As BNB Price Grows, Will the Binance Smart Chain Overtake Ethereum?

As BNB Price Grows, Will the Binance Smart Chain Overtake Ethereum?

As BNB continues to gain popularity, it seems that a growing number of analysts are pointing to the Binance Smart Chain (BSC) as a serious threat to the Ethereum network. Citing faster and cheaper transactions, these analysts believe that the BSC could overtake Ethereum as the ‘backbone’ of the decentralized finance (DeFi) ecosystem.

This increase in user activity has been reflected in the price of the Binance token (BNB), which has continued to rally as the Binance Smart Chain continues to rise in popularity. BSC, which was launched in September of 2020, acts in parallel to the Binance Chain. BSC allows for smart-contract functionality and provides a staking mechanism for BNB tokens.

According to data from CoinMarketcap, BNB surpassed Polkadot to become the third-largest cryptocurrency by market cap on Friday. BNB went on to hit a new all-time high on Saturday, with a price above $342. At press time, BNB was holding strong at $271.

”If You Want More Users for Your Dapp, You Need to Be on #BSC Now.”

As the BSC ecosystem continues to grow (and the price of BNB along with it), BSC has become the chain of choice for a growing number of DeFi protocols.

Indeed, a handful of projects have left Etheruem in favor of BSC, including Value DeFi and yield aggregator, Harvest Finance. Binance Chief Executive, Changpeng Zhao has encouraged projects to migrate to BSC since the chain was launched in the fall. However, as BNB has continued to grow over the past week, he has taken to Twitter with renewed enthusiasm.

On Saturday, February 20th, Zhao commented that: “there are almost 2x more transactions on #BSC than on ETH. If you want more users for your Dapp, you need to be on #BSC now.”

There are almost 2x more transactions on #BSC than on ETH. If you want more users for your Dapp, you need to be on #BSC now. pic.twitter.com/ZYnbFOVysc — CZ 🔶 Binance (@cz_binance) February 18, 2021

“#BNB started as a token on #ETH, but maybe #ETH will end up as a token on #BSC,” he wrote on Monday, February 22nd.

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#BNB started as a token on #ETH, but maybe #ETH will end up as a token on #BSC. Restricting comments due to the provocative joke. 😂 https://t.co/jmIr3Xbi6p — CZ 🔶 Binance (@cz_binance) February 22, 2021

”Have an Infinite Mindset.”

However, he encouraged Ethereum and BSC community members to get along with one another. “For those holding ETH, no need to attack #BSC. We together make the industry bigger. ETH price did not drop. It increases together with #BNB. Have an infinite mindset.”

A number of other platforms that were already hosted on the BSC platform have seen positive movement as a result of the growth of the BSC. For example, Venus, which Cointelegraph describes as “an algorithmic money market and synthetic stablecoin protocol designed specifically for BSC,” has grown significantly along with the BSC. The Venus token (XVS) has grown more than 2900% since its October launch, sitting at $75.37 at press time.

Moreover, PancakeSwap (CAKE), another BSC-based DeFi project, has seen massive growth since its inception on the Binance Smart Chain last autumn. CAKE was trading at roughly $1.40 when it launched in late September; today, that figure is up to $15.23. Furthermore, PancakeSwap is listed as the third-largest automated market maker in the DeFi space, following behind Uniswap and Sushiswap.

”DeFi Protocols Are Increasingly Chain-Agnostic.”

Why is BSC proving to be such a strong contender for an Ethereum replacement of sorts? A number of analysts say that it all comes down to cost and speed. As Ethereum has seen fees increase and transaction speed slow down with the growth of traffic on the network, DeFi developers have begun to look elsewhere.

A software update known as Eth2.0 is already underway to address the scalability issues on the Ethereum network. However, with a launch date that is months (or even years) in the future, some analysts believe that Eth2.0 may be too little, too late.

A spokesperson for Binance told Cointelegraph that: “feedback we have heard is the DeFi protocols are increasingly chain-agnostic. The rapid growth of BSC shows the users prefer lower transaction fees. BSC also provides a variety of assets, many of which are not available on DeFi protocols on Ethereum.”

Binance Blamed for Purposely Choking Ethereum’s Network – Exchanges Bitcoin News

Binance Blamed for Purposely Choking Ethereum’s Network

The recent ramp higher in cryptocurrency prices has assuredly attracted its fair share of cheerleaders and detractors alike, but the reality of this climb has been a concurrent increase in network fees from rising transaction volumes.

Binance is Blamed for Purposely Choking Ethereum’s Network to Drive More Users to Its Own Platform

The resulting volumes have clogged networks like Ethereum, which have seen gas costs climb almost 20x over the last 12 months. For the growing DeFi market, these sky-high costs have elicited significant criticism from the community and mobilized the ecosystem to hunt for more affordable options. Enter Binance, which may dethrone Ethereum as the new DeFi hotspot due to its interoperability and lower transaction costs.

Binance Smart Chain (BSC), which works on a Proof of Authority (POA) model, is centralized (Binance picks the authorities that run each node) relative to Ethereum’s entirely decentralized approach. This has prompted some users to criticize the approach, believing that Binance is abusing its clout and market power to intentionally clog the Ethereum network. However, this sharp critique misses the bigger picture.

