Sirwin
Sirwin

Binance Smart Chain Says ‘Howdy’

By paragism | paragism | 25 Feb 2021


Binance Smart Chain is in the news nowadays. Binance Chief Changpeng Zhao declared recently that the blockchain had flipped Ethereum as per daily transactions. He also took an indirect shot on Ethereum and emphasized that the low fee of the blockchain was attracting more users. Binance Smart Chain (BSC) is doing really well. BNB also surpassed DOT to become the number three cryptocurrency as per market capitalization. This is a significant achievement for a so-called exchange native coin which was designed initially to provide benefits to the users of Binance exchange. DeFi activity is increasing on BSC at an astounding rate (Pancakeswap is giving a tough fight to Uniswap) and BNB is reaping the maximum benefit out of that. BNB price is hovering around the range of $280-300 now and it has reached 20% market capitalization of Ethereum. The supporters of BNB are riding high with enthusiasm but the success story of BSC is quite controversial. Let’s have a quick look at what is working for BSC and the future.

EVM compatibility is giving dividend

BSC is an EVM (Ethereum Virtual Machine) compatible chain and it started its development based on the Go-Ethereum fork. The blockchain works with Metamask and it automatically gets good exposure as the existing users are accustomed to the infrastructure. You can also use your Ethereum address for doing BSC transactions (you need to change your network to BSC in Metamask). Ethereum smart contract developers can easily deploy their DAPPs on BSC with some smart tweaking and it is damn easy.

BUIDL reward for the developers

Binance has committed $100 million to a DeFi accelerator fund that seeks to bridge DeFi and centralized finance (CeFi) solutions. Right now, Binance is paying a 30% gas fee, paid by the users who are interacting with the smart contracts, to the smart contract developers. This reward is definitely driving the adoption and development of the ecosystem. The rewards are sent in BNB every month to the registered receiver addresses.

Low cost of DAPP deployment & transactions

BSC chain fees are really low. A DAPP developer can deploy his/her DAPP at 200 times lesser cost on BSC in comparison to Ethereum. Normal transactions are also very cheap.

CeFi-DeFi bridge

You can withdraw many digital assets from Binance CEX to BSC address as wrapped tokens with minimum fees. If you have BTC on Binance, you can withdraw it as BNB wrapped BTC (BTCB) to your BSC address and take part in yield farming very easily. Similar decentralized bridges on many other blockchains are available but obviously not very popular. 

Yes! BSC is a private blockchain

Proof of Authority (PoA) is a reputation-based consensus algorithm that is generally used for private blockchains. The algorithm relies on a limited number of block validators to increase scalability. The PoA model enables companies to maintain privacy while providing the benefits of blockchain technology. Microsoft Azure can be cited as an example where PoA is being implemented. All 21 nodes of BSC are operated by Binance so there is no scope of decentralization. Yes, Ethereum has 11,000 nodes now.

Fast! But…

BSC is 10 times faster than Ethereum. It’s 3 seconds block time vs. Ethereum’s 13 seconds makes it better for conducting the trading activity. There are so many blockchains that are even faster. Loopring’s ZK-Rollup offers 2000+ TPS on Ethereum layer2.  Being a bit fast does not hide the fact that BSC is 10,000 times more centralized than Ethereum.

Fake transactions?

It is really cool if BSC transactions are 3X of Ethereum. But what about the value settlement? Money Movers is a website that tracks value settlement. No data is available about BSC there and it may be possible that the website is not tracking BSC. Some Ethereum community members are pointing at fake transactions on BSC to inflate transaction volume. Using fake transactions to inflate figures is not a new game. Tron surpassed Ethereum transactions on 18th October 2018 and Justin Sun declared it as ‘the beginning’.

Binance has faced numerous controversies in the past. People still trade on Binance because of the high trade volume and its user-friendly interface. Liberal KYC/AML norm can be another reason for trading on Binance. Now the exchange is leveraging its infrastructure to take part in the happening DeFi game. Ethereum’s arbitrary gas fee is definitely a big problem and layer 2 infrastructures are not getting mass attention. BSC is trying to fill up the void quickly. The recent surge in volume says that it is getting success. BSC is enabling a new broad userbase to take part in DeFi activity very easily. DeFi came up with the promise of decentralization. The rise of BSC shows that many centralized platforms will enter DeFi with their centralized EVM compatible blockchains. The direction of the game is simple! Keep the fees minimum, copy popular Ethereum DAPPs and make numerous food coins. The traders will come and have a blast. The shortcut roadmap may not last for a long time but every craze takes time to die down.

Note: This post was first published here for Cryptowriter in association with voice.com.

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paragism
paragism

Cypherpunk. Writing content which I love. Creeping on the blockchain. Twitter - @paragism_


paragism
paragism

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