Many of the blockchain platforms that launched in recent years have claimed to be the "Ethereum killer". So many, in fact, that the term itself almost became a running joke, especially since none of them even came close. But the latest generation of platforms is proving to be very popular with developers and users alike, and today, Binance Smart Chain It is the cream of the crop.
Since its launch in September 2020, the BSC has seen impressive growth. As of this writing, the BSC Project website shows that there are close to $ 31 billion blocked, with more than five million transactions in the last 24 hours. By comparison, there is currently just under $ 55 billion locked into Ethereum.
Additionally, just as Ethereum's dominance in DeFi helped drive ETH prices to new all-time highs, Binance's BNB token is currently enjoying a record bull run. If you had bought BNB in early January when it was still trading below $ 40, you could now make a net profit of more than 1,100%. The increases have meant that BNB is now holding its own in the position in the leaderboards previously held by XRP and USDT.
So what is driving adoption towards BSC? Part of the reason has to be Ethereum's long-standing issues related to scalability, slow lock times, and high fees resulting from congestion. Average fees on the platform have risen to $ 39 this year, making it prohibitively expensive for everyone but the biggest investors to transact.
On the contrary, BSC is designed to be faster and with much lower fees than Ethereum. Currently, the average price of gas in BSC is around 7.3 gwei, which converted to USD is equivalent to a paltry $ 0.00000365.
This large difference in gas rates could well explain the growth of one of the BSC's most popular applications: PancakeSwap. It has many similarities to Uniswap, its biggest competitor on Ethereum, the most obvious being that it uses the same concepts of automated market makers to allow exchanges between a wide range of tokens.
However, Ethereum's high fees mean that Uniswap is unlikely to gain traction among the many cryptocurrency users who only want a simple and cheap means of token exchange, particularly when they only want to exchange low values.
Perhaps an even more compelling reason why BSC has proven to be so popular is that it supports the Ethereum virtual machine. This compatibility has made it possible, and even easy, for developers to migrate their Ethereum applications to the BSC and offer their users the best of both worlds. For now, there are several examples of DeFi applications that have taken advantage of this ability.
Projects that unite BSC and Ethereum
Premia Finance is one of those cases. The project was established last year and launched on the Ethereum mainnet in February with its marketplace for writing, exercising, and trading options for a wide range of ERC20 tokens. Options are traditionally used as a hedging tool, giving users the opportunity to reduce their exposure to losses, a much-needed feature in the volatile world of DeFi.
At the end of March, Premia was also launched on the BSC, which supports many new tokens specific to the BSC ecosystem. He has had considerable success at BSC, accumulating more than 2 million DAIs in open interest.
Another example is 1Inch, the liquidity aggregation service that routes trades through multiple DEXs to ensure traders can get the best available price. 1Inch launched in 2019 and enjoyed significant success on Ethereum.
However, the decision to expand into BSC appears to have been made under somewhat bitter circumstances. The 1Inch CTO stated that the move was "because Ethereum miners killed the Ethereum network by not increasing the block's gas limit."
Cook Protocol is another cross-chain DeFi app, which aims to bridge the gap between DeFi and professional investors. Cook Protocol is a decentralized asset management platform that is tapping into the fast-growing crypto asset management market. It allows asset managers to access a single interface through which they can access multiple DeFi protocols to execute their chosen strategies.
In early April, Cook Protocol announced that it would expand to BSC by allowing BSC users to stake the project's native COOK token. It now operates two groups of BSCs offering APYs of up to 1500%.
A winning formula
With so many projects choosing to make the move, BSC appears poised for even more stellar growth for the remainder of 2021. However, it is clear that the right strategy to catch up with Ethereum is cooperation, rather than conflict. By making BSC compatible with Ethereum, rather than simply trying to outperform it, it seems likely that BSC will finally achieve what has so far eluded competing platforms.