and are intended to be fun, often serving as "insider jokes" for their communities. Buying meme coins can be seen as a way to show support for these communities.

The institutionalization of meme coins significantly boosted their popularity in 2024. A key development was the launch of a meme coin index by VanEck, which tracks the six largest meme coins by market cap (DOGE, SHIB, PEPE, WIF, FLOKI, and BONK as of May 2024). 

The VanEck meme coin index increased the visibility of meme coins and is serving as a benchmark in the asset management industry, encouraging funds to try and outperform it. In addition, the inclusion of meme coin tickers on channels like Bloomberg helped spread information about meme coins and attract more trading activity.

What Do Meme Coins Mean for the Crypto Community?

Many meme coins, such as Dogecoin (DOGE), were launched with a fair distribution model, meaning they were available to the public without premining or significant early allocations to project founders. This aligns with the views of many cryptocurrency enthusiasts who value open access and community-driven growth. The decentralized nature of these launches fosters a sense of ownership and participation among the community.

However, not all projects follow the same principles. Some meme coins are premined, where a significant portion of the tokens is allocated to the creators or early investors before public distribution. This often leads to concerns about transparency and fairness, as it might allow a few individuals or groups to control a substantial portion of the coin's supply. For example, coins like Shiba Inu (SHIB) have seen mixed reactions due to the allocation strategies used by their creators.

Decentralized meme coins tend to be viewed more favorably by the community, as they embody the principles of decentralization and community involvement that are foundational to the crypto movement. Conversely, centralized meme coins often face criticism due to the potential risks of manipulation and unfair practices.

Potential Risks of Investing in Meme Coins

Tokenomics

First of all, the tokenomics of meme coins can be concerning. For instance, Bitcoin has its blockchain, a well-written whitepaper, an established ecosystem, and a predictable issuance rate. 

In contrast, most meme coins are inflationary and have no maximum supply. Their ecosystem, use cases, and fundamentals are often defined by the collective jokes of their communities.

Volatility 

Meme coins are heavily community-driven and are generally more volatile compared to bigger market capitalization cryptocurrencies. Their prices can randomly surge from celebrity shilling or FOMO, or unexpectedly crash when the community decides to move on to the next meme coin.

Rug pulls

Rug pulls are a significant risk in the meme coin market, where developers abandon the project and disappear with investors’ funds. Unfortunately, this type of scam is very common and has occurred many times throughout the years.

Examples of Meme Coin Rug Pulls

Below are some examples of meme coin rug pulls.

SQUID: a 2021 meme coin inspired by the popular Netflix show of the same name, gained sudden traction due to the popularity of the show. However, the development team rug-pulled the project, causing users to lose their funds.

BALD: In July 2023, the BALD meme coin experienced a rug pull when the developer pulled all liquidity from the coin on Coinbase’s Layer-2 Base network, causing the token's value to plummet to zero​.

MetaSwap: In early 2024, the MetaSwap token experienced a rug pull, leading to substantial losses for investors. The developers suddenly withdrew liquidity, leaving investors with worthless tokens.

URF: In March 2024, the team behind the URF meme coin vanished after a $450,000 presale, leaving investors with worthless tokens. Promoted by boxer and social media influencer Bryce Hall, the team disappeared within 24 hours of the launch.

How to Reduce Risks When Investing in Meme Coins?

Investing in meme coins can be highly speculative and risky due to their volatility and community-driven nature. However, there are strategies you can use to reduce these risks:

Do your own research (DYOR): before investing in meme coins, it’s important to research about the project. Whenever possible, check the team behind the project, their goals, whitepaper, roadmap, and overall community sentiment.

Understand the tokenomics: Pay close attention to the supply dynamics of the meme coin. Coins with unlimited or extremely high supplies can face inflationary pressures, potentially leading to devaluation. Understanding the token distribution and any mechanisms like burning or staking can also provide insights into the coin's long-term viability.

Diversify your portfolio: Avoid putting all your funds into a single meme coin. Diversification can help spread risk across various assets. Consider balancing your investment portfolio with more established cryptocurrencies, such as bitcoin (BTC), ether (ETH), SOL, and BNB.

Stay informed: Meme coins are heavily influenced by social media trends and news. Keep an eye on the latest developments and updates related to your investments. You can use tools like Google Alerts, join relevant social media groups, and follow influential figures in the cryptocurrency space.

Set stop-loss orders: Consider using stop-loss orders to automatically sell your meme coins in case the price goes below a certain level. Stop-loss orders can protect you against significant losses.

Avoid impulsive decisions: Only invest what you can afford to lose and avoid impulsive decisions led by emotions like FOMO (fear of missing out). The hype surrounding meme coins can lead to impulsive buying decisions. Take a step back and evaluate whether the investment makes sense based on your research, rather than getting caught up in the excitement.

How to avoid meme coin rug pulls?

Check the liquidity: A healthy liquidity pool is essential for the stability of any cryptocurrency. Ensure the meme coin you are interested in has locked liquidity, meaning the developers cannot easily withdraw the funds. Services like Unicrypt can be used to check liquidity lock status.

Examine the smart contract: If you have the technical know-how, review the project's smart contract. Look for red flags, such as functions that allow developers to mint unlimited tokens or transfer large amounts of funds. Alternatively, seek out third-party audits from reputable security firms like CertiK or Hacken.

Check the team: An anonymous team can be a red flag. While anonymity is common in the crypto world, it can also be used by scammers to disappear without a trace. Look for projects with transparent and credible teams who have verifiable track records in the industry.

Assess community engagement: A strong and active community can be a sign of a legitimate project. Engage with the community on platforms like Discord, Telegram, or Twitter to gauge their sentiment and activity. Be wary of projects with fake followers or an unusually high amount of shilling.

Check the project’s roadmap: Legitimate projects usually have a detailed roadmap outlining their development goals and timelines. Compare the roadmap with the project's actual progress to see if they are delivering on their promises. Projects that make unrealistic promises or frequently delay milestones may be suspect.

Look for red flags: Be cautious of projects that heavily rely on hype and celebrity endorsements without offering substantial information about their technology or use case. High-pressure tactics, such as limited-time offers or guaranteed returns, are often signs of a scam.

By following these guidelines and maintaining a healthy level of skepticism, you can better navigate the meme coin landscape and avoid potential scams like rug pulls. Always remember that investing in cryptocurrencies, especially meme coins, carries significant risk, and it’s essential to only invest money that you can afford to lose.

An Overview of the Popular Meme Coins

As of June 2024, the total market capitalization of meme coins is roughly $63 billion. The top 6 meme coins are DOGE, SHIB, PEPE, WIF, BONK, and FLOKI – according to CoinMarketCap data.

Dogecoin (DOGE)

Dogecoin (DOGE) was created in 2013 by software engineers Billy Markus and Jackson Palmer. It was inspired by the meme of a Shiba Inu dog and was intended to be a joke cryptocurrency to attract mainstream attention. As a fork of Litecoin (LTC), DOGE adopts the same Proof of Work (PoW) mechanism and has no maximum supply. 

For a more comprehensive overview of DOGE, check out What Is Dogecoin?

Shiba Inu (SHIB)

Shiba Inu (SHIB) is the rival of DOGE and is often referred to as the “Dogecoin killer”. SHIB is also named after a Japanese dog breed. It was created by an anonymous developer named Ryoshi in August 2020. The main difference between DOGE and SHIB is that the latter has a limited supply of 1 quadrillion tokens, of which 50% were burnt and donated to charity. SHIB’s ecosystem also includes a decentralized exchange, an NFT art incubator, NFTs, and an NFT game.

To learn more about SHIB and its ecosystem, check out What Is Shiba Inu (SHIB)?

Pepe (PEPE)

Pepe (PEPE) is a meme coin inspired by the popular internet meme character Pepe the Frog. Launched in April 2023, PEPE has quickly gained popularity due to its humorous and nostalgic appeal to internet culture enthusiasts. PEPE has a circulating supply of 420 trillion tokens.

Dogwifhat (WIF)

Dogwifhat (WIF) is a meme coin that has garnered significant attention since its launch in late 2023. Unlike some meme coins that pivot towards utility, Dogwifhat remains purely a meme-centric token.

FLOKI (FLOKI)

FLOKI (FLOKI) is a meme coin inspired by Elon Musk’s Shiba Inu dog. Launched with the vision of merging memes with real-world utility, FLOKI has developed into a project with an ecosystem that includes NFT marketplaces, NFT collections, and staking.

Bonk (BONK)

Bonk (BONK) is a dog-themed meme coin on the Solana blockchain. Launched in 2022, BONK gained attention after 50% of its total supply was airdropped to the Solana community.

Milady Meme Coin (LADYS)

Milady Meme Coin (LADYS) was launched in May 2023. Inspired by the Milady NFT collection, LADYS aims to combine meme coins with the growing popularity of NFTs. The total supply of LADYS is 888 trillion tokens.

How to Buy Meme Coins

You can buy the more popular meme coins, such as DOGE, SHIB, PEPE, and WIF, on cryptocurrency exchanges like Binance. For less prominent meme coins, you can go to decentralized exchanges. Let’s take DOGE as an example.

1. Log in to your Binance account. Then, head to [Trade] at the top bar to select the Spot market page.

2. On the right side of the screen, type “DOGE” on the search bar to see a list of the available trading pairs. We will use DOGE/FDUSD as an example. Click “DOGE/FDUSD” to open its trading page.

3. Scroll down to the [Spot] box and select the preferred order type. We will use a market order in this example. Enter the amount of DOGE you want to buy and click [Buy DOGE] to confirm the order. When the order is filled, you will see the DOGE you purchased in your Binance Spot Wallet.

Closing Thoughts

With new meme coins entering the market every day and traders hoping to replicate the profits posted by DOGE and SHIB, it’s important to DYOR before committing to any meme coins. Keep in mind that meme coins are highly volatile compared to other digital currencies. Trading or investing in cryptocurrencies involves high risk. Meme coins are largely community-driven and might crash unexpectedly, so you should never invest what you cannot afford to lose.

Further Reading

What Is Dogecoin?

What Is Shiba Inu (SHIB)?

What Is a Coin Burn?

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