A quick look at wallet and gas data highlights that Binance is the largest single gas spender. For instance, the image above tweeted by Nansen AI highlights from February 12th to the 18th, Binance spent the equivalent of nearly 5,000 ETH in gas alone. Although many users are quick to criticize publicized data of Asian exchanges which are known for inflating trading volume, this data can be corroborated by Etherscan data.

The data demonstrate that both in terms of gas spent and transaction volume over the last seven days, wallets attributed to Binance accounted for six out of 10 of the most active wallets in the entire Ethereum ecosystem. While it could be inferred that Binance’s volume is propelling Ether costs upward and doing so intentionally to attract more volume to its smart chain, this argument misses out on the blockchain interoperability that Binance has promoted. Moreover, Binance hasn’t shut off the taps to Ethereum, making the argument of it clogging the network somewhat moot.

Binance Pancakeswap Has Overtaken Uniswap

The costs of switching from Ethereum to Binance are very low, especially for smart contracts and Dapps. By improving the interoperability and reducing switching costs along with rebating developers who bring valuable projects online, Binance has built itself up as a formidable destination for all manner of activities.

Given the volumes of DeFi, any reduction in network fees and costs is likely to attract greater adoption. By filling this void quicker than competitors or more established chains, Binance is now home to PancakeSwap, which has overtaken Uniswap (based on Ethereum) in terms of volume.

Because the barriers of switching from Uniswap to PancakeSwap (which is effectively a copy of Uniswap on BSC), are fairly low, it’s no wonder why DeFi users have made the jump. Moreover, it has caused a sharp incline in Binance Coin’s (BNB) valuation, making transactions also more expensive on its own native chain.

Yet, unlike Ethereum, by building a more cost-effective ecosystem that rewards smart contract developers, Binance is actually incentivizing development and smart contract use, and not necessarily using its market power to clog other competing networks.

FTX Quick to Criticize

Still, that hasn’t been enough to silence critics like FTX, which blame Binance for the default chains where it sends transactions. In a recent tweet critique, cryptocurrency derivatives exchange FTX was quick to pile onto Binance’s withdrawal process which effectively defaults to promoting its own chains and creates a conflict due to the fees it reaps in return.

As a result, it has cost FTX dearly due to coins being sent to the wrong chains. Accordingly, the service has decided to pass along the extra costs to users in the form of a 5% deposit surcharge for tokens sent to the wrong chain. However, in large this argument speaks more towards user mistakes than Binance’s default settings.

While the Binance universe is undoubtedly growing, and exchange volumes speak credible truth to this reality, the self-promotion of its own tools will continue to spark the same sort of denunciations that marked the decentralized versus centralized exchange debate. Ultimately though, utility speaks the loudest.

What do you think – is Binance purposely choking the Ethereum network to gain more users? Let us know in the comments section below.

Image Credits: Shutterstock, Pixabay, Wiki Commons, Binance, Twitter user NanshenAI, Etherscan

Ethereum Reaches New Price Peak, Leading to Further Interest from Nvidia

Bitcoin may be hogging all the spotlight as of late, but we cannot discount some of the smaller competing altcoins that also call the crypto space home. One of those altcoins is Ethereum, the second-largest cryptocurrency by market cap and the number one competitor to bitcoin. At the time of writing, Ethereum has hit a new all-time high of more than $1,900 per unit, and the asset appears to be on a serious roll.

Ethereum Has Surged Like No Other Coin

Bitcoin doing well is typically good news for its competing crypto cousins. When BTC spikes, the others will usually follow, and as bitcoin has consistently been on the rise over the past six months, so has Ethereum. The currency has risen by more than 160 percent since the beginning of the year, thereby beating out bitcoin by more than double its rate of 78 percent.

Jehan Chu – co-founder of venture capital firm Kenetic Capital – explained in a recent interview:

The ether slingshot is in motion, with the number two coin looking cheap and posed to surge relative to bitcoin’s $52K level.

While bitcoin works predominantly as a cryptocurrency, Ethereum has brought several additional factors to the table through its blockchain network. It is typically the most attractive system to those looking to develop decentralized apps (dapps) or new coins given its smart contract capabilities.

Ethereum has run into serious problems because of its popularity. The amount of traffic has proved difficult for the Ethereum network to handle, leading to slow transaction times and high gas fees among other things. Its co-creator Vitalik Buterin has even commented that Ethereum was lacking scalability. However, the unveiling of Ethereum 2.0 last year is likely to set the currency back on track.

Chu further states:

Despite ongoing complaints about Ethereum network fees, it remains the go-to destination for all blockchain applications.

Ethereum is doing so well pricewise that chip developer Nvidia is establishing a new series of semiconductors specifically designed to mine the world’s second-largest form of crypto. Known as CMPs – or cryptocurrency mining processors – the cards are set to go on sale this coming March according to a recent statement issued by the company.

Matt Wuebbling – head of GeForce marketing at Nvidia – commented in a blog post:

CMP products – which don’t do graphics – are sold through authorized partners and optimized for the best mining performance and efficiency.

Furthermore, the company is also unveiling a new addition to its gaming graphics card series known as the RTX 3060. At this stage, the card is still undergoing specific modifications, and likely won’t be ready until the latter half of the year, though customers are already engaged in pre-ordering the product.

The Card Maker Is Very Interested

Nvidia said: