Most of you will have heard of Binance, which started as a popular crypto exchange, but has since expanded into an entire crypto ecosystem. Having launched the Binance Smart Chain (BSC) in September 2020, the platform now hosts smart contract functionality.
In this article, we’ll look at why projects might choose to expand onto the Binance Smart Chain, which projects are moving over from Ethereum to Binance, and then talk about what the future might hold for these two blockchain juggernauts.
Why build on Binance Smart Chain?
Binance Smart Chain (BSC) is designed to run in parallel to the existing Binance blockchain. This will help bring smart contract functionality to the network without compromising the main chain’s speed and instant finality. It also allows BNB holders to take advantage of a new staking mechanism for their BNB tokens.
Binance founder Changpeng Zhao (‘CZ’) has been quite critical of Ethereum’s rising gas fees, and forthcoming with his intentions to remedy this by offering a faster, cheaper, and more scalable solution on Binance.
Many ‘Ethereum Killers’ have come before, and none have yet succeeded to capture any significant percentage of the original smart contract platform’s DApps and users.
Despite the uphill battle, the team at Binance is aggressively pursuing this cause.
BSC developers claim that the blockchain’s Proof of Staked Authority (PoSA) consensus provides the ideal balance between high performance and decentralization, despite the fact that there are only 21 validators (compared to Ethereum’s 11,000 nodes).
The BNB development fund has set aside $100million for projects that commit to building on BSC, with individual projects able to claim up to $100,000 if they are successfully chosen by the Binance community.
This is similar to how the Binance Launchpad initiative works. A community governance panel chooses select new projects and later receives support from Binance Labs, token reward distribution on the exchange’s native launchpool and the possibility of a lucrative Binance exchange listing.
One project that has notably benefited from this is ThorChain, which after starting life as a micro-cap project has grown tremendously over the past year to become a fully-fledged liquidity pool and cross-chain exchange for both Binance BEP2 and ERC20 assets.
Such success stories are also good for Binance of course, as it allows for continued growth of their ecosystem across the space.
To add to this organic growth, a number of Ethereum-based projects are expanding onto the Binance Smart Chain, causing a resurgence in the online debate about ‘which blockchain is better, Binance or Ethereum’.
Projects that are moving from Ethereum to Binance Smart Chain
It should be noted that a lot of these projects are merely spreading out onto Binance Smart Chain, rather than completely moving away from Ethereum.
IDEX for example, is one of the oldest decentralized exchanges in the space, and has been a popular platform for traders to buy newly-listed Ethereum projects using the native Metamask wallet. IDEX’s popularity began to wane in the past year however, as rising gas fees and the popularity of Uniswap turned traders’ heads elsewhere.
Now, IDEX is taking the initiative by launching a multi-chain solution, which will see the expansion of its infrastructure across multiple blockchains as a way of onboarding new assets and reducing settlement costs.
With Binance Smart Chain, the first integration has been completed, and millions of trades have already been finalized using BSC, with an average transaction fee of $0.10 (compared to $4.50 on Ethereum).
This integration with Binance is just the first step in IDEX’s goal of becoming a decentralized exchange with ‘centralized exchange speed and features’. The project is also planning to benefit from the future of cross-chain DeFi, by integrating with Polkadot and Algorand.
C.R.E.A.M Finance (Crypto Rules Everything Around Me) is another Ethereum based DeFi platform that has partly migrated onto BSC, praising the increased speed and the advantages of having access to the Binance ecosystem’s 170 fiat gateways and 400,000 user accounts.
The team behind C.R.E.A.M, a lending and exchange platform, sees centralized exchanges as having a vital role in the growth of the DeFi space and the accessibility of governance protocols.
Sushiswap is another popular DeFi project that has made the move onto both BSC and also the Fantom smart contract platform, in order to escape from Ethereum gas fees. This arguably leaves the DEX in a stronger position than Uniswap, the project that, ironically, Sushiswap copied all of the original open-source code from.
DeFi protocols that are firmly based on Binance include Pancake Swap (a copy of a copy of a copy...) and Zero Swap, a familiarly-structured lending and borrowing platform that supports both ERC-20 and BEP2 tokens.
Aside from DeFi, another area of the crypto sphere which is slated for huge growth is non-fungible tokens (NFTs).
Bounce Finance is a decentralized auction platform that allows users to bid for NFTs (pieces of digital art) using either BNB or ETH for payment.
By going live on both blockchains, the Bounce team were one of the first to take advantage of the fact that MetaMask can be used both on the Ethereum and the Binance Smart Chain networks. This increases the number of users that can interact with their decentralized NFT auctions and Token Offerings, and continues with the recurring theme of using centralized finance (CeFi) in order to increase the efficiency of DeFi.
Binance Smart Chain just one part of a Multichain Future?
There’s certainly room for multiple blockchains in crypto, but the first rumblings of discontent between Binance and Ethereum developers have already begun.
Binance was recently taken to task following the development on BSC of a DApp called Musical Beats; an undeniable rip-off of the original Ethereum based DApp, EulerBeats, which creates music and visual-based NFTs.
Musical Beats has since shut down, promising to partially refund token holders as much as the development fund allows them to, but other rip-off projects (For example a BSC clone of Ethereum’s Open Sea NFT market called ‘Bopen Sea’) are popping up, and Ethereum devs are crying foul.
This is understandable on the level that criticism of Ethereum’s congested platform is not morally sustainable with consistent leeching of Ethereum’s developer creativity.
It is also somewhat inevitable, as Sushiswap shows, that so long as it’s profitable to copy, paste and then tweak open-source code in a decentralized environment, shark-like devs will continue to do so, although the long-term prospects of such projects are limited, considering the likelihood that they will lack the dev talent that made the original project a success in the first place.
But keeping in mind that the blockchain market size is predicted to grow exponentially over the next years and decades, there is surely space enough for a symbiotic relationship between Binance and Ethereum.
Ethereum’s current scaling issues can be boosted by the capabilities of the more centralized Binance blockchain, and this will allow some of the crypto industry’s most popular DApps to continue to function without the barrier of extremely high fees.
Meanwhile, projects built on Binance can effectively improve their level of security and decentralization by operating also on the Ethereum blockchain.
And with other interoperable blockchains such as Polkadot and Cosmos on the horizon, the future looks to be multi-chain regardless.
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This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.